State ‘must support citizens in debt’

THE GOVERNMENT needs to start providing as much support to the ordinary man or woman who is in debt as it does to big business, the director general of the country’s free legal aid centres (FLAC) has warned.

FLAC director general Noeline Blackwell said legislation around personal indebtedness is “absolutely antiquated” and the country’s lenders have to become more accountable for their “irresponsible lending”.

It was announced yesterday that the Government is to appoint 19 new advisers to the state’s money advice agency, Money Advice and Budgeting Service (MABS) as it is overwhelmed by the numbers seeking help since the economy stalled. This year alone, the service has had 10,000 new clients with an average debt of €15,000.

FLAC welcomed these five full-time and 14 part-time appointments, but said the Government must provide comprehensive protection for those in debt.

“Silly decisions were taken, certainly, by borrowers, but [there] were also a lot of slick lenders who should have known better. An economy was created... out of this easy credit culture and the Government has to take a lead and show its responsibility by drawing up legislation whereby lenders agree to absorb a certain percentage of the outstanding debt of people who we know will not ever be able to pay the outstanding loan as it should never have been sanctioned,” she said.

Ms Blackwell said this novel approach would require legislation, but “as a society, we have to ask the question whether we put big business over individuals”. As it stands, she said, we were protecting business by injecting them with capital, while ordinary people are being shown little mercy. “Look at what’s being done for developers through NAMA and for the bankers through recapitalisation. Why can’t we afford such protection for the individual so that they can be guaranteed... the banks will work with them so they can avoid repossession?

“A company can go into examinership by law here, but there is nothing for the small man. In Britain, for example, there is a much more modern approach to insolvency whereby the law works with people to help them out. For instance, court hearings are held in private and there is a wide range of legal bankruptcy and insolvency options.”

It is understood the bigger banks, as requested by the Government, have been working with defaulters to agree manageable loan repayment plans while the smaller sub-prime sector are seeking court intervention as soon as possible.