Tom Barry (Cork East, Fine Gael)

I welcome the Bill. The issues of debt and bankruptcy have been examined for many years. The current bankruptcy period of 12 years is a lifetime and much too long. Unfortunately, it has taken the current hard times to have the matter addressed. The proposed bankruptcy period of three years makes much more sense than the current position. I welcome the proposal to have debt relief provided on the basis of knowledge rather than any form of favouritism.

I will focus on debt relief notices as they will affect more people than the debt settlement arrangements. The debt relief notices will be available to those with unsecured debt of less than €20,000 and will be provided in cases where people have a disposable income of €60 per month. All incomings and outgoings of a household will be assessed to arrive at their disposable income. The legislation provides that those who avail of a debt relief notice must be left with a reasonable standard of living. This is an important provision because it gets to the nub of the issue, namely, that many of the people we consider to be financially secure wake up every morning tormented by financial worries and a belief that they may not get through the following week or month. This is an extremely dangerous situation.

A debtor who wishes to avail of a debt relief notice must submit a written application, including a written declaration of all incomings and outgoings, to an approved intermediary who will go through the applicant's affairs in detail. The comprehensive and fair assessment process set out in the legislation will lead to the drawing up of a prescribed financial statement providing for a resolution for persons who do not have any prospect of clearing their debts within five years. This process allows people to see light at the end of the tunnel. This is the key element of the Bill because many individuals and families do not have hope and without hope, a solution is not possible. The co-operation of everyone involved is required for this process to succeed. I note the Bill provides for co-operation between the Revenue Commissioners and all Departments. This will ensure no one can cite a lack of co-operation among public service bodies as a reason for the process not being completed properly.

The debt relief notice process takes into account future changes in a person's circumstances. For example, if a person receives a gift of more than €500 or his or her income increases by more than €250 per month, half of the additional sum will be allocated to the insolvency service. If an individual who avails of a debt relief notice wishes to take out an additional loan, he or she must notify all relevant parties that he or she is in this process. There is no point foisting high cost options on people who can barely afford to put food on the table, and this process provides a low cost option for debt relief.

The debt settlement arrangements will apply to those with unsecured debt of more than €20,000. Under these arrangements, the debt will also be relieved within a five year timeframe. I commend the Minister on his approach to this issue because his Bill goes to the heart of the debt problem. Banks will be required to take a much more prudent approach to lending and to be cognisant of the legislation. They will not be able to railroad people. Instead, they will be required to deal with debtors properly with a view to rectifying the mistakes made by the debtor and bank. There are always two sides involved where debts arise. If the banks refuse to deal with people properly, the debtor may avail of the debt settlement option. This is a sensible means of getting everyone to work together.

I thank the Minister for giving this matter much time and consideration. People should read the Bill because in the years ahead people will recognise that it provided a basis for a comprehensive solution to the many problems people now face.

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