ENDING THE use of imprisonment in debt enforcement and promoting the use of mediation and debt rescheduling, are among the recommendations of the legal rights campaigning group, Flac (Free Legal Advice Centres), in a major report being presented today.
A number of clients of the Money Advice and Budgeting Service (Mabs) were interviewed in the report by Flac.
The report, on debt enforcement, highlights the issues confronting those who find themselves unable to pay their debts, leading to court orders being issued against them which, when breached, can lead to imprisonment.
In 2008, 276 people were imprisoned in connection with debt, with the average time served being 27 days. The debt is still owed when the person is released.
The report proposes improving access to information for debtors who find themselves faced with legal proceedings, though the publication of an explanatory booklet in plain language outlining the options available and the consequences of not responding to the issuing of proceedings. All the legal documents should be in plain English, it says.
Mabs should be promoted and advertised nationally to ensure that help is sought at the earliest opportunity, and the money advice process should be promoted as an alternative to court proceedings.
Given the cuts to public spending, a co-ordinated approach to the provision of services complementary to Mabs, like legal aid and advice, citizens’ information and family support, should be developed, it says. Funding for Mabs should increase to reflect the increased demand on its services, reflected in waiting lists.
The Legal Aid Board should promote its services in the area of financial matters as well as family law, and it should seek to co-operate with Mabs.
Legal aid offices should also assist people to establish that the debt really is owed, rather than always assuming it is. A person threatened with imprisonment for debt should always be able to acquire legal representation, the report states. The creditor should be able to make proposals on repayments. Any judgments should be based on a comprehensive financial statement of their financial affairs.
The decision on instalment repayments should be made in private rather than in open court, and debtors should be entitled to have advisers with them to put forward proposals. They should be clearly informed of their right to apply to the court for a variation of the instalment order.
They should also be informed, when a committal order is issued, that imprisonment is not inevitable and that by turning up and giving an explanation acceptable to the court it can be averted. They should also be informed of their right to appeal a committal order, the report recommends.
Mediation should be promoted as an alternative to court proceedings, with legislation to provide for it, Flac recommends. This should involve the establishment of a Debt Rescheduling and Mediation Service, sitting in private, which would facilitate agreement on affordable repayments, and which could have a debt settlement role.