Practice of jailing people for non-payment of debts under fire

IMPRISONING people who are unable to pay their debts is an unjust and outdated practice and should be ended, according to a legal advice group.

The Free Legal Advice Centre (FLAC), which hosted a conference on consumer debt earlier this week, said the huge growth in consumer debt made reform of the debt system even more urgent.

It is in favour of introducing the European model of debt settlement, where debtors and creditors work out a realistic repayment schedule.

At the end of the period, any debt that cannot be repaid is written off, under the ‘fresh start’ principle.

“We need a more modern process because the enforcement procedures are outdated,” said spokesman Paul Joyce.

Currently, people who fall into debt can be taken to the courts by creditors and ordered to repay, even if the sums are beyond their means.

Around 800 people were imprisoned for this offence between 1993-96. The Department of Justice is preparing legislation which will end the practice of jailing people for non-payment of court fines, but not those with civil debts.

Figures from the Central Bank show there is a growing problem with personal debt.

There was a 255% increase in home mortgage indebtedness between 1995 and 2002, while credit card debt almost doubled from €884 million in 2000 to €1.6 billion in 2003.

“There are people with a couple of credit cards on the go and people borrowing from other sources to pay debts. It can mushroom into an uncontrollable situation,” Mr Joyce.

He also believes the financial institutions have a role to play in not granting credit freely to customers who have a history of indebtedness.

The Money Advice and Budgeting Service (MABS) and the Irish Bankers Federation are operating a debt settlement pilot scheme which provides a non-judicial alternative to resolving cases of multiple consumer debt. However, this approach is not enshrined in legislation.

FLAC invited a representative from the Department of Justice to its conference last Monday but none turned up.

A Department of Justice spokeswoman said there were currently no plans for civil debt settlement legislation.