Seán Kyne (Galway West, Fine Gael)

I am delighted to have an opportunity to speak on the Personal Insolvency Bill, which is radical legislation dealing with an area of Irish law which has urgently needed reform for many years. Regrettably, over-indebtedness, bankruptcy and insolvency have grown exponentially in recent years as the effects of the global financial crisis trickle down to individual level. The ideal opportunity to reform this area of law, much of which has remained the same for several decades, was during the economically successful years when far fewer individuals required such assistance. So out of touch with reality was our insolvency legislation that external experts insisted in including this reform in our EU-IMF agreement.

I commend the Minister, Deputy Shatter, for confronting this issue head on, first with the Civil Law (Miscellaneous Provisions) Act 2011 and now with the comprehensive Personal Insolvency Bill. I commend other stakeholders such as the Law Reform Commission, the free legal advice centres and the Money Advice and Budgetary Service, MABS, for conducting very helpful analysis in this area and for making clear, meaningful and citizen-centred recommendations and observations. We must never lose sight of the fact this issue concerns citizens and families who, for whatever reason, find themselves burdened with insurmountable debt which negatively affect all areas of life, from health to family to work. It is to no one's benefit for fellow citizens to endure such pressures and strains.

A positive measure contained in the Bill is the removal of many debt-related matters from a court setting. By all means it is appropriate for the court to play a role such as that required in the approval of arrangements or orders, but non-judicial alternatives would be more beneficial, particularly for over-indebted citizens already in a vulnerable position. I am certain the creation of an independent insolvency service, to be headed by a director and staffed to monitor insolvency arrangements, consider applications for debt relief notices and provide information to the public, will prove constructive. I am less optimistic about the function which permits the service to authorise approved intermediaries and personal insolvency practitioners. A greater detail of focus is needed here. Some commentators on the issue of insolvency and debt relief warn against the creation of a cheats' charter which would enable dishonest individuals evade their financial responsibilities. Greater vigilance will be required if we are to prevent an industry from springing up whose sole purpose is to profit from the financial woes of others.

We have an excellent world-class debt advice and information service in MABS, provided by the State on a non-profit citizen-centred basis. Citizens trust and respect MABS and other bodies such as the free legal advice centres for impartial advice and assistance. I know from the information provided by the Department that the regulation of approved intermediaries will be developed on Committee and Report Stages and I agree fully with the sentiments expressed which view this section as key to the success of the Personal Insolvency Bill.

To those who unkindly comment that some of the reforms contained in the Bill will facilitate the evasion of personal financial responsibilities, I draw their attention to the many measures which pertain to the three main voluntary debt settlement arrangements. Each arrangement, namely, the debt relief notice, the debt settlement arrangement and the personal insolvency arrangement, is specifically designed to assist citizens with various levels of over-indebtedness. The debt relief notice, which facilitates a debt write-off of up to €20,000, contains requirements that a person be unable to pay his or her debts as they fall due and have no prospect of being able to meet these debts. It is a low-cost alternative to bankruptcy which will be in reach of citizens for whom the existing bankruptcy law is of no help. I am confident a debt relief notice would provide a person with the necessary breathing space to solve financial problems and become debt free while also enabling that person to make contributions to paying off existing debt if his or her circumstances should change for the better.

The debt settlement arrangement, which is for larger and longer term unsecured debt, contains innovative and helpful features. One such feature is the protective certificate which, to my mind, is almost like examinership, not for businesses but for citizens. I must concur with some stakeholders who noted the 65% approval rate required from creditors constitutes a veto over the debt settlement arrangement process, but I also believe a majority of creditors will realise there is almost nothing positive to be gained from pursuing through the courts an overly indebted person who is struggling. The exclusion of certain debts, such as taxes, Government charges, domestic maintenance and the protection of the principal private residence, proves that safeguards exist so the Bill assists and helps honest citizens. The personal insolvency arrangements will prove helpful for debts involving property or other large assets and may prove a less judicially focused more co-operative alternative to bankruptcy.

The Bill will provide further clarification in certain areas, the reforms so desperately needed in this area of Irish law and relief to citizens struggling with the burden of debt. It represents the concrete fulfilment of a commitment contained in the programme for Government for national recovery agreed by the coalition partners. It recognises implicitly that any national recovery will be dependent on the collective individual recovery of our over-indebted citizens.

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