Ireland’s “Victorian” Debt Laws to Be Overhauled

Should there be a complete overhaul of Ireland’s “Victorian” debt laws in order to differentiate between the “can’t pay” and the “won’t pay?”

According to a leading member of the Law Reform Commission, Patricia Rickard-Clarke there should be, who also claimed that various financial institutions took part in “reckless lending” by offering 120% mortgages and should now be penalised for bad practices.

Ms Rickard-Clarke also declared that Ireland’s reliance on the legal system and a myriad of different debt collection methods was “crazy” and it should be centralised in a national debt enforcement office to take much of debt recovery out of the court system and cut down on legal costs. Her comments come ahead of a major conference, ‘Reforming the Law on Personal Debt’, which is scheduled to take place in Dublin Castle next Wednesday.

The conference comes against a backdrop of spiralling credit problems, which now stands at an estimated 395 billion Euros, and bad debt which has led to a nation with a “growing level of personal indebtedness.”

“The legislation we have pre-dates Victorian times — it was there long before the current credit-based society that we live in,” says Ms Rickard-Clarke.

“The first thing that happens when someone can’t pay is that the person who is owed the money goes into court and gets a court order for debt recovery – it’s a very expensive procedure and what’s the point if the debtor can’t pay?” she says.

Ireland currently ranks fourth in an international table of household debt, with a ratio of household debt to disposable income levels standing at 176 per cent.