Question: Recently, my husband received a letter from a solicitor wherein he was informed that if he did not pay monies being in and around the figure of €4,500 that is owed to a supplier for materials furnished to my husband, he would be brought to Court. The money is owed but we are just not in a position to pay all of it at the moment. My husband is not dealing with the situation. What could happen here?

Answer: Firstly, in the current economic climate, problems such as yours are not uncommon. Your husband would have received what is called in legal terms a Letter of Demand seeking payment of a sum of money that apparently is owed by your husband to a third party. If that is the case, i.e. that he owes the money, then steps should be taken at this stage by your husband to discharge the sum that is due. However, it is recognised particularly in this current climate that this is easier said than done. Nonetheless sticking the head in the sand, so to speak and doing nothing about it will not make the debt go away.

Assuming therefore that the debt is not over six years old, an arrangement could be made between your husband and the third party to discharge the sum due by instalments or to reach some sort of satisfactory settlement for both parties. However, it does not always work like that and very often Letters of Demand are ignored quite simply because the money is not there to pay, and the matter eventually ends up in Court. This means in plain English that if a letter of Demand is ignored, legal proceedings can then be issued in the District Court, as in this case since the debt is under €6,348.00.(District Court only has jurisdiction to deal with debts up to €6,348.00).

At this stage, proceedings can be served on the person who owes the money by registered post or personal service and these proceedings set out the names of the parties, the amount due, the circumstances as to how the debt arose and the town where the court will be held. The Debtor (the person owing the money) has usually about 30 days to respond to these proceedings and before the relevant Court date. If the Debtor denies that the debt is due then the matter can be heard in Court with both sides putting forward their case. In the present case however, I understand that the debt due is not in dispute. If that is the case, even at this stage, parties to the debt should seek to resolve it and come to some sort of settlement as between the parties. In the event that the proceedings are ignored, the following occurs:

WHERE PROCEEDINGS ARE IGNORED:

In the event that no response is made by the Debtor to the proceedings, in other words, that the proceedings are ignored or are not dealt with, a Judgement can be obtained in the District Court Office by the creditor without the necessity on the part of the Creditor to attend Court.

Judgement

Once this is got, thereafter, there are various options open to the creditor in how it is proposed to enforce that Judgement. Examples of options are:

1. Lodgement of Judgement with the Sherriff’s Office;

2. Register the Judgement over the property of the person who owes the debt;

3. Obtain an Instalment Order against the Debtor.

1. Lodgement of Judgement with the Sherriff:

When a Judgement is obtained for the payment of money, from a Court, it can be lodged in the Sherriff’s Office in Cork City and this commands the Sherriff to seize whatever goods belonging to the Debtor to the value of the sum that is due. This method very often involves the Sherriff calling to the premises of the person who owes the Debt and taking the goods. They are then sold and the money produced is used to pay the Debt that is due.

2. Judgement Mortgage:

The Judgement that has been obtained in the District Court Office can also be registered as a mortgage against any property belonging to the person who owes the money. It is true to say that this is a long term way of securing payment, but it is valid as a mortgage on their title for twelve years from the date of Judgement. Therefore if in that time for example, the person who owes the money decided to sell their property or even to remortgage, they must satisfy this debt or else they will not be able to deal with the property. Of course, once a Judgement Mortgage has been put on the title, it is open to the Creditor to go to the Court to seek an Order for Sale of the property, but this is an unlikely scenario in the context of a small debt such as this.

3. Instalment Order:

If for instance, an application can be made in the District Court to get what is called an Instalment Order against the Debtor. In simple terms, the Debtor is summoned to Court to be cross examined on their means so that a reasonable instalment order can be made against the person who owes the money. For instance, based on the assets owned by the Debtor and the weekly income, the Court could make an Order against the Debtor to pay the sum of €40.00 per week to the Creditor in discharge of the Debt.

In summary, if you are in financial difficulty and finding it hard to make ends meet one of the first steps would be to make an appointment with your creditor to explain the situation and to seek to reach a compromise.

Money management is not just about money but also about wellbeing and being in control.

Myra Dinneen

Published: West Cork People February 2010