In the Debt Recovery sector, 2017 may be looked back upon as a year that saw a decline in numbers,generally.
At the beginning of January 2017, the rate of interest on judgment debts was reduced from 8% to 2% following the Courts Act 1981 (Interest on Judgement Debts) Order 2016. While the 2% rate most likely does not vary dramatically from current deposit interest rates, creditors may well take the view that it offers insufficient compensation for having to wait, possibly for a long time, for payment of a lawful debt.
Early March 2017 saw a legislative attempt to reduce the time period for making a claim based on a contract down from six years, to just two years from the date that the cause of action arises. However, although the proposed private members' bill to amend the Statute of Limitations 1957 reached the second stage of the Irish legislature, or Oireachtas, it was defeated on 13 April 2017.
Creditors before the Courts
In a series of reviews of the volumes of debt recovery proceedings before the Courts over the past ten years, we have highlighted a continuing decline in creditor litigation and enforcement. The 2016 Courts Service Annual Report, published in July 2017, provided further evidence of this. Two particular statistics from this Report are notable:
The number of default judgments marked in 2016 across the District, Circuit and High Courts showed an approximate 26% fall from 14,204 in 2015 to 10,475 in 2016. Even more notable, the 2016 figure represents an almost 80% drop on the equivalent 2010 figure. Just 3,695 instalment order applications were issued in 2016. This is where a creditor applies to the District Court for an order compelling the debtor to pay the judgment debt by fixed instalments. This represented a 32% decrease on the corresponding 2015 figure and a 46% drop on the equivalent 2014 one. The lack of credit extended in both the banking and business sectors in Ireland over the recession years has been reflected in the drop off in litigation and enforcement activity by creditors. In addition, given that some nine years have passed since the global financial crisis began, it is to be expected that most potential creditor enforcement that it gave rise to has already been commenced. However, with credit having grown in most sectors of the improving Irish economy, this is also likely to lead to creditors enforcing their rights following any credit default in the medium term.