Mr. Ross Maguire:

I thank the joint committee for giving me the opportunity to make a presentation to it. New Beginning believes that, at least in principle, the structures are in place to facilitate the working-out of a solution to this problem, whether it be through the code, the Personal Insolvency Act 2012, the Bankruptcy Act 1988 or section 2 of the new Land and Conveyancing Law Reform Act 2013, on which we worked with Deputy Stephen S. Donnelly. The difficulty is - it cannot be underestimated - that waiting for banks to provide solutions is not the way to proceed anymore. Debtors need to understand what is available to them. In that regard, New Beginning has embarked on a national tour and will have visited every county in Ireland by the end of next week. The idea in this regard is to make known to ordinary people the solutions available thanks to the introduction of the 2012 Act and, most importantly, the new bankruptcy laws. I will deal with the issue of bankruptcy.

Negotiation is the first step available via the MARP process. The problem with this is that it is a completely opaque system. As previous speakers pointed out, there is no transparency with regard to the criteria the banks apply. In addition, some of these criteria are deeply unfair. If, for example, one is in positive equity, one simply cannot obtain a deal. The person living next door, however, who happened to purchase his or her home a few years later and is in negative equity will get a deal. We are concerned about the lack of transparency because it leads to resentment on the part of those who do not obtain deals. It can also lead to resentment on the part of the community in general who are, in the case of banks such as AIB, financing these deals. For those who have business with a number of banks or debts with various parties, it is impossible to put everyone in the same room together in an informal sense. We have grave concerns about transparency and recognise that in the case of multiple creditors, informal deals are almost impossible.

The next part of the process involves the insolvency system. While the take-up has been low thus far, international comparisons show that this is to be expected. One would expect the rate to spike later this year and into 2015. The idea behind the system is that one puts creditors in a room and forces them to agree to debt restructuring. The question which arises is why would a creditor agree to such debt restructuring? Why is it that over 94% of individual voluntary arrangements, IVAs, arrived at in the United Kingdom are accepted, particularly when, in the context of a standard IVA, one would expect a 70% or even greater write-down of unsecured debts? The reason for this is the existence in Britain of a benign bankruptcy law. While our laws are not quite as benign, they are sufficiently so to allow people to start to put pressure on banks. People must understand that, for all its disadvantages, bankruptcy means that all of one's debts are written off in a moment and that one can start again there and then. It is, therefore, a reboot. It is not the case that everyone must go bankrupt. However, it is a card that people now have at their disposal. Their having it fundamentally changes the negotiation process involving creditors. It is important that people understand what is involved.

What are the negatives in bankruptcy? People say there is a stigma attaching to it. We just need to get over this in this country. People here have faced a perfect storm. On the one hand, there has been an enormous recession and the collapse of real estate prices, while, on the other, the fact that we are in the eurozone means that our debts have not deflated as they would have done if we still had our own currency. The other aspect is that we have not had our own insolvency system up until now. As a result, there was no way out. The position in this regard has now changed and we hope this will force the banks to do the deals they ought to have been doing in 2008. The other concern people have with regard to bankruptcy relates to the family home. The assignee has repeatedly stated he does not want to sell family homes in bankruptcy. He has indicated that he will do so if he has to do so, but in reality the houses in question were going to be lost. In many cases, family homes will not necessarily be lost in bankruptcy.

Bankruptcy does not make any difference in the context of employment, unless one is a pharmacist or an auctioneer. It is bizarre that if one is bankrupt, one cannot be a pharmacist, but one can be a doctor and that one cannot be an auctioneer, but one can be a solicitor. There are some anomalies in the system and I understand legislation is going through the Houses to facilitate people who are bankrupt and want to run in Dáil elections. That makes sense because we need to get over the stigma attaching to bankruptcy. Many people, small business owners and the like, have been obliged to put up with this nightmare for the past five years. For them, bankruptcy has no downside in the context of employment. At the height of the crisis in the United Kingdom in 2008, there were 70,000 bankruptcies. In Ireland last year the figure for bankruptcies stood somewhere in the mid-40s. I inform people that Abraham Lincoln, Walt Disney and Donald Trump who recently visited Ireland in order to purchase the golf resort at Doonbeg were all bankrupts at one point. We need to get over our difficulties with bankruptcy. That, in my respectful submission to the committee, would have the effect of forcing through the deals which need to be done.