Catherine Byrne (Dublin South Central, Fine Gael)

I welcome the Bill and commend the Minister, Deputy Shatter, and the Minister for Finance, Deputy Noonan, and their Departments on the work they have done on this very important issue as the Government works to overhaul the law on bankruptcy and personal insolvency.

The issue of personal debt is one which is affecting a growing number of people in this country and this Bill will help people to deal with their debts without having to go through the courts. It also aims to help people to stay in their homes and to continue to rear their families, which is a very welcome step.

This Bill represents a lifeline for many people who have found themselves in debt which has consumed their daily lives. It will give them breathing space and allow them to live in their homes and, hopefully, resolve some of the day-to-day credit issues they may face. This legislation introduces three measures which aim to help those struggling with debt. One is a debt relief notice which would allow for the write off of unsecured debt up to €20,000A person who has debt of less than €20,000 will be able to look for a debt relief notice. MABS can act as an intermediary to assist with this process. The debt relief notice is in place for three years and during the three years, the debtor cannot be pursued by the creditor. The second is a debt settlement arrangement for the agreed settlement of unsecured debt over five years and the third is a personal insolvency arrangement for the agreed settlement of secured debt up to €3 million.

This Bill also sets up an independent body called the insolvency service to oversee the non-judicial system and it radically reforms the length of bankruptcy from 12 to three years. Does the Bill go far enough to help those people struggling with debts? Maybe it does or maybe it does not, but it is a start and a step in the right direction and it shows that this Government is committed to helping those in genuine need.

The instability of our banking sector over the past few years has resulted in banks not engaging with their customers and those who must borrow money. The Bill does not provide for an automatic writing off of negative equity. Where people are in a position to service their mortgages, they must continue to do so. Back in the boom times, banks fell over each other to lend money. They gave loans to many people whose ability to repay was not examined properly. Now, many of these people have lost their jobs or have had a reduction in their wages and simply cannot meet their repayments. They face mounting debt and feel utterly helpless. Meanwhile, the banks, for the most part, refuse to engage in any meaningful way with their customers to address their arrears. We heard an Opposition Deputy read a letter that was received by a constituent. How frightening it must be to have such a letter come through one's door.

Furthermore, I am very concerned at the refusal of some banks to pass on reductions in interest rates to their customers. Last week, the European Central Bank cut interest rates by a quarter of a percentage point to 0.75%, a record low. However, customers of many Irish banks will not benefit from this, which is not acceptable. AIB-EBS has refused to pass on this cut, which is a huge blow to their customers who are already struggling. I am also concerned that the banks are reluctant to lend even small amounts that could make life easier for many people, particularly owners of small businesses.

As a housewife, I see a sign of the times when I go shopping at the weekend and notice other people's shopping trolleys. Shoppers are now very focused on what they put in their trolleys, which is sure sign that they are watching what they are spending and do not have the same amount of money as previously.

Last week the Irish League of Credit Unions published its findings on how families are struggling to survive on a low income. Many families have just €100 to live on after they pay all their bills, and rely on family and friends to help them out. The credit union report found that 40% of those surveyed are borrowing to pay household bills, with 10% turning to moneylenders for extra cash. This highlights a worrying trend, where more and more people are turning to moneylenders to help them get by. Many of those who go to moneylenders may not have a bank account, or even be welcome in a bank, and may feel they have no other option to get some extra cash. If they cannot get money from friends or family they turn to moneylenders. However, the consequences of this can be very serious.

There are now more than 40 licensed moneylenders operating here, with countless others operating illegally. They charge interest rates of up to 190%, leaving it almost impossible for people successfully to keep up repayments. These unscrupulous lenders operate a door-to-door policy for repayments, which can lead to a feeling of intimidation. I have witnessed this doorstep intimidation many times in my constituency. This approach means borrowers get themselves into even more debt and borrowing from a moneylender is their only option.

Besides the enactment of the Bill, I would like to see two things to happen. First, credit unions need to look at their own lending practices. Credit unions have traditionally been the people's bank and they must continue to carry out this function. I am frequently contacted by people in my constituency who have trouble getting even a small loan from any traditional source, and this needs to be addressed. Second, I call on the Central Bank to look at the need for regulation of moneylenders. They are currently required to display their high interest rates, under the provisions of the consumer protection code for licensed moneylenders, but there is no cap on the interest rates they can charge. This, effectively, means they are charging what they like.

Illegal money lenders are charging huge interest rates. Many of them follow their borrowers to the local post office on the day children's allowance or other social welfare payments are paid and wait outside to be handed their money. I have witnessed this.

We are living in a very difficult time, but a little more compassion from our banks and other agencies would help people to lighten their burden and help them through the dark tunnel they are in at present.

Many young people are suffering huge stress. Some days ago, Deputy Dan Neville spoke about the incidence of suicide among young people and the growing concern about suicide among young people who are in terrible debt, particularly in mortgage arrears. Every life is precious, but for many people the only way out of their struggle, particularly with debt, is to take their own life. This is a sad reflection on where we have come to. We may be a high-tech country with jobs in high-tech companies but our young people and how they deal with stress on a daily basis is most important. I hope we will continue to identify with people who are struggling, who have lost their jobs and, above all, who feel the only end in sight it to take their lives.

I commend the Bill to the House.

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