Michael Creed (Cork North West, Fine Gael)

I welcome the publication of the Personal Insolvency Bill. Rarely has legislation been so eagerly awaited not just by the political class but by the ordinary man on the street, if I can use the term, particularly those people struggling under a mountain of debt. It is understandable, given that it was promised in the programme for Government, that it has taken so long because it is extremely complex legislation, running to more than 120 pages, with 144 sections and a 27 page memorandum. It cross-references hundreds of pieces of legislation and it is unsurprising it has taken as long as it has to get to Second Stage.

I welcome the fact the Government saw fit to publish the heads of the Bill in draft format and the justice committee, of which I am a member, had an opportunity under the chairmanship of Deputy Stanton to engage in a constructive fashion with interest groups. They included representatives from the banks, which will be a major player in any debt resolution process, the legal profession, the free legal aid centres, the money advice and budgeting service and the Department of Social Protection. This cross-section of people have expertise that will need to be brought to bear in achieving an effective resolution to a complex and difficult problem faced by people.

In its report, the committee highlighted a number of areas of concern, with some taken on board. I am sure the Minister is open to reasonable and constructive proposals for amendment but it is interesting to see that from the speakers I have heard to date, across all shades of political opinion, there is a broad welcome for the Bill on Second Stage. The sooner we get to Committee Stage to examine the nuts and bolts of putting together effective legislation, the better. We should make haste slowly and effectively in that direction.

There is a critical point that must be made as everybody speaks about the thousands of mortgage holders - it may be 10% of them or more - who are in some form of difficulty with repayments. A very significant number of mortgage holders are struggling, with enormous personal and family sacrifice, to continue to pay their monthly mortgage. It is critical the banks do not seek to screw those compliant mortgage holders in an effort to balance what they will forgo as this legislation will inevitably lead to individual cases of debt write-down. It is interesting and we should be cognisant of that problem.

On the front page of a newspaper today there is a story concerning an internal memo from the AIB which indicated that debt write-down would not be countenanced at this stage in the mortgage resolution process. That flies in the face of the spirit of this legislation. There is no blanket proposal to write down mortgage debt but there is a process. In certain circumstances, where individuals are incapable of meeting mortgage repayments, there is a provision for write-down. There is the question of whether the banks have a veto on this personal insolvency arrangement as it applies to secured debt and, primarily, mortgages. Will they come to the table with clean hands and examine each individual case?

There will be a variety of different arrangements for different levels of debt as they relate to mortgages but it is inevitable there will be debt write-down in certain cases. The emergence of the internal memo from AIB today clearly demonstrates the battle which lies ahead, and the Minister will have to consider seriously whether the banks in which the State is a substantial shareholder - we essentially own AIB - will come to the table with clean hands. As I noted earlier, there is also the issue of the mortgage holders who are meeting repayments and whether they will be screwed to make up what the banks might lose on the other side with the provisions of this Bill. It would not be an acceptable outcome. The idea of "can't pay, won't pay" has been aired repeatedly, and a position might be engineered where people will ask why they should continue to struggle to make the monthly repayments if they are being screwed by the banks.

One of the other welcome aspects of the Bill as published is its holistic approach to debt. This is not just legislation for people with mortgage debt; it is much more comprehensive than that. That point came across repeatedly in the meetings held by the justice committee. There was no point in examining mortgage arrears in isolation and we had to consider all household debt, including credit union loans, credit card debt, car loans, hire-purchase agreements and loans for holidays or house building. The approach in the legislation for debt relief notices, debt settlement and personal insolvency arrangements is a good start, and although much detail has yet to be considered, there is a broad outline for how to proceed. It is a welcome roadmap.

I have concerns about the insolvency arrangements in our nearest neighbour and comparison with our proposals. It is a significant improvement on the existing arrangements requiring 12 years to discharge a person from bankruptcy, and we are proposing a three-year regime. We have seen high and low profile cases of bankruptcy tourism, with people leaving the country and travelling to the UK or Northern Ireland to have their bankruptcy and insolvency arrangements adjudicated in those courts, with the proceedings recognised here. There is a question of what consultation, if any, has taken place with the United Kingdom authorities about putting in place throughout the European Union a single arrangement for insolvency timeframes. That way either the rest of the European Union, including Ireland, could move to the UK model of 12 months or the United Kingdom could move to a three year model. Still, people will face a choice that could undermine the provisions of the Bill if they can discharge themselves from bankruptcy in the UK sooner. I am keen to hear the Minister tease out that issue in greater detail and outline any consultation he has had with the UK authorities. There have been cases in the United Kingdom in which the original bankruptcy arrangements, when contested, have been overturned because of a lack of appropriate information. We need to examine that issue.

The legislation should be as user-friendly as possible when it comes to court jurisdiction. As we go up the ladder of court arrangements from the District Court to the Circuit Court, to the High Court and to the Supreme Court, the complexity and costs involved accrue significantly. I am not interested in solicitor, barrister or accountant bashing, but we should make this as user-friendly as possible for the person in financial difficulty. This means using the lowest possible level of court jurisdiction. We should examine the arrangements for debt relief notices in the Circuit Court and other arrangements in the Bill to determine whether they are the most appropriate levels at which to address the problems.

We should consider the position of agents who will act on behalf of people also. The Money Advice and Budgeting Service has a significant reach in communities and those working for it have significant experience in handling issues and negotiating on behalf of clients in financial difficulties. I am not arguing for exclusivity, but it is important that the MABS is enabled to continue to act on behalf of persons with debt problems.

This is complex legislation and I welcome its publication. There is much work to do, but this is a welcome start. There is a broad welcome for the Bill and I look forward to working with the Minister and my colleagues to fine-tune the legislation which aims to serve the public.

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