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Last year, 30,000 people had judgments issued against them for failing to pay their debts. They owed money chiefly to banks, credit unions and car finance companies, but some were sued by businesses on foot of debts which, in cases heard in the district courts, came to less than €6,350.
One might imagine that defendants, especially those ordered to pay back small sums in weekly or monthly instalments, would be overawed by the majesty of the law and the possible penalties for default. They could be declared bankrupt. They could even go to prison. The reality is starkly different. It is described in this newspaper today by our personal finance editor, Charlie Weston, after a detailed and lengthy study of proceedings in the district courts.
Many thousands of defendants simply do not turn up in court. The same is true, in large numbers of cases, of persons who have defaulted on the instalments they have been ordered to make. Some do not appreciate the gravity of their situation: our correspondent observed one man sound asleep. Lawyers acting for creditors are poorly briefed. Sometimes they admit ignorance of the background of a case.
In short, the unavoidable picture is of a system not fit for purpose, which for the most part provides little satisfaction for either the creditors or the debtors.
It has been worsening for years -- harking back, as with so much else, to the credit boom and the mountain of debt inherited from it. The culpability of the main banks is well known, but others must share the blame.
These include people who neglected their financial affairs and have taken no steps to rectify them. They also include popular institutions like credit unions. One judge is quoted as saying that credit unions "lavished money" on borrowers to finance, for example, home extensions.
Thankfully, we now have a prospect of a partial solution in the form of the Personal Insolvency Bill, published in draft form by the Government last month.
This measure does not address itself only to the situation of speculators who owe vast amounts of money. It proposes three non-judicial settlement systems for individuals. One would allow persons with limited means to obtain a debt relief certificate which would permit them to write off unsecured debt of up to €20,000. Arrangements of this kind could lift an unbearable burden from the courts.
However, much revision remains to be done on the Bill before it becomes law. The Government would be wise to speed up the process -- but not at the expense of clarity and workability. Too much in our public administration does not work. This Bill can work.
Irish Independent
