NOTE ON THE CIVIL DEBT (PROCEDURES) BILL, 2015
The purpose of the Civil Debt (Procedures) Bill, 2015 (the “Bill”), is to effectively allow creditors recover debts where the debtor has capacity to pay the sums due, but refuses so to do.
The main features of the Bill allow creditors to apply to Court for an Order enabling either attachment of earnings or deductions from social welfare payments for the purpose of enforcement of the types of debts to which the legislation will apply.
An Order for Attachment of Earnings allows for the payment of debts by direct deduction from the debtor’s earnings. Attachment of earnings would arise where the Court orders the debtor’s employer to deduct specified sums from the debtor’s earnings to pay over to the creditor.
Deduction from social welfare payments would arise where the court orders the Department of Social Protection to deduct specified sums from the debtor’s social welfare payments to pay over to the creditor.
However, these provisions are subject to a number of safeguards for debtors and will have regard to the debtor’s capacity to repay the amount owed.
The Civil Law (Miscellaneous Provisions) Act, 2011 amended legislation to give the District Court the power to regard a failure by a parent/spouse/civil partner to comply with a court order as contempt of court and to deal with it accordingly, including by means of imprisonment.
Under the provisions of the Bill, such family law proceedings will now be the only situation in which a debtor can be imprisoned for not paying debts.
As of now, the law currently states that arrest and imprisonment are options available as an enforcement mechanism as a last resort, where a creditor has proved beyond reasonable doubt that a judgment debtor has failed to comply with an instalment order due to that debtor’s wilful refusal or culpable neglect.
The Bill abolishes the imprisonment of debtors in all circumstances other than family law proceedings as outlined above.
- This Bill does not relate to debts for the repayment of loans by a bank, credit union, or other entity regulated by the Central Bank of Ireland; money lenders; or, credit cards. (Section 1)
- The Bill relates to Judgment Debtors. A Judgment Debtor is defined in the Bill as a person against whom judgment has been obtained. Therefore, a creditor wishing to rely on this legislation would need to have an order or decree for judgment against the debtor. (Section 1)
- A Creditor who has a judgment against a debtor can apply to the Court where the judgment is for a liquidated sum of not less than €500, but not more than €4,000, in circumstances where the judgment remains unsatisfied in whole or in part. (Section 5(1))
- Any application for an Order under this legislation would be made before the District Court in the District where the debtor resides. (Section 4)
- An employer of a judgment debtor is defined as a person who employs the debtor under a contract of employment or if the employer is an employment agency and the debtor has a contract with them; and is liable to pay the earnings of the debtor in respect of that work. Interestingly, this also includes a trustee of a pension scheme under which the judgment debtor is receiving periodical pension benefits. (Section 1)
- A Judge cannot make an order which both attaches earnings and makes deductions from social welfare payments at the same time in relation to the same debt.
ATTACHMENT OF EARNINGS ORDER
- Section 9 of the Bill would empower the Court on application to make an order directing the employer of the debtor to deduct certain specified amounts at specified intervals from the debtor’s earnings and to pay the sums deducted directly to the creditor.
- The Bill also provides that before deciding whether to make or refuse an attachment of earnings order, the court must give the debtor an opportunity to make representations.
- The Bill goes on to provide that in specifying the amount of deductions the court must have regard to the “normal deduction rate”, which is the periodical amount which the earnings to which the order relates should be applied in satisfying the debt.
- The “protected earnings rate” is the rate below which the debtor’s earnings should not be reduced (having regard to the needs of the judgment debtor and his or her particular circumstances).
- If an employer affected by an attachment of earnings order ceases to be the debtor’s employer, the order lapses as far as that employer is concerned, except with regard to deductions from earnings paid by the employer after the cessation of employment, and payment to the creditor of such deductions from earnings made at any time by that employer.
- Where there is a change of circumstances, the debtor must notify the creditor within ten days.
- Where the debtor has a new employer, and the employer is made aware of the Order in force, the new employer must notify the creditor and the court.
- Where a debtor is in the service of the State, or local authorities etc., the Bill provides that for employees of the State or certain state bodies, specified persons are to be regarded, for the purposes of making an attachment of earnings order, as the relevant employer. Any question as to who should be the employer may be referred to the Minister for Public Expenditure and Reform for determination but the Minister is not obliged to respond unless the matter is referred to him or her by the court.
SOCIAL WELFARE DEDUCTIONS
- Section 15 of the Bill would empower the court on application to make an order directing the Minister for Social Protection, to deduct certain specified amounts from the debtor’s net social welfare and pay the deductions to the creditor.
- Before deciding whether to make or refuse a deduction from payments order, the court must give the judgment debtor an opportunity to make representations.
- Any social welfare deductions are deducted from the debtor’s social welfare after the following deductions are made:
- Deductions for overpayments and repayments where an offence was committed;
- Deductions for local authority rent;
- Deductions for Local Property Tax;
- Deductions required by an Order of Court (e.g. child maintenance).
- A deduction from payments order will be sent by the court clerk to the Minister for Social Protection and the Minister will ensure that the deductions are made and paid to the creditor as soon as possible.
OTHER PROVISIONS TO NOTE
- When a debtor receives notice of the creditor’s application to the Court, they will have a specified amount of time to complete and furnish a Statement of Means. The Statement of Means must specify, amongst other things, the debtor’s earning and expected earning, the name and address of every employer of the debtor, and information to allow employers identify the debtor. (Section 6)
- If a person in in receipt of social welfare and is a person to whom net scheme payments are payable, they will need to apply for a verifying certificate, which verifies the required information, however, this certificate will not be disclosed by the Court to a Creditor. (Section 6)
- If a debtor doesn’t provide the necessary information, the Court can order him so to do. (Section 6)
- Where the Court believes that the debtor can pay the debt concerned within a reasonable period, the Court can adjourn the creditor’s application for such a period on terms the Court deems reasonable.
- A debtor could apply to the court to amend an Order under the legislation where their earnings or social welfare payments decrease, or if there is another change of circumstances.
- At any time while an Order is in place, the debtor can pay the entirety of the amount owed, and the Order will cease to have effect.
- If the statement of means is false or misleading, the debtor can be fined by the Court.