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Debtors with an inability to pay must be protected - Ó Snodaigh

10 July, 2009 - by Aengus Ó Snodaigh TD

Speaking during today’s Dáil debate on the Enforcement of Court Orders (Amendment) Bill 2009 Sinn Féin Justice Spokesperson Aengus Ó Snodaigh TD warned that whilst the Bill provides progressive changes to existing draconian legislation that resulted in 276 people being imprisoned for non-repayment of debt last year, it does not go far enough to protect vulnerable individuals from the social and psychological impact of debt related incarceration.

The Dublin Central TD said:

“In the current economic climate, vulnerable individuals and families have found themselves falling deeper and deeper into debt due to job-losses, reduced wages, short time working, and business failure combined with tax increases. Given this, the onset of spiralling debt is blatantly predictable. It is paramount the government provides in its legislation an alternative to costly imprisonment for non-payment of debts and fines.

“This is a fair measure that will enable individuals and families to break the cycle of shame and poverty that can result from debt related imprisonment. 

“The Bill before us does go some way deferring the option of incarceration of those unable to pay off their debt, but even so imprisonment remains the preferred option. This is a lazy and costly solution. Community service should be the primary penalty for small cases of non-repayment of debt and in such lesser cases the seizure of goods and assets should be only that, not to be followed by succession of crippling fines leading the debtor into a never ending nightmare of financial difficulty.

“A recent report published this month by the independent human rights organisation Free Legal Advice Centres (FLAC), entitled ‘To No Ones Credit’ notes that ‘debt enforcement in this country has devastating and largely pointless human cost.’ It is in this context that I condemn the government's decision to license retail credit firms and hire purchase companies charging 195% interest rates. This is modern-day money lending – a license to rob. I have impressed on the government today that it must urgently bring forward legislation to make this change.

“Although the Bill provides considerable improvements to the enforcement process, I along with many others remain of the opinion that the reforms proposed could be stretched further.  The Bill's three main changes of an end to imprisonment of a debtor in his or her absence, a reversal in the onus of providing proof during the court process, from the debtor to the creditor, and a new provision for the possibility of legal aid for debtors in question, are all positive.

“However reform in this field must go further. Many people are effectively being criminalized simply for being poor.  People associate prisons with criminals and stigma results regardless of whether a conviction is actually recorded. 

“As currently drafted the Bill provides that an arrested debtor shall be brought before the Court “as soon as practicable”.  We want to build in some flexibility in recognition of the fact that we are not talking about violent offenders.  The debtors in question should not be forced for example to spend the night in a Garda cell.

“The legislation we are dealing with today is just one small reform to the end point of an outdated system.  The Court enforcement procedure operates against a backdrop of an outdated, constrained and extremely expensive bankruptcy system.  We also have no personal insolvency system akin to the Individual Voluntary Arrangements made available in recent years in England or to the type of repayment schemes that exist elsewhere in Europe. 

“The numbers suffering over-indebtedness in the 26 counties are rising at an astronomical rate.  The figure for non-housing and non-investment related unpaid credit balances rose from €3.9 billion in second quarter 1999 to €18.8 billion in the third quarter 2008. 

“In addition greater resources must be made available to the Money Advice Bureaus who are increasingly inundated with requests for help and who are operating in a near vacuum when it comes to statutory supports and systems to recover personal debt in a fair and humane way.  We should explore making financial and credit institutions foot some of the funding that is required by MABS.” ENDS

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