There have been renewed calls recently by the Free Legal Advice Centre (FLAC) and the Irish Institute of Credit Management (IICM) for debt collectors and debt collection agencies in Ireland to be licensed.

According to FLAC and IICM, there have been reports that some debt collectors in Ireland have used intimidatory and unscrupulous practices in the pursuit of debtors and, in their view, regulation would help get rid of the “cowboy” debt collectors and help establish an Irish debt collection code of conduct to deal with issues such as how often and what times in the day/evening collectors should call or visit debtors.

While we fully agree with the need to regulate and license the debt collection industry in Ireland, we would also argue that creditors and/or their agents should be allowed to exercise legitimate means to pursue unpaid monies from debtors. We therefore need to look closely at whether the Irish judicial system is currently up to the task. It seems obvious that if the legal system was less costly and more streamlined, particularly in the case of uncontested debt collection matters, creditors would be less likely to look to the so-called “cowboy” debt collectors to recover their debts.

Let’s not forget that, in many of the cases which are passed on to debt collectors, a creditor would have probably tried (and failed) many times to recover the debt using amicable means. Handing over the debt to a debt collection agency is very often a last resort. And, because a debtor possibly ignored peaceful efforts in the past to collect the debt, a creditor may be quite happy for a collection agency to employ more heavy-handed tactics. Any small business or individual that has been in the position where it has been owed money will fully understand the creditor’s position.

Yes we agree there ought to be regulation of debt collection services in Ireland, but let’s not forget that small and medium sized businesses are failing every day because of cashflow problems caused by debtors’ failure to pay legitimate bills. In Irish debt collection cases, as with most things in life, there are two sides to every story. It’s just a shame that, with organisations clamouring to uphold the rights of debtors, the rights and livelihoods of creditors are far too often being ignored.

We previously wrote about the failings of the Small Claims procedure when it comes to business to business debts. However, for individuals who have an eligible claim for under €2,000, there is a new online facility for making a Small Claims application online.

Small Claims Court Ireland Online

Before you rush off to sue every Tom, Dick and Harry, take note that only the following types of claim are eligible:

• A claim in respect of goods or services bought for private use from someone selling them in the course of a business (consumer claim).

• A claim in respect of minor damage to property (but excluding personal injuries).

• A claim in respect of the non-return of a rent deposit in relation to a holiday premises (actions relating to rent deposits for places of residence must be brought to the Private Residential Tenancies Board.)

Get more information and advice about the Small Claims Court procedure in Ireland by downloading the following PDF guide:

A Guide to the Small Claims Court in Ireland

With great fanfare, the Minister for Justice, Equality and Law Reform, Mr. Dermot Ahern, T.D., recently announced new Court Rules to extend the current remit of the Irish Small Claims procedure to include certain business claims.

Introducing the new Small Claims procedure Minister Ahern said

“The new rules will facilitate claims from a business against another business in respect of goods or services not exceeding €2,000. This Government is conscious that all businesses, but small businesses in particular, have been significantly affected by the very difficult economic situation that this country is facing. Businesses, as well as consumers, can find themselves in a position where they have a legitimate claim against another business or vendor in relation to a contract in respect of goods or services purchased.”

Sounds like a great idea doesn’t it? On first reading, it appears the Minister has introduced something useful for once which will enable Irish businesses to issue legal proceedings themselves in the Small Claims Court (provided the debt is less than €2,000), thus doing away with the need for costly legal proceedings and solicitors. However, on further inspection, there are certain caveats which which suggest this won’t be a panacea to the problem of slow payers and bad debts.

The new Small Claims procedure amends District Court Rules (Order 53A of the District Court Rules 1997). The consumer or business must have purchased goods or services from someone selling them in the course of business. Claims cannot be made in respect of debts, personal injuries or breach of leasing or hire purchase agreements. The procedure provides an alternative and complimentary mechanism to the civil bill procedure.

So, it seems the Small Claims procedure in Ireland can’t be used for business to business debts. The most frustrating thing is that this was a perfect opportunity to introduce legislation which would have allowed businesses in Ireland (partricularly SMEs) a cheaper, fasttrack way of suing debtors. But if, as it seems, this isn’t the case, you kind of wonder what useful purpose it’s going to serve.