By Karen Walsh, a solicitor practicing in Walsh and Partners Solicitors
For a farmer, debts arise. You may owe debts, debts may be owed to you.
Examples would be debts arising from suppliers and contractors, or to a bank on foot of a loan or a mortgage.
The person who owes the money is known as a debtor and the person the money is owed to is a creditor.
When a debt is owed, the debtor will normally instruct a solicitor to try to recover the debt. The solicitor on behalf of the creditor will normally do an initial letter requesting the debt, and if the debt remains outstanding, they will issue court proceedings against the debtor.
The court proceedings can be issued in a number of courts; it depends on the level of the debt. The lower range tends to be in the District (where the debt is less than €15,000) and Circuit (where the debt is less than €75,000) and the higher range in the High Court (where the debt is greater than €75,000).
The creditor will normally get a judgement or decree in court that the debt is owed. Rather than dealing with procedure for obtaining a judgment in court, this article will deal with the common ways of enforcing such a judgement against a debtor.
You are entitled to register a judgement in the Central Office of the High Court.
Normally before doing this, the creditor will give you an opportunity to pay the debt, as this publicises the fact that the judgement is against you, and may preclude you from obtaining credit in the future.
The following are the more common methods of enforcing judgements:-
n Instalment orders following by committal orders.
Execution against goods.
Attachment of earnings.
Execution orders, also known as “fieri facias” or “fi fa”, are the most common method of enforcement, particularly for smaller debts, and it is necessary to obtain an execution order, either from the High Court or District Court, and to send it to the Sheriff for execution.
An execution order is generally valid for at least a year, but can be renewed.
There are Sherrifs in Dublin and Cork, and the County Registrar also carries out this function in other parts of the country.
A sheriff has the powers to seize goods and the right of entry onto premises, provided he does so peacefully, and believes that there are goods on the premises.
One of the most common enforcement procedures is an Instalment Order. This normally allows for a debt to be paid in instalments.
In the event that such an order is breached, there is a possibility of applying for a Committal Order under the Enforcement of Courts Order (Amendment) Act, 2009.
If a judgement is obtained against you, the creditor may register a charge against the property or land with the Land Registry, or the Registry of Deeds. This is known as a Judgement Mortgage.
This is the equivalent of a mortgage, and can be registered as a Burden on the folio in respect of your lands.
The creditor can then make an application to the court forcing the sale of the property or land, known as an order for possession.
However this will normally not automatically be granted by the court, and normally gives the debtor further opportunities to discharge the debt before ordering a sale.
In the event that an order for possession is granted, the court may allow a stay of execution, which gives the debtor an opportunity to pay the debt, or sell the asset without a receiver being appointed, within the duration of the stay, for example, a year.
Normally, a court will not grant an attachment over your earnings in respect of a debt.
However, farmers should note there has been a recent case where the court distinguished between earnings and what a debtor would be entitled to under the Basic Farm Payment Scheme.
The case of ACC Loan Management versus Rickard stated that a receiver can be appointed by a creditor to enforce a debt.
The facts in this case were that the court were content that it was appropriate to appoint a receiver over payments to which a debtor may become entitled pursuant to the Basic Farm Payment Scheme.
However, in the facts of this particular case, they distinguish between earnings and what a debtor would be entitled to under the Payment Scheme.
This decision will be of concern to farmers because if there is a Judgement Mortgage against their lands, a creditor potentially can recover against any entitlements under the Basic Farm Payment Scheme which a debtor would normally be able to recover from the land.
If you are in debt, it is advisable to take advice from a solicitor and negotiate with the creditor immediately to avoid a judgement being obtained against you.