John Paul Phelan (Carlow-Kilkenny, Fine Gael)

I am also glad to have the opportunity to raise a few points on the Personal Insolvency Bill. I welcome the legislation and the efforts of the Minister and his officials in drafting it.

I heard much of the debate heretofore. There has been criticism that the Bill was slow in arriving. The nature of this legislation is such that it was bound to be difficult to draft. On the areas it reforms, some of the laws governing the areas of bankruptcy and insolvency predate the State and are certainly complex to resolve.

As a public representative, I am sure I am only one of 166 in this Chamber who have met constituents who find themselves in difficult financial situations arising out of the country's recent economic difficulties. In fact, in the year and a bit since I have become a Member, I have found it difficult to deal with the stressful situations in which these individuals and families find themselves. It is one of the aspects of being a public representative that one finds oneself from time to time having to act in the role of a counsellor who gives advice.

I have been struck by the number of couples and individuals who have come to my office and clinics moved to the point of tears and very frightened for their futures because of an inability to pay mortgage repayments, in particular, but also other debts. This is why I welcome the Bill, which completely transforms the systems that are currently in place with regard to resolving financial difficulties that families and individuals face. Much of the legislation is completely new. It contains proposals to reform the existing structures on bankruptcy, which is certainly long overdue and welcome, but it also sets out a whole new process of debt reconciliation which, if it is passed, will become the normal practice.

I want to ask the Minister about certain aspects of the Bill but I also want to acknowledge the difficult balancing act which he is trying to achieve. I have heard several Opposition speakers, both in the past and during this debate, suggest there is no bailout for individuals and families whereas there is a bailout for banks. In fact, the difficult balancing act in this legislation is between those people who are in financial distress and cannot legitimately meet their debts and those who might choose not to meet their debts. The fact is that in a situation where the State is a creditor and is now the major shareholder in many of our financial institutions, the writing off of debt has a direct impact on everyone. There can be no situation where there is an open chequebook for people who are in a position to meet their debt repayments in order to escape the legitimate charges they face. This legislation manges to strike that balance between those people who genuinely cannot pay and those who are opportunistically trying to avoid payment. In that regard, I welcome it.

I heard Deputy Ross's contributions to the debate a few days ago and again today. I point out that a significant number of creditors are not banks. It is equally important to state that not all mortgages entered into were bad arrangements and many were legitimately entered into by people at the time, although their circumstances may have changed. None the less, this does not mean people who entered into a mortgage can expect in the future to abrogate their responsibilities and they have a responsibility to live up to their mortgages. I myself am a mortgage holder and I know the difficulties that are attached to that.

It is interesting that some of the heaviest criticism of this Bill was from the Irish Banking Federation, which was not happy with the Minister's upper limit on personal insolvency arrangements, which I understand is €3 million.

I agree with Deputy O'Mahony in regard to some of the bad practices that crept into our banks in the past ten years in particular, an issue I raised as a Member of the other House. There was a period from, say, 2004 to 2008, where every four to six months I would personally receive a letter from my financial institution offering me €10,000 or €20,000 in an unsecured personal loan. I am sure many thousands of other customers of that institution used to get similar letters and I am sure many took up these opportunities for loans at the time. It is fair to say the financial institutions carry a large responsibility for those types of personal loan arrangements that people took on despite this money being unsolicited by the consumer. The banks cannot walk away from their responsibility in offering such facilities to their customers. I also agree with Deputy O'Mahony in regard to the point made by Deputy Durkan last week on penalties, compound interest and the possibility of putting people in even more difficult situations into the future.

One of the aspects of this legislation that is long overdue is the reform of the terms of bankruptcy. The attitude to bankruptcy is an issue that is particular to Ireland and perhaps the neighbouring island. Like many other Members, I have a significant number of family members, cousins and other relatives who live across the Atlantic in the United States. I was speaking recently to a second cousin who is in his second incarnation as a restaurateur in Florida, where he has a series of restaurants, although he went bankrupt in his previous existence as a restaurateur some ten years ago. There is a completely different attitude to bankruptcy in the United States which means that, if people fail and make an honest effort to repay and meet their debts, they are allowed to recover, get back into business and continue to have a life and prospects into the future. In this country, the old system of keeping people out of business for 12 years acted as a disincentive for people to get involved in business and was outdated, to say the least. This is why I welcome the fact this new three year provision is included in the legislation.

With regard to the new personal insolvency practitioners who are designated under the Bill, what type of individual does the Minister foresee filling these particularly important functions? These are the people who will be charged with drafting the settlement arrangements that are referred to in the legislation, which is a very important role as these people will bring forward the arrangements which will be voted on by creditors. I point out to Senator Ross that a veto is not just available to creditors but also to debtors, who will have the opportunity not to accept what is proposed by the personal insolvency practitioner.

I would like to ensure the fees that are charged by such practitioners are not exorbitant. Obviously, the people who are seeking to avail of the services of such practitioners are not in a position to pay huge fees for the service provided, and it would be important the provision of this service is not hugely costly in itself.

Those are the issues I wished to raise apart from those raised by other speakers. I welcome the introduction of the legislation and congratulate the Minister, who is by far the busiest member of the Government in terms of legislation within this area. This substantial legislation promises to overhaul completely the insolvency laws in this country and I welcome it wholeheartedly.

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