High Court figures show banks already laying off on debt enforcement

Banks were under considerable pressure this week to delay enforcement action against struggling debtors affected by the crisis. On Wednesday afternoon three-month moratoriums on mortgage payments were announced.

An analysis of official data, however, shows that financial institutions, including banks and so-called “vulture funds”, had in recent weeks already dramatically scaled back enforcement through High Court summary judgment actions.

Summary debt actions, where lenders seek an almost instant judgment against a borrower with no trial, are among the most aggressive collection tools in a lender’s armoury. An unsatisfied judgment gives a lender the right to seek to sequester even unsecured assets.

By this time last year, according to an Irish Times analysis of High Court data, banks and other debt holders had filed about 262 such debt actions. In 2020, however, the corresponding number is down 63 per cent to just 98 cases.

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In the first 19 days of March last year, lenders sought 62 summary judgments. So far in March 2020, that has dropped to just 27 cases.

The figures show that the slowdown was already apparent in the number of filings in January and February, suggesting that Covid-19 is not the only factor, and that a fear of a no-deal Brexit may also have played a role.

Since it became clear in recent weeks that coronavirus was going to harm the economy, banks have stepped back almost completely. Yet that probably is as much to do with the courts only dealing with priority cases as anything else.

AIB has filed only nine cases this month, with the most recent coming last Friday. Bank of Ireland has filed just a single summary debt case in March.

There have been two vulture fund summary cases filed this month, a complete reversal of last year when they were filing more than the banks.

The banks have eased off, but some others haven’t. For example, Dublin City Council was still filing summary debt cases against its creditors as recently as Monday of this week.