merrion street

Justice Minister Alan Shatter and Finance Minister Michael Noonan today announced that the Government has approved publication of the Heads of the Personal Insolvency Bill and his proposals for it’s drafting in final legislative form to provide a new approach to dealing with insolvency.

Making the announcement Minister Shatter said

In bringing forward this draft Bill the Government is delivering on a crucial promise made in the Programme for Government. The Bill will radically reform our insolvency legislation by prescribing new mechanisms for non judicial debt settlement in the public interest, in the interest of both debtors and creditors and, in particular, will assist those in unexpected difficulties as a result of the current fiscal, economic and employment conditions. When enacted this legislation will be one of the key legislative instruments for addressing the financial difficulties of general insolvency; mortgage debt and negative equity.

The finalisation of the Bill will be arranged on a priority basis, so that it can be published in full by end of April – in line with the revised commitment in the EU/IMF Programme of Financial Support.

The Minister said that the proposals for the reform of personal insolvency law will involve the introduction of the following new non-judicial debt settlement systems, subject to relevant conditions in each case:

• A Debt Relief Certificate to allow for the full write-off of qualifying unsecured debt up to €20,000, after a one-year moratorium period;

• a Debt Settlement Arrangement for the agreed settlement of unsecured debt of €20,001 and over;

• a Personal Insolvency Arrangement for the agreed settlement of both secured and unsecured debt of €20,001 and over.]

The Minister said that he will also continue the reform of the Bankruptcy Act 1988, begun in the Civil Law (miscellaneous Provisions) Act 2011. This will include, critically, the introduction of automatic discharge from bankruptcy, subject to certain conditions, after 3 years in place of the current 12 years.

The Minister for Finance welcomed this important step in assisting those in difficulty with their mortgage and debt commitments:

The Government is acutely aware of the financial stress that households are facing arising from difficulties in meeting their mortgage and loan commitments.

I have always stated that the introduction of a new Scheme of Personal Insolvency is a key step in addressing the mortgage arrears crisis. This Personal Insolvency scheme will rebalance the rights of the borrower and lender in a fairer manner.

The Minister added:

The Government is committed to assisting those who cannot pay their mortgage through carefully targeted measures. All of the measures on which we are working, including the Scheme of the Personal Insolvency Bill being announced today, are directed at those in need of assistance. In these difficult times, the taxpayer cannot be expected to provide assistance to those who can afford to pay their mortgages.

Minister Shatter spoke to MerrionStreet.ie.

Watch his comments below.