Law review considers jail time for bad debtors

Members of the public who refuse to settle their debts - even ignoring Court orders - could be jailed.

That's the gist of a review being undertaken by the Samoa Law Reform Commission (S.L.R.C.).

The Judgement Summonses Act (J.S.A.) 1965 gives the scenarios in which someone can be put in jail if they refuse to pay their debts. 

It is a “last resort for problem debtors”, who despite Court judgments, repeatedly avoid making repayments to their creditors.

In November last year, the Police expressed concern that the Judgement Summonses Act is causing “unnecessary congestion in the judicial system", and asked the S.L.R.C. to review it.

Petty, but nonetheless owed amounts were resulting in arrests which Police say are “exhausting limited Police and Corrections resources in enforcing civil contracts".

The Commission is undertaking a stakeholder review before a public consultation, in which views on the appropriate penalty for “persistent unwillingness towards payment of a debt" will be collated. 

The question — on whether prison time should remain in the Act and whether court bailiffs and the Police should be required to help execute arrest warrants — will also be put forward for discussion.

The Commission will also seek views on whether imprisonment should not cancel the debt or deprive creditors from having the option to claim their loan against land, goods or chattels of the debtor.

The Judgement Summonses Act sets out the process by which the Courts can support lenders to get their money from borrowers back.

At first, they can apply for a Court judgement or order to recover the debt. But if it is not repaid, the creditor can apply to the Registrar for a summons — which is an order for the debtor to appear before the judge.

When the debtor appears before the bench, they can explain to the judge why they haven’t paid up and the judge will order them to repay their debt either in installations or all at once. If the debt still is not paid in the prescribed time, the creditor can ask the registrar to issue a warrant of committal – arrest. 

While arrest and time in prison would not remove the debt. They still owe the money and are still expected to pay it back.

In its review discussion paper, the Commission states that judgement creditors spend a lot of time and money chasing up bad borrowers. Some cases are referred to mediation and according to the Commission, most debtors do not comply with repayment agreements made in mediation, even in some cases where the debt value is reduced.

Debtor families plead for leniency and some debtors are imprisoned multiple times in this process.And at every stage, the creditor is paying court filing fees.

“Some judgement creditors have actually given up after the judgement debtor is committed to prison more than two times and still does not pay,” the review states.

Prison terms should not exceed six months, and prisoners should be released if their debt is paid sooner than their sentence. 

Only debtors who fall under the exceptions of the J.S.A are liable to be imprisoned. The "general rule" is that there should be no imprisonment for defaulting on payments.

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