Monday, July 06, 2009
PEOPLE who face court or jail for non-payment of debt often suffer traumatic stress, are frightened their children will be taken into care and are ashamed to have their financial difficulties discussed in a public forum, a major new report has found.
The study by FLAC (Free Legal Advice Centres) portrays a compelling picture of how someone in debt is affected by their experience.
Those surveyed for the report cited a range of side effects from family rows, blame, guilt, loss of security, constant worry about the future and the fear of children being taken into care.
Launched today, the report, To No One’s Credit, calls for urgent reform of laws, which date from 1926 and 1940, and have put 276 people in prison for non- payment of debt in 2008.
Under current rules, judges may make instalment orders for payment without knowing the current income or circumstances of the debtor and without the debtor ever attending court.
The head of FLAC, Noeline Blackwell, said debt enforcement here has a "devastating and largely pointless human cost".
The FLAC survey found people taken to court for not repaying debts talk about nightmares, worry, stress, illness and having to resort to medication.
They report being "frightened" and "confused" by the legal jargon of the documents sent to them and felt they had nowhere to turn. when faced by mounting debt.
It also found that people did not attend debt hearings because they feared the embarrassment and shame of having their personal financial difficulties discussed in a public forum.
Three out of four debtors surveyed claimed not to have understood the legal documentation served upon them, and most said they did not understand the consequences of the proceedings or their options.
The vast majority of the those surveyed had suffered an adverse change in their financial circumstances due to unemployment, illness or business failure.
Many had two or more debts in arrears and were reliant on a social welfare payment as their sole or principal source of income.
The FLAC report said the State’s only response to over-indebtedness has been to fund MABS (the Money Advice and Budgeting Service). While the report calls for more funding for MABS, it also calls for the removal of imprisonment for non-payment of debt.
Imprisonment to enforce a private contract debt is "entirely inappropriate" in 2009, states the report, apart from being of "very questionable" use to creditors and a waste of the State and taxpayers’ resources.
The study finds that imprisonment without an accurate assessment of ability to a person’s ability to pay – usually because they do not show up in court – renders the process "fundamentally flawed".
Emergency legislation around debt and imprisonment is set to be debated in the Seanad tomorrow.
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