independent

Saturday 19 April 2014

Banks are 'hounding borrowers to suicide'

High Court chief breaks silence to highlight crisis of personal debt

BANKS are driving some borrowers who can not pay their debts to suicide, the Master of the High Court warned last night.

Ed Honohan, brother of Central Bank Governor Patrick Honohan, told the Irish Independent he decided to speak out against the banks and other creditors because he had dealt with several debt cases where the borrowers had subsequently taken their own lives.

He added that he also decided to speak out as many borrowers who can not repay their loans, such as mortgages, credit cards and personal loans, are being pursued by banks who have already written off the debts.

This was leading to "meaningless accountancy exercises" that were driving some people to suicide, he said.

In an extraordinary intervention on the deepening debt crisis, Mr Honohan strongly criticised banks and other creditors for pursuing "to the bitter end" debtors who cannot pay judgment mortgages.

Banks are still required to chase debts and maximise recovery from borrowers even if they have written them off in their books.

Mr Honohan, a barrister, said most of the debt cases arose due to circumstances beyond the control of borrowers -- because the economy shut down as a result of the banking collapse.

He criticised the banks as he called for the updating of legislation to protect people unable to pay debts and to introduce a level of "debt forgiveness".

He said there had been a surge not only in mortgage cases but also instances where banks had chased borrowers for personal loans and then sought for judgments to be registered against family homes.

"We can not wait for 18 months before the Government introduces new personal insolvency laws," Mr Honohan said. He was referring to the March 2012 deadline imposed by the EU/ IMF for reform of our outdated debtor's laws.

Borrowers might think they are "outlaws in uncharted territory", he said, but stressed that even members of the "new debt set" have legal rights.

Mr Honohan said it was a criminal offence to demand repayment so frequently that it would cause alarm, distress or humiliation; to tell a debtor they are guilty of a criminal offence or to pretend to be officially authorised by law to enforce payment.

Several of the tragic deaths that had crossed his desk had been reported in the media, he said.

His court is a central hub for debt actions that go to law.

The Free Legal Advice Centres (FLAC) said that some borrowers had taken their own lives as a result of stress caused by being chased for their debts.

Paul Joyce, FLAC's senior policy researcher on consumer credit law, said that many borrowers did not realise that their homes could potentially be at risk if creditors converted judgments obtained on foot of consumer loans by registering them against their property.

Last night the Irish Bankers' Federation (IBF), which represents mainstream domestic and international banks operating in Ireland, said that it fully supported calls for reform of Ireland's outdated personal insolvency laws.

Arrears

The IBF, which helped devise the statutory code on mortgage arrears and has also designed a protocol with the Monetary Advice and Budgeting Service (MABS) to deal with non-mortgage debt, denied its members were heavy-handed with borrowers.

Mr Honohan said there was no reason why the 1850 Judgment Mortgage Act should not be changed to "put a brake" on the spiralling number of judgments and that would be a way of introducing debt forgiveness.

"Why should there be an incentive to cause untold harm socially when there is no money at the end of the road?"

He warned that banks should not expect to have it all their own way when pursuing debtors.

"We know which banks were the cheerleaders for the (Celtic) Tiger," he said. "Yet some banks are reverting to type and come to court assuming that the banker always wins anyway. That's not how the law sees it."

Irish Independent

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