Feargal Quinn (Independent)

I was unsure whether I had done something wrong.

The 12 year term for bankruptcy is longer than many jail terms handed down for manslaughter. According to the Free Legal Advice Centre, 276 people were imprisoned last year, some of them twice, on foot of non-payment of civil debt court orders.

The jump in the number of people being imprisoned is worrying and I assume it is due to the recession. Between January 2009 and the end of October 2009, 3,366 people were imprisoned, an increase of over 50% on the total figure for 2008.

We have a great need for this Bill but concerns arise that it does not go far enough. The recommendations of the Law Reform Commission need to be taken on board in a number of areas. The commission made 122 provisional recommendations for reform. It proposed the establishment of a central debt enforcement office that would divert most cases away from the courts to provide cheaper and quicker non-judicial debt settlements through the attachment of earnings. In Finland, where fines are linked to income, one businessman was fined €250,000 for speeding on his motorbike. The commission distinguished between individuals who will not pay and those who cannot pay, with the former remaining exposed to imprisonment. It is estimated that approximately 2,000 prison places could be freed in our prisons if such proposals were implemented.

I am disappointed there are no proposals to end the practice whereby people can be imprisoned for the non-payment of civil debt despite calls from the UN Human Rights Committee to end it. Perhaps we should also consider giving people the opportunity to repay some of their debts with moneys that are otherwise tied up in pension funds. Pension savers must be at least 50 years old before they can touch their funds, thus denying them a valuable asset that could help to dig them out of debt. Brendan Burgess, founder of the consumer finance website, www.askaboutmoney.com, and a member of the Government's expert group on indebtedness, believes pensions should form part of a deal with creditors. He has stated that participants in debt settlement schemes:

should not be able to benefit from a substantial write-off of their debts while they have a valuable pension fund asset...they should stop contributing so that the borrower has more funds available to pay their debts...If a debtor has a defined contribution pension scheme, then the fund should be available to pay off any creditors as part of the scheme.

It is worthwhile to examine the accessibility of pension funds when it comes to tackling debt restructuring.

We should also consider how the Irish Credit Bureau reports borrowers' payment histories in terms of only indicating payments made on time or missed. It could be described as a very inflexible system because there is little scope for grey areas, such as partial payments or those who were late by a few days. This has serious consequences for rescheduling debts, even with the agreement of creditors, because credit files will treat the debtor as being in default. This black mark stays on their files for five years. We desperately need a system whereby restructured payments are classed as such by the Irish Credit Bureau rather than treated as defaults and arrears.

At the same time, we have to reconsider at our approach to bankruptcy. If one is declared bankrupt, the restrictions applied become a millstone around one's neck for the next 12 years. In England and Wales, one can be in bankruptcy for as little as 12 months. If Alan Sugar and Donald Trump had gone bankrupt in Ireland, they would not have been in a position to create new businesses, take new risks or succeed on a larger scale. F.W. Woolworth went bankrupt three times before he succeeded in building up his empire. We have to give people at least some chance of getting out of bankruptcy and, perhaps, paying their debts at a later stage.

The Irish Penal Reform Trust has made several observations on the Bill which need to be considered in the context of its later Stages. For example, section 12(b), refers to the aggregate value of all property, whether real or personal. I agree that the estimated value of property should be assessed together with the potential for sale in the prevailing real estate market.

What is certain is that most people are willing to pay personal fines and debts, provided due account is taken of their financial circumstances. Society will benefit and the State will save money if we take the first steps in overhauling our debt enforcement procedures with this Bill. I commend the Bill to the House and I am sure it will be accepted by all Senators. However, it will be worthwhile to scrutinise it further on Committee Stage with a view to improving it and ensuring it addresses the concerns raised today.