The Master of the High Court has strongly criticised banks and other credit institutions for the relentless pursuit of those unable to pay their debts.
The Master of the High Court has strongly criticised banks and other credit institutions for the relentless pursuit of those unable to pay their debts.
Edmund Honohan said the pursuit of people "to the bitter end" as part of an accountancy exercise to write off debts for tax relief was leading to social disquiet and driving some people to suicide.
His strongly-worded remarks have been welcomes by charities who help those who die by suicide.
Paul Kelly, chief executive of Console, told RTE's News at One that the subject was an important one facing families up and down the land and people needed to know there was help available.
Mr Honohan, who is one of the most senior officials in the High Court said some banks were "reverting to type" and pursuing people for debts even though they had already written them off their own books.
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Samaritans free helpline: 1850 60 90 90
Console free helpline: 1850 60 90 90
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Mr Honohan made his remarks at the High Court in a semi-scripted aside for which he later said he had no regrets even though the banking officials union described the remarks as "inflammatory" and "emotive".
He said everyone knew who the "cheer leaders for the Celtic Tiger" and said some were "then reverting to type and come to court assuming the banker always wins. That is not how the law sees it".
He said banks who had entered into "joint ventures" with customers should bear part of the responsibility of the debt when customers ended up in difficulties.
And he called for some quick "back of the envelope" solutions that he insisted could be drafted and brought into law within a month.
He said efforts to change the law were talking too long and it was not acceptable to wait until March next year, the deadline for reform of debt legislation set by the IMF.
Ireland has some of the most draconian personal debt laws in the world - under bankruptcy legislation, an individual is not clear of their debts for 12 years, compared to the UK where customers can walk away after 12 months.
The bankruptcy law in the UK was reformed as part of a range of measures to destigmatise personal debt.<
We need debt forgiveness law
Mr Honohan added there was no reason why legislation should not be changed to 'put a brake' on the spiralling number of judgments against those who cannot pay. This would be a way of introducing debt forgiveness, he said, adding: 'Why should there be an incentive to cause untold harm socially when there is no money at the end of the road?'
He said even members of the "new debt set" had legal rights.
It was a criminal offence to demand repayment so frequently as to cause alarm, distress or humiliation or to tell a debtor they are guilty of criminal offence. To pretend to be officially authorised by law to enforce payment and the unjustified enrichment of creditors were also prohibited under law.
David Hall of New Beginning, a voluntary organisation that is offering free legal aid to those who cannot afford barristers in repossession cases welcomed Mr Honohan's remarks and said it was unfair that the only people facing prosecution because of debt were the mortgage holders, not the bank, the accountant or the mortgage broker that may have been involved.
He said personal debt was on the most serious issues facing society.
The Master, who is a barrister but not a judge, deals with a range of legal matters including applications to register and enforce judgments, made the remarks when dealing with several such cases.
In one case, he noted a creditor who obtained a judgment mortgage for €14,000, at interest of 8% per year, arising from money due for the hire of an industrial machine was seeking an order aimed at procuring the sale of the family home of the particular debtor. This was a private creditor who was also free to sell on the judgment mortgage, he noted.
He noted no laws on debt relief had been introduced to implement recommendations by the Law Reform Commission in 2004. These included a recommendation that a family home should not be sold on foot of a judgment mortgage unless such order was approved by a court.
Laws belong to 19th century
If there was not going to be 'prompt' legislation updating the Bankruptcy Act, the 1840 Judgment Mortgage Act and the 1850 Debtors Ireland Act and introducing the proposed non-judicial debt resolution process, other stopgap measures should be considered, Mr Honohan said.
He also urged full legal effect should be given to the EU Consumer Credit Directive of 2008 and provisions protecting consumers should be extended to personal guarantors of non-consumer credit.
Guarantors who find themselves in court as 'innocent victims of collateral damage' deserved 'appropriate leniency', particularly if the principal debt was already written off by the creditor, he said.<
The balance between secured and unsecured debts should be adjusted by restricting the option of securing any judgment to 50% of the debt, he proposed. Tax deductions sought for written-off debt should only be granted on proof the debt was fully cancelled, he said.
More info
The Samaritans
Website: www.samaritans.org
Suicide helpline: 1850 60 90 90
Console
Website: www.console.ie
Suicide helpline: 1800 24 70
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