Kieran O'Donnell (Limerick City, Fine Gael)

I compliment the Minister on this substantial body of legislation which runs to almost 120 pages. It is comprehensive in nature, but it comes from a simple, threefold premise: first, bankruptcy is a measure of last resort; second, it relates to people who are unable to pay as distinct from those who will not pay; and, third, every effort should be made to ensure people remain in their homes.

The legislation on debt settlement arrangements has three tools: first, a debt relief notice for unsecured debt of less than €20,000; second, a debt settlement arrangement for unsecured debt greater than €20,000; and, third, personal insolvency arrangements for an agreed settlement of secured debt up to €3 million and for unsecured debt. There are bankruptcy arrangements also, but they are seen as a measure of last resort. There will be considerable reform of the bankruptcy laws. Up until now, the period has been for 12 years, but it will be reduced to three. I welcome this change. The Bill strikes the right balance. It deals with the issue of personal debt but in a way that is fair and structured.

It is welcome that the Minister will set up the Insolvency Service of Ireland which will be an over-arching body to deal with debt relief notices, debt settlement arrangements and personal insolvency arrangements. Members will be aware from meeting people when out and about and in their constituency clinics - certainly it is the case in Limerick - that ordinary people are under considerable pressure with unsecured debt, including credit card debt and small loans, and secured debt, including mortgages. There is a need to put in place an arrangement, whereby people will be able to access the service. An advisory service will be set up also. This will serve to take away the taboo of tackling debt. People will have to be able to access the service in a relatively straightforward fashion and there should not be a perception that this measure is only for the elite; the ordinary person on the street should be able to access the service.

It is welcome that the MABS will be involved in dealing with debt relief notices, as it carries out admirable work. We all deal with it on a daily basis. It has a good approach to dealing with people. The process will involve it dealing with debt relief notices for unsecured debt of less than €20,000. Personal insolvency practitioners will be appointed for debt settlement arrangements which relate to unsecured debt of greater than €20,000 and for personal insolvency arrangements for secured debt of up to €3 million and other unsecured debt. It is important that the personal insolvency practitioner will be appointed by the borrower. The practitioner will be able to apply to get up to 70 days protection, similar to the examinership arrangements in place, and pursue arrangements involving the agreement of both parties on behalf of the borrower.

The Bill provides for a protection period and arrangements to be put in place to bring people back to solvency and deal with their affairs. When the Bill reaches Committee Stage, it will be important to consider the matter of how insolvency practitioners are paid. It is important that this process be transparent and that there be a flat rate fee for work done, like any other work. I have no wish to see payment as a percentage of the amount of money involved. We must get something that will work and these arrangements will work.

As issues arise, they will be discussed on Committee Stage. The process should be seen to be transparent and, above all, fair. The key point of the legislation is to strike the fine balance between the requirements of the borrower and the lender. Whether it is the reality, there is at least a perception among borrowers that, to a certain extent, the power lies with the financial institutions. This legislation goes a long way to redress that imbalance. I am keen to see this operating in practice in such a way that the institutions realise that they must work with people to try to restructure loans. If institutions are unwilling to do so, people have recourse elsewhere. Many people on low incomes or with limited means will have debts of less than €20,000. They should be able to apply for a debt relief notice and the legislation should ensure the financial institutions will deal with them in a constructive way. Following a three year period they will be discharged from their debts.

The debt settlement arrangement entails a five-year period. It is more structured and is for loans greater than €20,000. The position of director of the insolvency service has already been advertised, which I welcome because it shows intent on the part of the Government.

As a politician who deals with people on the ground, and having been a chartered accountant for many years and having dealt with people with debt problems, I discovered it is important that people realise the extent of their debts and that there is a way out. This legislation provides a road map. Ultimately, if one must opt for a measure of last resort, one will, within a three-year period, be out of the bankruptcy process. One must realise there is a way out.

The banks must realise they ought to play their part. Some €64 billion in taxpayers' money has gone into the banks through no fault of the ordinary taxpayer. The banks must realise that what is good for the borrowers is good for the banks. The banks must not operate in a silo and solely look after their own interests. I hope that when the new service is up and running, ordinary people, when sitting at home at night, will be able to turn to each other and say there is a way out of their debt problem such that they can return to solvency and resume their normal lives.

I very much welcome this legislation. It is a credit to the Minister and his staff. I look forward to Committee Stage because I have no doubt there will be much discussion thereon. This is a proactive, strong and welcome measure that deals with the issues of ordinary people. It will allow them to tackle their debts so they can resume their normal lives and return to solvency.

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