Consumers drowning in debt

The average consumer debt in the county has increased five-fold over the last four years with judgement claims filed against Clare debtors jumping from €920,026 in 2008 to a current figure of €5.661 million.

 

An indication of the hardship Clare people are experiencing is also reflected in the dramatic rise of credit union’s taking defaulters to court.

Of all the credit unions in the country, Scariff-based Derg Credit Union has registered the highest number of judgments against customers this year, with 46. St Francis Credit Union, headquartered in Ennis, had the third-highest with 33 judgments over the same period.

According to debt defaulters magazine, Stubbs Gazette, the dramatic rise in Clare’s debt levels has resulted in a drop of 13 places in a nationwide league table from 15th place in 2008 to now being the most second indebted county behind Cork.

Unemployment is one of the main reasons behind the explosion of consumer debt in the Mid-West, which has been one of the hardest hit areas.

The Stubbs figures track debts that have been chased through the courts after an individual was unable to pay telephone, fuel and tax bills, as well as repayments on unsecured loans, such as credit cards, personal loans and credit union loans. The figures do not include mortgage debt.

The closure of the production facility at Finsa chipboard factory in Scariff is believed to be one of the main reasons for the high number of judgements filed by the local Derg Credit Union, which serves several communities in East Clare.

Derg Credit Union (DCU) manager, Paddy McNamara, stressed the Scariff-based lending facility only pursued debtors through the courts as a last resort when all other reasonable alternative avenues had been exhausted.

Acknowledging that people had suffered a reduction in income following major job losses in Finsa and other local industries, Mr McNamara pointed out DCU were more than willing to work with any debtor to draw up a new repayment plan, once they were prepared to work with the facility.

Mr McNamara noted that DCU also had a responsibility to protect the money invested by its existing members.

St Francis Credit Union in Ennis currently has 19,500 members with over €30 million in loans and €92 million in assets.

Covering a large urban and rural area including Ennis and its environs – Tulla, Crusheen, Corofin and Barefield – St Francis is easily the largest credit union in Clare.

St Francis manager Louis Fay confirmed that in a minority of cases and when other reasonable means had failed, the union is obliged to recover as much money as possible from debtors through the courts.
Mr Fay revealed there has been a 19% drop in the number and 28% fall in the overall value of loan applications up to the end of last September compared to September 2011.

He said this was reflected in a general drop in the demand for its Christmas Saving Club, as consumers were saving more during the year, engaging in better financial planning and spending less.

He also expressed concern about the increase in the number of people using legal and illegal moneylenders in view of the fact that consumers must be obtaining credit from this source as the mainstream banks are lending very little to individuals.

Irish credit unions have registered 692 judgments on debts totalling €10.9 million so far this year. This compares with 687 judgments on debts of €11.6 million during the same period last year.

The average debt judgment registered by a credit union so far this year has been €15,800 compared with €16,900 last year.