The Minister for Justice and Equality, Alan Shatter, TD 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 Minister stated that "The draft Bill is in line both with the express commitment to reform contained in the Programme for Government and will fulfill this State’s obligation under the EU/IMF Programme of Financial Support for Ireland."
The General Scheme of the Bill will be furnished to the Joint Oireachtas Committee for Justice, Defence and Equality for their consideration. The views of the Committee will be sought by 1st March. Any submissions received by 1st March from interested parties will also be taken into consideration in the further development of the Bill by the Attorney Generals Office in consultation with the Department of Justice and Equality and the Department of Finance.
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 completion of the Bill will be subject to ongoing consultation with relevant Departments and the Attorney General. The Heads of the Bill which the Government approved yesterday will, of course, be subject to further refinement during the formal drafting stages in advance of publication.
Following the Bill’s publication on 30th April there will be a Second Stage debate in the Dail and a further opportunity for submissions. In making today’s announcement, the Minister stressed that the legislation in this area is complex and that "the Government recognises that no one has a monopoly of wisdom in relation to this." The Minister further stated that "serious consideration will be given to submissions received and to amendments later proposed."
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 Bill makes provision for the establishment of an Insolvency Service to operate the new non judicial insolvency arrangements.
The Minister said that the development of modern insolvency law is in line with the commitments in the Programme for Government. It will also fulfil his Department’s obligations in respect of implementation of the recommendations of the Inter-Departmental Working Group on Mortgage Arrears (Keane) Report of October 2011. That Report stated that "the early introduction of new judicial and non-judicial bankruptcy options is vital; but this is highly complex and will need to be properly resourced. Without effective bankruptcy legislation the mortgage arrears problem will not be resolved".
Minister Shatter further said "I am of the view that new personal insolvency laws, including the reform of our bankruptcy law, should provide a significant incentive for financial institutions to now better develop and implement realistic agreements to manage or settle debt with their customers".
The Minister noted that failure to agree a suitable non-judicial debt settlement between debtors and creditors will leave open the option of debt enforcement or judicial bankruptcy. Minister Shatter emphasised that the Personal Insolvency Bill is one of a number of measures recommended in the Keane Report. He stated that "further announcements will be made shortly in respect of other recommendations contained in the Keane Report by Ministerial colleagues."
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."Minister Noonan set out that today’s announcement is only one element of the Government’s strategy for dealing with mortgage arrears and significant work is underway on the other elements as set out in the accompanying documentation:"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."
The Scheme of the Bill will be available shortly on the Department of Justice and Equality website www.justice.ie