Minister for Justice Frances Fitzgerald has said she believes there should be "proportionate debt forgiveness" for homeowners who have fallen into mortgage arrears.
Speaking ahead of the announcement of changes to personal insolvency legislation that are due next week, Ms Fitzgerald said she believed now was the optimum time to address the situation.
“Many, many people obviously want to pay their debts, and those who can pay them will pay them,” she said. “No reasonable person will resent seeing someone who has fallen on hard times benefit from proportionate debt forgiveness.”
She added that the amendments to personal insolvency legislation being introduced by the Government “should be very helpful in terms of working with those people who want to resolve the issues they have and get the kind of support that’s needed through the court process”.
As part of the proposed changes distressed borrowers can refer arrangements they have entered into with lending institutions to the courts, which can then order a review of any deals which are deemed to contain unreasonable conditions.
Ms Fitzgerald was speaking at the publication of the 2014 annual report for the Free Legal Advice Centre (Flac).*
The organisation's director general Noeline Blackwell said that while the number of queries from members of the public regarding debts has fallen, those who are in the midst of a domestic debt crisis are now in "worse trouble".
Around one in every 10 enquiries dealt with by FLAC last year concerned credit and debt problems, and over half of such queries related to mortgage arrears and repossessions.
A spike in the number of repossession orders granted by the courts is causing difficulty for an increasing number of indebted homeowners.
Courts Service figures show some 586 repossession orders were granted by the circuit court in the first three months of this year, compared with 95 in the same period last year. Of the 586, some 383 were for primary homes, 97 were for buy-to-lets and 106 were “unknown”.
Ms Fitzgerald also made reference to the pronounced increase in queries dealt with by Flac relating to landlord and tenant law, saying she was “struck” by the range of complaints and that those involved in the housing sector “face a very difficult situation at present”.
*This article was amended on July 7th, 2015