Unpaid Invoice - Ireland
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Unpaid invoice - Ireland - what to do

Unpaid invoice - Ireland - what to do

1. Send a Demand letter

Although there is no legal requirement and you may skip this step, it is highly recommended, as a first step, to send a “Demand Letter” to your client (the “debtor”) because not only is there a possibility that the client will pay you as a result, but also should the dispute end up in court, this will support your case. Make sure that the demand letter contains all the relevant facts:

  • Amount owed
  • Services or goods provided
  • Unpaid invoice number and date
  • How to pay
  • Deadline for payment (seven days is typical if you have already sent several reminders)
  • Threat that legal action will be taken if payment is not made

2. The Business Disputes Register

If the Demand letter failed to get a response they making the details of your debt public will likely spur your client into action as they will want to avoid the unwanted publicity. To make the details of the debt owed to you public, you file it on the Business Disputes Register (www.disputesregister.org). An automatic email is then sent to your client urging them to get in touch with you to resolve the dispute and remove it from the register. This is very effective low cost strategy. The fee for filing on the register is €20.

File on the Business Disputes Register

Dispute with Country Currency Amount Category
STRATUSHEALTHCARE Ireland EUR 2,528 Unpaid invoice
CAPRI MEDICAL LIMITED Ireland USD 6,404 Unpaid invoice
KERWEX HUMAN RESOURCES LIMITED Ireland EUR 14,327 Unpaid invoice
ADVANCED PET STORE LIMITED Ireland EUR 372 Unpaid invoice
Holmes O'Malley Sexton LLP Ireland GBP 2,700 Unpaid invoice
fettle therapy Ireland EUR 460 Unpaid invoice
WEST-O HYGIENE SOLUTIONS LIMITED Ireland GBP 14,878 Unpaid invoice

3. Debt collection Agencies

A more aggressive but more costly escalation is to employ the services of a debt collection agency or debt collection lawyers. The costs vary: lawyers are likely to charge an hourly rate and collection agencies often charge a success fee between 10 and 30%. They both offer pretty much the same service which is to intimidate the client into paying by sending official letters demanding payment and threatening legal action. This is often a bluff as they will quite often not carry out the threat of legal action unless you agree to cover additional costs. They have no power to enforce payment.

Here is list of debt collection agencies based in the republic of Ireland:

Here is a list of debt collection lawyers based in the Republic of Ireland

All debt collectors, including private individuals and debt collection agencies, are covered by Section 11 of the Non-Fatal Offences against the Person Act 1997. Under the law, they cannot make a demand for payment of a debt if:

  • The demands are so frequent that they are expected to cause the debtor or the debtor’s  family alarm, distress or humiliation
  • They falsely suggest that non-payment will result in criminal proceedings
  • They falsely suggest that they are authorised in an official capacity to enforce payment
  • They use a false official document

4. Legal action and going to Court

Note on Small Claims Court

You may have heard about the Small Claims Court, however, the Small Claims procedure is not for chasing up payments or any other debt recovery; it is for claiming against a business for goods or services you purchased from them.

Debts under €15,000 are dealt by District courts, debts between €15,000 and €75,000 are dealt by Circuit courts and debts over €75,000 are dealt by high courts.

For debts under €15,000

Send a claim notice

The first step is to send your client a Claim Notice (this is different to a Demand Letter). This is a courts services document which you need to fill in and get the District court to stamped and date it. 

You then need to “serve” the claim notice on your client (the “respondent”). The fee for this is €25. The procedure is as follows:

  • 3 copies, including the original are given to the court office. You get assigned a “record number” and two copies are returned to you.
  • You “serve” your client by sending a stamped dated copy by registered post

The claim notice informs the debtor that if they fail to respond to it and fail to pay the debt then the creditor (you) is free to apply to the court for a judgment against them. There is a good chance that your client will chose to pay your debt rather than face a possible court proceeding.

Your client can dispute the claim and decide to defend it. In which case your client can serve an “Appearance and Defence” on you (or your solicitor). In this situation, you (the creditor) can decide to go to court or to drop the matter. However, your client may choose to make a counter-claim against you and will include a “notice and statement of counterclaim” in his/her Appearance and defence documents.

Note that every debtor has a right to defend a claim notice that is served on them, which they can do within 28 days of receiving the claim notice by notifying you (or your solicitor) and by providing called their ‘defence’. You will then need to review this defence document and if necessary, reply to the points made. After this, either party can apply to for a court hearing.

On the hearing date itself, both parties will be required to give evidence and prove their case. You therefore need to be sure your claim is provable with documentation such as a contracts, invoices, confirmation emails, purchase orders etc.

Apply for a judgment

If your client does not respond to your claim notice within 28 days of receiving it, or replies without an intention to defend the claim and also fails to pay the outstanding debt, then you have the option to  apply to the District Court for a judgment against the debtor. There is no need for you to actually attend court to get a judgment as all that is needed is the filing of documents at the District Court office.

Statute of limitations

There are time limits for taking most types of legal action and for chasing a debt it is six years, otherwise  a debtor cannot be forced to pay the debt by the courts.

The following are the steps involved:

A. Confirmation of service of the claim notice

Statutory declaration of service document must be signed in the presence of a commissioner for oaths or a practising solicitor (costs about €10). This document gives details of how and where service of the claim notice was executed.

B. Confirmation of the debt remaining outstanding

You must provide the court with an Affidavit of debt document which you must prepare after 28 days after the claim notice was served. This must also be signed in the presence of a practising solicitor or a commissioner for oaths (cost is about €10).

C. Preparation of judgment document

You will need to provide to the court office  an  the application for the judgment against the debtor for the total amount still outstanding  (“Judgment (decree) by default”) and have it signed by an officer of the court.

D. Filing of documents with the court office

The above three documents (the “judgment set”) have to be filed at the District Court office (€15x 2 + €25 to €80 depending on size of claim).

Before making a claim in court, however, it is important for you to remember that:

  • If the case fails and the court rules against you (the creditor), you could be liable for the debtor’s costs as well as your own.
  • A court is unlikely to make a ruling in your favour if you cannot prove the facts of the case.
  • If the debtor has filed for bankruptcy or has gone into liquidation, the debt will be more difficult to recover.

Setting down for trial

After completing these steps, you can serve notice of trial on the debtor (respondent). On occasion, however, other applications are necessary before the action can be set down for trial. These applications are known as interlocutory applications.

At least 10 days’ notice of trial will be given. The notice must be filed with the District Court clerk without delay following service.

If you fail to serve notice of trial within 10 days of receiving the respondent’s defence, the respondent can serve notice of trial on you, otherwise your client can apply to dismiss the claim for “want of prosecution”.

Whoever is filing the notice of trial must also file with the clerk, the following:

  • A set of copies of the pleadings, including particulars, and any affidavits in the case, in chronological sequence
  • A set of copies of any correspondence relied on by either party, in chronological sequence
  • Copies of any other documents they are directed to file
  • They may also be directed to file a completed case management questionnaire.

The court will set a date for trial at the next available sitting (after the notice period).

Issue of judgment by the court office

These documents are checked and, if all are in order, the District Court issues the judgment for the amount owed plus the costs involved in the proceedings. Having obtained the judgment, you are entitled to enforce the judgment. 8% interest accrues the judgment amount starting from the date of the judgment. A judgment where the debtor did not defend the claim is a “summary judgment”.

Enforcing a Judgement

If you client still refuses to pay even though a judgment has been awarded, then there are several methods of enforcement which are available to you. 

a) Publication: the judgment can be registered in the Central Office of the High Court which will affect your client’s credit rating as trade gazettes will publish your client’s name and the amount owed.

b) Execution by Sheriff: You can request that the local Sheriff to seizes goods and sells them to raise funds to pay your debt. Alternatively, the Sheriff can seek payments in instalments or lumpsum from your client.

c) Judgment mortgages: if your client owns land or property then a judgment mortgage can be registered as a mortgage. This means your client cannot sell the property until the mortgage is discharged and you can enforce the judgment mortgage by seeking a court order to sell the property to settle the debt.

d) Garnishee orders: if a 3rd party owes money to your client, the court can make a further order directing that party to pay you directly.

e) Receiver by way of equitable execution: if money is due to be paid to your client at future dates such as rents, a court may appoint an independent person to receive the money payable to the debtor and pay you instead.

f) Injunctions: An injunction is a court order directing your client to refrain from disposing of assets or from leaving the jurisdiction..

g) Examination of directors: Officers of your client’s company can be examined before the court to assist in discovery and execution of the judgment.

h) Liquidation: When a company is unable to pay its debts it is insolvent and a number of events may follow including voluntary or compulsory liquidation, which will lead to the sale all assets and distribution of any proceeds (net of liquidator’s costs) to the creditors (in order of priority).

For debts €15,000 to €75,000

Circuit Court

Claims for any amounts above €15,000 and up to €75,000 must be made via the Circuit Court where the first step is the preparation of an ordinary civil bill which must identify the circuit and county in which the proceedings are taken, the names of the parties and their addresses, the amount being claimed and confirmation that the debtor (your client) has asked to pay the debt, but refuses to pay.

For debts above €75,000

High Court

All claims over €75,000 are dealt by the High Court for which you will need to prepare a “summary summons” stating the amount claimed and why.