Gilmore: Law will not allow forgiving of debts

FAMILIES facing home repossession had their hopes of any immediate rescue dashed after the Government firmly ruled out debt forgiveness.

Tánaiste Eamon Gilmore said “interim measures” were being drawn up to help mortgage holders in difficulty but there will be no substantial change in the law before a Personal Insolvency Bill is published some time next year.

Even then it will not allow for debt forgiveness as a general principle, despite calls from lawyers, voluntary groups and the Master of the High Court for swift and radical change to the way mortgage arrears are handled by the courts.

Enterprise Minister Richard Bruton backed Eamon Gilmore, who said the issue of distressed mortgage holders was a “matter of very great urgency” for the Government, but he indicated a hands-off approach would be adopted.

“Ultimately the relationship between banks and individual borrowers is something that they have to work through and they have to make decisions on those, and there is a genuine issue about moral hazard. You can not be writing off one person’s debt and expecting another person to pay their debt,” Mr Bruton said.

He said the Government had created a “frame of reference” for dealing with the issue in a fair way and would “over time” further develop codes of practice.

But Master of the High Court Edmund Honohan — who claimed banks were driving struggling mortgage holders to suicide — said yesterday there was no time to waste.

Mr Honohan said the Government owned the banks and could insist they translate debts that had been written off and compensated for by recapitalisation into debt forgiveness for individuals.

Mr Honohan said he could write the solution to the problem on the back of an envelope and it could be sanctioned and in operation within a month if the imagination was there to do it.

“The problem is that no one in the Department of Finance knows the law and no one in the Department of Justice knows economics, so in order to do anything they have to set up a subcommittee. It’s a bureaucratic problem.”

The exchanges yesterday will do little to comfort the 45,000 mortgage holders who are at least three months in arrears, or the estimated 40,000 others who have had to restructure their mortgage because they cannot meet the repayments.

Suicide charity Console was among the groups that yesterday praised Mr Honohan for highlighting the anguish of people facing the loss of their home.

Supporting the charity’s awareness campaign, Macra na Feirme president Alan Jagoe said banks should have a “moral obligation” towards people left emotionally vulnerable by being pursued through the courts.

Presidential hopefuls David Norris and Sean Gallagher also backed Mr Honohan and said it was important to recognise the unbearable pressures people were facing.


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