Charity urges bank restraint on debts
The plea from the Society of St Vincent de Paul (SVP) comes after the Irish Examiner revealed court cases against debtors are up 30% to 40% on last year.
The SVP last night said banks and other lenders had played a role in creating Ireland’s debt burden by allowing people to borrow too much during the boom years.
“Financial institutions were very fast to lend people money so we hope they will exercise responsibility now people are in difficult times,” said SVP spokesman Stuart Kenny. “People who should never have got credit were given credit by lenders who wanted to bump up their [financial] figures.
“So now we expect lenders to exercise responsibility and work out arrangements with those in debt.”
The rising number of debtors before the courts was also an indication of Ireland’s own subprime lending crisis, he said.
Banks in the US sparked financial chaos after losing billions of dollars by lending money to high-risk clients known as “subprime borrowers”.
Now Irish courts handle 1,500 to 2,000 debt cases every month as banks, credit card companies and other lenders try to recoup money they have lent the public.
Just a year ago the courts were handling 1,000 to 1,500 debt cases a month, but the number has risen sharply after interest rate rises in 2006 and 2007 made loans costlier.
The SVP said borrowers were also being hit twice-over by the subprime lending crisis as banks were hiking the cost of interest rates to make up for their losses.
“Irish banks are making their current customers pay for this and are putting up their interest rates even though the Central Bank is holding its rates currently,” said Mr Kenny.
Figures for April show the SVP in the greater Dublin region alone is dealing with 60% more pleas for financial help and other support than last year. In April 2007, the SVP had 1,102 requests for help but last month the figure rose to 1,762, with the society blaming the economic downturn.
Labour revealed the taxman last year collected €970 million in VAT on ESB, Bord Gáis, petrol, diesel and other energy bills.
Liz McManus, the party’s energy spokeswoman, used the figure to call on the Government to do more to help struggling families.
“With the constant rise in fuel prices over recent months and the ESB and Bord Gáis warning of the ‘inevitability’ of further increases, more and more low- income families will experience real difficulty in paying for heat and light,” she said.
