Ciarán Cuffe
Question:19 Mr. Cuffe asked the Minister for Social and Family Affairs the views of her Department on the publication of An End Based on Means by the Free Legal Advice centres. [17890/03]
Written Answers. - Legal Aid Service.
Joan Burton
Question:47 Ms Burton asked the Minister for Social and Family Affairs if her attention has been drawn to a recent report from the Free Legal Advice Centres; the measures she is taking to provide advice and support to people with debt problems; and if she will make a statement on the matter. [17911/03]
I propose to take Questions Nos. 19 and 47 together.
The report An End Based on Means which deals with how the legal system treats uncontested consumer debt cases and examines alternatives and proposals for reform, is a very comprehensive report on an area that has not been examined for a long time.
The report brings together many of the issues faced by people who are over-indebted. The free legal advice centres work closely with the Money Advice and Budgeting Service funded by my Department and the views of those working in the service were sought for the purpose of this report. The Money Advice and Budgeting Service helps to negotiate voluntary repayment arrangements as an alternative to the legal system. This approach is generally well received by creditors who in the absence of the MABS would be more likely to use the legal system to enforce the debt. The service now operates nationwide with 52 services operating from 62 centres throughout the country. It has an emphasis on practical, budget-based measures that will assist in removing people permanently from dependence on moneylenders and open up alternative sources of credit through the credit unions. The service gives advice and assistance, but does not pay debts. An option offered by the MABS is to arrange for the person to open a "special account" in their local credit union. This enables them to repay their debts by paying an agreed weekly amount into this account. They also open a shares account which helps to cultivate a savings habit and facilitates borrowing in time of need.
In the past year the Money Advice and Budgeting Service and the Irish Bankers' Federation have developed an alternative to the legal system in relation to debt enforcement and this is being piloted in a number of areas in Dublin. This pilot is targeted at those who are on the point of legal action with their creditor or creditors. The programme consists of a voluntary agreement between debtor and creditors which provides for basic income retention, freezing of interest and writing off of residual debt after a repayment period of up to five years. This fresh start pilot scheme recognises that some people may find it almost impossible to repay their debts and that court action would be futile, only adding to misery and hardship. Several people have already availed of the pilot and it has now been extended to give others throughout the country an opportunity to participate. I believe that the Money Advice and Budgeting Service offers practical and effective assistance to people with problems of indebtedness. I will be taking account of the recommendations in this report in considering future development in this area.
Question No. 20 answered with Question No. 11.