Laws on way to curb jailing of debtors

LAWS are being promised to ensure imprisonment is used only “as a last resort” for people unable to pay back bank loans or credit card debt.

The Government announced its intention to bring forward legislation on the matter after an Irish Examiner report revealed at least one person was sent to jail every day for debt defaults since the State guarantee for financial institutions was announced a year ago.

Tánaiste Mary Coughlan told the Dáil yesterday that “work is ongoing” by the Department of Justice to “provide more legislative measures to ensure incarceration of people for debt will only be a last resort”.

However she was unable to give a timeframe for when the legal situation would change for the hundreds of people who spend an average of 20 days in jail if they are unable to meet repayments.

Ms Coughlan was responding to questions from the opposition who said it was a “serious and scandalous situation”.

Sinn Féin’s Caoimhghín O Caoláin said: “It has been reported this week that at least one person has been imprisoned by the courts for failure to pay debts in respect of either a credit card or financial institution loan. This is happening to at least one person every day since the introduction by Government of the bail-out for the banking institutions.”

The problem of spiralling debt has led to 306 cases of imprisonment last year and 186 cases up to June of this year.

This does not include the estimated 25,000 cases of homeowners in mortgage arrears.

Despite banks promising a more flexible approach to loan defaulters, there was a rise in the rate of imprisonment for debtor offences after the State guarantee was introduced just over a year ago.

The revised Programme for Government agreed between Fianna Fáil and the Green Party last month promised to “create a new system of personal insolvency regulations”.

Mr O Caoláin asked Ms Coughlan if legislation was being drafted “to ensure that imprisonment of debtors and fine defaulters is used only as a penalty of last resort and to ensure that prison is the option of last resort for non-serious crime”.

The Tánaiste said: “The Minister for Justice has advised me that as of Tuesday, no one is in jail in this country for debt. The Law Reform Commission has carried out consultation in the context of providing more legislative measures to ensure incarceration of people for debt will only be a last resort. Work is ongoing with the minister in this regard.”