Ruth Coppinger (Dublin West, Socialist Party)
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120. To ask the Minister for Justice and Equality if her Department is planning to effect changes to the way debt is dealt with. [20218/15]

Frances Fitzgerald (Dublin Mid West, Fine Gael)
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On 6 May 2015 the Government agreed to the drafting of the Civil Debt (Procedures) Bill.

The proposed Bill will implement a number of recommendations of the Law Reform Commission (LRC) in relation to the enforcement of debt. TheLRC Report published in 2010 on Personal Debt Management and Debt Enforcementmade a number of recommendations for wide scale reform of the existing personal insolvency and debt enforcement regimes. Key elements of that Report in relation to insolvency and measures to assist in the resolution of personal indebtedness were implemented through enactment of the Personal Insolvency Act 2012.

The Civil Debt (Procedures) Bill seeks to implement further recommendations of the Report aimed at enforcement and recovery of debts which could be developed to streamline the existing enforcement procedures which are available to creditors. There is a need for a balanced approach in relation to civil debt to ensure the protection of creditor rights by making available a range of legal mechanisms which compel payment by “won’t pay” debtors who knowingly refuse to pay their obligations.Creditors may apply to the Court for an order enabling either attachment of earnings or deductions from social welfare payments, as appropriate, for the purpose of enforcement of debt.

Attachment of earnings would arise where a Court orders the debtor’s employer to deduct specified sums from the debtor’s earnings to pay over to the creditor. Deduction from social welfare payments would arise where the Court orders the Department of Social Protection to deduct specified sums from the debtor’s Social Welfare payments to pay over to the creditor. However, these provisions would be subject to a number of safeguards for debtors such as:-

- The provisions may only be used by a creditor after reasonable efforts to engage with the debtor have failed. In applying to court for an attachment or deduction order, as the case may be, the onus is on the creditor to demonstrate to the court the efforts he or she has made to seek repayment.

- The debtor will be offered an opportunity to make representations to the court on his or her behalf before the court may make a decision on the matter.

- Importantly, in making a decision, the Court will be required to take into account the debtor’s capacity to repay the debt in terms of the amount of the attachment or deduction which would be ordered.

- Provision is also made for variation or termination of the order if the debtor’s circumstances change materially.

Of course the Government recognises that civil debts arise as a result of a range of different causes whether from financial borrowings or the supply of goods and services, including what might be regarded as essential services. The Government's intention is that this new legislation would not provide "carte blanche" as regards the use of the proposed attachment and deduction provisions in respect of all debts regardless of their source and amount. Methods of delimiting the application of the new measures having regard to both size of debt and the nature or source of the debt are being worked on actively, in consultation with the Office of the Attorney General, as part of the drafting process.

Importantly, the proposed Bill will also make provision for the abolition of imprisonment of debtors except in the case of maintenance arising from family law proceedings. This implements one of the key recommendations of the Law Reform Commission in this area. Under existing law, arrest and imprisonment remains a possibility as an enforcement mechanism of last resort in cases where a creditor has proved beyond all reasonable doubt the judgment debtor has failed to comply with an instalment order due to his or her wilful refusal or culpable neglect. This Bill removes this possibility for the vast majority of debtors.

Without doubt, the most desirable situation is for creditors and debtors to reach an amicable agreement for settlement of the debt. However, the reality is that in some cases the debtor – who may actually be in a position to pay the debt - simply refuses to engage with the creditor or does not adhere to the agreed repayment schedule to satisfy an outstanding debt. It is an economic reality that creditors must have a range of options available to them to recover money owed to them particularly where the debtor has capacity to repay and will not do so.