THERE HAS been a dramatic increase in court judgments relating to debt under all headings except committals to prison, according to a report from the Law Reform Commission.
Minister for Justice Dermot Ahern will tonight launch an interim report by the commission on Personal Debt Management and Debt Enforcement.
This follows the publication of a 420-page Consultation Paper on the subject last September, which led to the setting up of a Working Group to consider some of the proposals in the Consultation Paper, in order to find some short-term solutions to the problems identified. Many of these proposals are being acted upon, though the final report has not yet been published.
The Consultation Paper recommended that the law should recognise the distinction between debtors who cannot pay and those who refuse to pay, and that reforms must be based on an individualised and holistic approach to personal debt.
Figures contained in the interim report underline the urgency of the problem, with a 35 per cent rise in orders for possession, an 18 per cent rise in summary judgments, an increase of 53 per cent in applications for judgment mortgages in the Circuit Court and of 65 per cent in the High Court, a 33 per cent rise in judgments in default of appearance in the Circuit Court, a 46 per cent increase in new claims for liquidated sums in the High Court, a 112 per cent rise in new bankruptcy adjudications and a 66 per cent rise in winding up orders.
The working group set up by the LRC included representatives of the commission itself, of the Department of Finance, the Department of Justice, Equality and Law Reform, the Financial Regulator, the Money Advice and Budgeting Service, the management of the Courts Service, and the Irish Banking Federation.
The group drew up a 14-point action plan, with actions allocated to different members of the group. The interim report outlines the actions being taken.
These includes the further development of a Standard Financial Statement, which would assess an individual’s total income and total outgoings.
Some creditors do not take into account a person’s total debts when assessing how much they expect them to pay, the interim report points out, and this would enable a realistic repayment plan.
The group also proposed extending the existing IBF-MABS Operational Protocol on Managing Debt, in order to bring more financial institutions and other creditors, including credit unions and utility companies, into a nationally agreed debt management process. The working group also agreed on the compilation and distribution of comprehensive information for consumer debtors, using a dedicated website. This would provide a one-stop-shop of all the available information, based on the detailed material compiled in the Interim Report.
The commission and Courts Service management agreed to draw up a pre-action protocol for consumer debt cases, which would impose a mandatory requirement on creditors to issue a warning letter before bringing debt proceedings. This would allow the creditor to obtain advice before proceedings began.
The commission’s Interim Report does not deal directly with the issue of mortgage debt, because this is currently being considered by the Government’s Mortgage Arrears and Personal Debt Review Group, which was established in February of this year.
It commented that mortgage debt differed from other personal debt in two respects: it was secured debt, and from a personal point of view it impacted on a person’s sense of safety and security in his or her family home.