Tuesday 20 February 2018

Stephen Donnelly: Pilot debt scheme will keep borrowers on never-never

A plan to help people in distress merely protects banks and does little for those trapped by big loans.

Stephen Donnelly

IN refusing to participate in a new Central Bank scheme for borrowers, the credit unions are taking a leadership role long vacated by politicians.

Last week, the Irish League of Credit Unions (ILCU) took a stand. They refused to participate in a Central Bank pilot scheme aimed at over-indebted citizens. Announced last week, the scheme is aimed at helping borrowers with multiple distressed debts reach 'fair and equitable' solutions with their lenders.

Sounds dull, I know, but some mechanism is desperately needed. Many people with unsustainable debts have several creditors. A family might be servicing their mortgage but, due to job loss or pay cuts, can't meet payments on a student, credit union or business loan. Five years into the crisis, no workable framework exists for multiple lenders to agree a joined-up position. So families get bounced between lenders, and the interest continues to mount. And that affects everybody.

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