John Lyons (Dublin North West, Labour)

I welcome the opportunity to contribute to the debate on this legislation. I congratulate the Minister and his staff on their work on this Bill, which is clearly a detailed piece of legislation. I appreciate the time and effort that went into producing it.

I wish to talk about the unsustainable debt burden in our society at present and the impact it is having on individuals, their families and society. I will also talk about some aspects of this Bill, particularly the non-judicial elements and the impact they will have. The Bill is long overdue. The current legislation relating to bankruptcy and discharging people of their debts is woefully out of date and unsuitable for the challenges we face today. As we know the primary problem in Ireland relates to debt taken on at a time when people believed our economic prosperity would always guarantee their ability to pay their debts.

While listening to some of the previous speakers I was reminded that I am one of those people. I am 35 and most of my 20s were in the first decade of the 21st century. Along with the rest of my friends with whom I grew up, we were told we must be mad not to have a house. I believe one former Deputy said one would even be suicidal not to buy a house at that particular time. Most of us bought into that, which highlights that previous administrations and the current Administration have not done anything about offering an alternative to private accommodation. We really need to revisit the issue of social housing for people. Regardless of whether we like it, we bought into this bubble and I was one of those as were most of my friends. The reality is that those people do not go out at weekends, they are counting their pennies, they do not have fancy holidays, they shop in the places they will get the cheapest groceries and are barely making ends meet. They have enough to pay to go to work. I admire those who go out to work albeit just to pay to stay alive as opposed to live. That is what that bubble caused to people of my generation.

The crippling financial effects of unemployment and failed businesses have stranded many people in situations they never imagined they would face. Other problems relating to debt have arisen through changed family situations or illness. The majority of people who took on debt that is no longer sustainable were those with mortgages on a family home and whose situations have drastically changed. These people now need guidance and help to deal with their financial situations.

The scale of the problem is immense. My figures differ somewhat from those outlined by Deputy Ó Caoláin. I am not sure whose are right but I believe mine are quite accurate. At the end of March, 77,630 mortgages representing 10.2% of all mortgages were in arrears of more than 90 days. That means that approximately 90% of people are paying their mortgages on time. However, I imagine that a significant number of those people are struggling to pay it on time. The number of accounts that were in arrears of more than 180 days was 59,437 at end of March 2012, equivalent to 7.8% of the total stock. Some of these people will be able to work through their debts, but many will not. Debt in Irish society has always had a certain shame attached to it but these people now need guidance and help to deal with their financial situations - they do not need judgment. That means responsible legislation that gives people a workable solution to their affairs.

The Bill and the non-judicial debt resolution measures it will introduce are very welcome in bringing forward these workable solutions. Through options such as a debt relief notice, debt settlement agreements and personal insolvency agreements, these people will now have options for their individual situations. The independent insolvency service to be set up will provide guidance and oversee the non-judicial personal insolvency system. While welcoming these new debt resolution means and in particular the non-judicial ones, it is important not to represent these as easy options for people to avail of. None of these processes should be viewed as anything other than a last option. There are no guaranteed outcomes and creditors will still have a large say in the process. Much will be learned from how these processes are implemented in practice. For instance, it will be interesting to see what is decided as a "reasonable standard of living" in allocating a debtor's income.

It is important that people with unsustainable debts will have options and guidance and the role of the insolvency service will be telling here. I hope the service is adequately staffed and funded to meet this challenge given the scale of the problem. On the issue of resources, MABS, for example, received more than 7,657 helpline calls in the first quarter of 2012. These calls ranged from personal debt and mortgages to difficulties with bills. Not all these people required follow-up help but they indicate the scale of difficulty with financial matters that exists. People come to Deputies every week to talk about their financial situation. They are not looking to easily offload their issues. It takes considerable courage to come and talk to somebody about personal issues. They are explaining that they are in a situation about which they are embarrassed to talk but are making the effort to do so. People who are genuinely in very difficult situations should not be ashamed and I hope they will use the services that the legislation will introduce. Many people have postponed seeking solutions for their debts in anticipation of this legislation so I ask the Minister to pay particular attention to this issue. I believe that more people will use these services than the number of people who have already contacted MABS.

Some commentators have said that this legislation will encourage more entrepreneurial behaviour as it means people will not be tied to their debts for life if a business is unsuccessful. While I accept this point, where business debts are not paid small creditors and businesses also lose out. We must remember that debt relief is not always victimless.

With debt settlement agreements it is important that certain types of debt are excluded in principle without the consent of the creditor. I am thinking in particular of taxes, levies and management company fees. I have found through advising and assisting management companies in my own constituency that where people have difficulty paying their fees, their management companies by and large are usually accommodating in arranging payment plans. As all residents depend on the shared payment of services and necessities, such as insurance and waste, it is important that these fees are not included. These are important points in the context of the debate we are having.

The focus of the solutions as they work themselves out should be to keep people in their homes wherever possible. This has been the focus of some of the Keane report measures already implemented such as the mortgage to let scheme and the same principle should be followed here. If families lose their homes as a result of an insolvency process, the knock-on effects on their lives in terms of disruption to children in school and other factors could be enormous. As I mentioned earlier, we simply do not have the social housing stock to accommodate people displaced from their homes. Keeping people in their homes must be the focus of the solution to unsustainable debt where possible.

I welcome this legislation. I welcome any Bill that seeks to remove the burden of unsustainable debt from people's shoulders. I also welcome that the Oireachtas will have oversight of the insolvency service. We will learn much about the finer points of the Bill as it passes through the House and as it is tested in practice but I welcome it and I thank the Minister for introducing it. While many Deputies have already spoken on this debate and more will do so, some are saying that the Bill does not go far enough. Unfortunately, no Bill will go far enough to deal with the reality of everybody's situation. However, our hope is that it will go far enough to deal with those who are most burdened in order to allow them to live again.

See this speech in context