Confronting debt - A crisis we must work to resolve

FOR an honest person, and despite all of the evidence most Irish people are honest, unmanageable, out-of-control debt is a real nightmare.

It is the cause of tension, sleepless nights and the kind of stress that undermines long-standing, loving relationships and families.

In a society so obsessed by property and appearances — status anxiety as it’s called elsewhere — the intervention of a lender in the day-to-day affairs of a business or household because debt obligations cannot be met represents the kind of personal and social failure unimaginable in other societies. Here it’s a life-defining crisis, in other countries it’s recognised that there’s little option but to be realistic, shake off the dust and start again.

In regard to some mortgages and some personal debt we have reached that point and all that remains to be decided is how we start again.

Government, lenders and consumers will have to reach agreements that are equitable, recognise honestly the role each party played in creating this terrible situation but, most of all, offer the possibility of restoring stability to personal and commercial finances. The sanity of too many decent, hardworking people, especially young couples, is at stake.

The figures are truly staggering.

Yesterday we were told that the value of debts registered against consumers in the first half of this year was ten times greater than that faced during the same period five years ago. Irish Judgments, the non-profit organisation which collates judgement information in Ireland, reported that five years ago debts totalling €22.9m were registered against consumers in the first six months of the year; this year that figure stands at €230.4m — is an increase of more than 900%.

This escalation is almost incomprehensible and deeply worrying. If that figure is not enough to make you sit up consider this. Yesterday, Frank Conway, director of moneycoach.ie, warned that up to 12,500 people may have to pay their children’s mortgages if they fall into difficulty because they acted as guarantor when the loans were taken out.

In some instances parents may have acted as guarantor for more than one child, in others just one parent may be alive. In lots of cases parents’ life savings would have been wiped out because of collapsing share values. Some parents will face the double whammy of paying a child’s mortgage while trying to survive on a pension much smaller than had been anticipated. Still more will have to repay a mortgage to banks they once held valuable shares in but are now worthless because of the banks’ behaviour.

Naturally this will again give rise to the most basic question of all about our current crisis — how can the banks destroy so much wealth, renege on so many commitments, especially pensions, but insist that those who owe them money repay it in full?

How that question is answered will define this society, and the lives of tens of thousands of people, for decades to come.