Debt legislation - Imprisoning debtors helps no one

THE Seanad will begin debating emergency legislation in relation to imprisoning people for debt tomorrow.

There was an old adage that if you owed the banks a few hundred, you were worried, but it you owed them millions, then they were worried. Now we have people owing the banks tens, even hundreds of millions, while the banks owe billions.

The whole country should be worried, but it seems that only comparatively small debtors are going to jail. Under legislation dating from 1926 and 1940, some 276 people were put in prison for non-payment of debts during 2008.

The Free Legal Aid Centre (FLAC) warns, in a report published today, that people are traumatised by a fear of being jailed and their children being put into care because they are in financial difficulties. The study entitled, To No One’s Credit, shows that those surveyed are suffering severe side affects as a result of family rows, blame, guilt, constant worry and loss of security.

The vast majority of those surveyed have suffered an adverse change to their financial circumstances as a result of illness, business failure, or unemployment. In a sense they are afraid to face their problems.

Three-quarters of the debtors surveyed said they did not understand the legal jargon in documents served on them, and most said they did not know or understand the options available to them.

They felt they had nowhere to turn in the midst of their financial problems. Some do not turn up in court because they are ashamed of having their personal finances discussed in an open forum.

Many of those people are decent, proud, hardworking individuals who find themselves out of employment through no fault of their own. Dependent on social welfare as their sole or principal source of income, they are unable to meet their repayments.

Under current laws a judge may order an individual to make specific installment payments without knowing the individual’s current income or financial circumstances. It doesn’t require legal qualifications to realise that it is not possible to get blood out of stone, or to get money out of people who do not have it and who no longer have the means of acquiring it.

Imprisoning people in such circumstances is having “a devastating and largely pointless human cost,” according to a spokesman for FLAC. Jailing people who cannot — as opposed those who can but refuse to — pay is fundamentally wrong. Nobody gains from that. Indeed, everybody loses, because it is a waste of prison space and taxpayers’ money.

To No One’s Credit contends that the state’s only response to this debt problem has been to continue to fund the Money Advice and Budgeting Service (MABS), which is seriously stretched. There is a crying need to tackle the flawed aspect of our legal system. The sanction of imprisonment for those who cannot pay their debts is a throwback to darker times.