Regina Doherty (Meath East, Fine Gael)

I welcome the opportunity to speak on this long anticipated Bill. It provides for the reform of personal insolvency law and will introduce a number of new non-judicial debt resolution processes. It will provide a framework for people to start dealing with unsustainable debts in a structured manner and to start putting their lives back together. The legislation significantly reforms the insolvency regime and allows for more flexible ways of dealing with people with unsustainable debts and mortgages. As stated by the Minister, the legislation addresses the obligations of debtors and the rights of creditors in a proportionate and balanced way and it represents a radical overhaul and modernisation of Ireland's personal insolvency law.

With this legislation, the Government has put together a suite of solutions to personal insolvency and I commend the Minister and the Department on all the work involved in drafting it. The radical overhaul of Ireland's regime for personal debt insolvency is fundamental to the Government's strategy. As the Tánaiste stated recently, it is mammoth and ground-breaking legislation. The Government has put together effective solutions which people can understand and negotiate themselves, or have proper supports to guide them where appropriate.

The Bill has three main features. If bankruptcy is declared, the bankruptcy period is reduced from 12 years to three years; the possibility is created of having unsecured debt of up to €20,000 written off if one has a net disposable income of less than €60 per month and one's circumstances do not change over a period of five years; and a debt settlement arrangement is created for secured debt of up to €3 million. In addition, the Bill provides for the establishment of an insolvency service to operate the new arrangements. However, as the Minister stated, the Bill does not provide for an automatic writing off of negative equity, and where someone is in a position to service their mortgage they must continue to do so.

The issue of mortgage arrears has been one of the most pressing economic, social and human problems facing the country, with many at risk of losing their homes. According to Central Bank data, at present 773,420 private mortgage accounts are held in Ireland to a value of approximately €115 billion. A spokesperson from the Independent Mortgage Advisers Federation recently stated approximately 80,000 mortgage holders have fallen behind on at least three months of payments, not including a much greater number of people struggling to repay buy-to-let mortgages. According to some commentators, this could just be the tip of the iceberg. The Central Bank estimates the value of arrears has passed €1 billion for the first time, with the average size of the arrears just over €17,000 and the average loan amount outstanding €196,400. It is not surprising agencies such as FLAC and MABS have expressed concerns that not enough supports exist for people seeking legal advice. With the advent of this legislation there will be a surge in demand for their services which they will not be able to meet.

In May, the Financial Regulator stated banks need to examine other ways of dealing with the arrears, such as reducing the amount of debt owed. He was to meet each bank board to ask directors to focus personally on the arrears problems. Is it possible for these discussions with the banks to be taken into consideration?

All commentators are agreed this is a very detailed and well thought out Bill. Given this is such complex legislation, we need to ensure proper supports and infrastructure are in place so normal everyday ordinary people are able to negotiate their way around it to find the solution which is most appropriate to their circumstances. The scheme contains up to ten options. It has been estimated the cost of the services of intermediaries and legal practitioners will be between €3,500 and €4,000. I am concerned that people facing into a personal insolvency scheme will not have the financial resources to pay for such services. I welcome the inclusion in the Bill of details of a potential waiver for application fees. Hopefully, other costs will reflect individual personal circumstances. We do not need to preclude people from entering the process. Everyone has waited a long time for this legislation but it must come with the proper supports to make it function. We need to recognise this and to get it right.

I welcome the fact that the Bill contemplates the issuing of guidance, by way of codes of practice to be published by the insolvency service, regarding the mandatory requirements for the debt settlement arrangement, DSA, and personal insolvency agreement, PIA, proposals. These may include guidelines regarding the assessment of reasonable expenditure and essential income when determining what a debtor might need to enable him to maintain a reasonable standard of living. People want to resolve their debts, so let us help them do it with dignity and fairness. We must ensure that we rebalance the rights of the borrower and lender in a fairer manner. The proof of that will be in the pudding but this Bill makes a good start.

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