Dáil Éireann Debate, Wednesday - 10 November 2004
124 Mr. Gilmore asked the Minister for Social and Family Affairs if he will respond to proposals from the free legal aid centres for a more ordered approach to indebtedness and to persons in financial difficulty, particularly in the context of their report, An End Based on Means, published in May 2003; and if he will make a statement on the matter. [28203/04]
Amharc ar fhreagraThe report, An End Based on Means, is a comprehensive report on an area that has not been examined for some time. The report brings together many of the issues faced by people who are over indebted. It deals with how the legal system treats uncontested consumer debt cases and examines alternatives and proposals for reform. The case is made for a review of debt enforcement procedure to be undertaken by the Department of Justice, Equality and Law Reform, which has primary responsibility in this area.
The money advice and budgeting service, MABS, funded by my Department, 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 free legal advice centres, FLAC, work closely with the MABS and the views of those working in the service were sought for the purpose of this report.
The service now operates nationwide, with 52 services operating from 65 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.
A pilot debt settlement programme was agreed by the MABS and the Irish Bankers' Federation and supported by the other main creditors. This pilot scheme provides a non-judicial alternative for resolving cases of multiple consumer debt that are likely to prove intractable and otherwise end up in court. The scheme introduces a range of innovative features that are new to this jurisdiction, such as a finite period for an agreed debt repayment programme, the freezing/reduction of interest and the write off of residual debt on successful completion of the programme. The debt settlement pilot commenced in four Dublin areas in June 2002 and was extended countrywide in June 2003. It closed for new cases on 30 September and it will be evaluated in the first quarter of 2005.
I believe the money advice and budgeting service offers practical and effective assistance to people with problems of indebtedness. I will take account of the recommendations in this report in considering future development in this area.
