Brendan Ryan (Dublin North, Labour)

Thank you, a Cheann Comhairle, for the opportunity to speak on this most important Bill. I welcome its publication Bill. It is radical legislation which, if passed as it is designed, will overhaul our laws on personal insolvency and bankruptcy.

The destruction of our economy by the previous Government laid bare numerous underlying faults and flaws in the economic, political, societal and legal structure of our State. Two such faults were the lack of regulation of our banking sector and in our building regime.

Toxic lending to young people to buy poorly built homes is a double tragedy affecting thousands of people all over the country. This was brought to a head when the economy collapsed and unemployment soared. People were suddenly faced with loans they were struggling to meet and mortgages they were unable to pay. Our bankruptcy laws were totally inadequate to deal with the sudden onset of the mortgage crisis.

The Personal Insolvency Bill is a strong example of the Labour Party delivering on its promises to tackle mortgage debt reform. Reform and fairness formed two pillars of our general election campaign and the Bill looks to deliver elements of both. The Bill provides workable solutions for individuals and families struggling to restructure some of their debts. There will be options to allow for people to remain in their homes or move to smaller more affordable alternatives. For the first time since the economic collapse, distressed home owners will be able to see at least some light at the end of the tunnel.

The three voluntary debt settlements created by this Bill, the debt relief notices, debt settlement arrangements and the personal insolvency arrangements, will provide mechanisms for people to relieve themselves from different levels of unpayable debt. The processes for each arrangement will not be easy but they will be manageable. This is not blanket debt forgiveness; it is debt settlement and relief. It is designed for people who are making every effort to meet their debt requirements but through no fault of their own are unable to do so. For the first time the relationship between the borrower and the bank will be rebalanced towards the borrower. This is a big shift for which the Labour Party has fought over many years.

The reduction of the period of bankruptcy from 12 to three years is a long overdue and most welcome change. The 12 year period was outdated and represented a severe punishment for bankruptcy by EU standards. A three year period demonstrates progressive reform and is a much fairer timescale.

However, the Bill must not be viewed as an isolated approach to our mortgage crisis. The Minister of State at the Department of the Environment, Community and Local Government, Deputy Jan O'Sullivan, announced recently that the mortgage-to-rent scheme is to be rolled out nationally. This scheme allows people to arrange for local authorities to purchase their homes from the bank at the current market rate while they continue to live in it as tenants of the council. This is another progressive step by the Government in dealing with the mortgage crisis. However, the road is long and we have many obstacles to overcome. The Personal Insolvency Bill 2012 is a big step in the right direction but it is not the answer in and of itself. The Government will need to monitor its application in practice. If issues need to be addressed in the application of the Bill, we need to be swift and decisive in addressing them.

That said, this Bill is a game changer for bankruptcy law and personal insolvency in Ireland. Its success will be predicated on an open, honest and constructive engagement between borrower and lender. It is incumbent on all of us in this House to ensure that borrowers engage with lenders in this manner. If they do so, this Bill has the potential to be a big step on the road out of our current mortgage crisis.

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