FLAC calls for Dynamic Debt Settlement System

16 December 2010

In a society where credit has become the main driver of consumer spending, there has been an unacceptable failure by government to change the law to reflect that change in society.

Following two years of reflection, and a consultation paper in 2009, the Law Reform Commission has now published final recommendations to government for a comprehensive personal debt settlement process which includes: non-judicial debt settlement arrangements, debt relief orders, a revision of the judicial bankruptcy legislation, a complete overhaul of existing debt enforcement mechanisms together with a Debt Enforcement Office to oversee a revised system of enforcement and to supervise debt settlement arrangements - all of these provide a blueprint for how debt recovery will be dealt with in the future.

In welcoming the Law Reform Commission's proposals, Noeline Blackwell, FLAC Director General, commended the Commission on its work and commented:
"The Law Reform Commission's Report brings to a close an examination process of what needs to be done to drag debt settlement from the doldrums of the 19th century into the 21st century where credit is the main driver of consumer spending. The consumer has sadly been ignored since the economic crisis where financial institutions have been prioritised. FLAC believes the time for reflection has come to an end. It is now a time for action and for legislation in this area to be introduced without delay. "

Paul Joyce, FLAC's Senior Policy Researcher, who spoke at the Law Reform Commission's conference today emphasises that:
"The future of debt enforcement should mean that legal proceedings occur as seldom as possible. It is the State's obligation to ensure that there is a proper money and indeed legal advice infrastructure to enable early resolution of debt cases to take place.

"Furthermore, the existence of private 'for profit' debt-settlement companies is an area which needs to be properly regulated and monitored, otherwise there is a significant danger that already vulnerable clients, desperate for solutions to their financial problems will grasp at expensive straws."

A stigma still lingers in Ireland for many in relation to over-indebtedness despite our recent exposure to financial crises according to FLAC. These proposals from the Law Reform Commission, if implemented, will take the debt process out of the glare of the public courts and into a more dignified private setting.


Editors' notes:

1. FLAC (Free Legal Advice Centres) is an independent human rights organisation which works to promote equal access to justice for all. It runs a lo-call telephone information line giving general legal information and supports a network of evening FLAC clinics around Ireland. FLAC has produced research reports in the area of personal debt: 'An Ends Based Means' and 'To No One's Credit' in 2003 and 2009 respectively.

2. The Law Reform Commission launched its report on proposed new Personal Debt Settlement Process at its annual conference in Dublin Castle this morning. Among the speakers was Paul Joyce, Senior Policy Researcher with FLAC, who gave a lecture on 'The Future of Debt Enforcement' in Ireland.The full report is available at