John Halligan (Waterford, Independent)

Any measure which can bring relief to people who have found themselves in an impossible position because of mounting debts and reduced capacity to pay is progressive. However, there are a number of elements in the Bill which must be amended if we are to put in place measures effective enough to move away from our punitive way of dealing with debt and give people the opportunity of a fresh start in life.

The latest figures indicate that 79,712 mortgages are subject to restructuring plans while 961 homes were in the process of repossession in the first quarter of this year alone. The Irish League of Credit Unions has estimated that 1.8 million people are left with less than €100 a month to live on after paying essential bills. These realities must be made clear to banks and mortgage providers. It is the duty of the Government, and all of us as legislators, to force the State-owned banks to pass on any cuts in interest rates to help struggling mortgage holders.

The fact that this legislation affords banks or other lenders a potential veto on any debt settlement arrangement or personal insolvency arrangement will make the Bill meaningless to many people. A submission on the Bill by the Society of St. Vincent de Paul confirmed that many of the households due to access the arrangements as proposed in the draft legislation already live on inadequate incomes and face considerable household budgeting pressure. It is its view, and mine, that corrupt bankers destroyed this country and now they are being allowed to decide whether people can go bankrupt. That is exactly what it means. People feel utterly betrayed because the Government let the unsecured Irish bondholders write their own rules and now the banks are practically writing their own rules. Nothing has changed, therefore, in the minds of hundreds of thousands of people who are dealing with banks and credit institutions across the country. It would be morally wrong to allow this veto while the banks' collection officers are going around the country shaming, harassing and intimidating unfortunate families out of their last few euro because their own underwriters recklessly dished out unsustainable and non-stress-tested, commission-driven loans. My concern is that the new legislation will lead to more aggressive pursuit of householders in mortgage arrears by lending institutions.

The Minister should be aware that this is happening. I refer him to comments made last week by the Minister for Finance, Deputy Noonan, who rightly stated that we cannot trust or believe the banks. I am dealing with instances in which the banks are hounding people. Is the Minister aware that they are ringing people after 9 p.m.? Does he know that they are threatening and hounding people out of their homes? The Minister should not let them tell him otherwise. I outlined an instance in the House recently, which I will repeat. A young girl finished her shift in a factory in Waterford at 8.30 a.m., following which she came into my office with her father. As she was in arrears for two months - she had already taken a 30% cut in her income - the bank was threatening to repossess her house. That did not happen four or five years ago; it happened last week. People had better cop on that the banks and lending institutions are not listening to what the Minister is saying. I know what I am talking about from the many bankers I know and my other connections. They are making their representatives and the workers in the banks engage in such practices.

Ultimately, this veto could result in lenders' rejecting viable alternative arrangements in favour of more costly, court-based bankruptcy proceedings. I am open to being proven wrong in that regard but in the next few years we will see what the banks intend to do about people in debt who are making honest efforts to repay their debts. We will see if the banks continue to harass and threaten people and if the credit institutions continue to take people to court.

There are a number of other flaws in the Bill, on which I wish to focus. The one clear-cut benefit of the Bill is that people will be able to declare themselves insolvent after three years and the negative equity remaining after the repossession and disposal of their home will no longer hang over them. I welcome that. However, while the bankruptcy term will now be three years, the insolvency service or a creditor can then ask for a five-year income payment order to be implemented. My interpretation, and that of the Society of St. Vincent de Paul and other groups, is that this will mean eight years of further austerity for someone already going bankrupt. Somebody who bought a house for a huge sum of money in 2003 when he or she had a stable, well-paying job but then lost the job and now has no other prospect of covering the mortgage is already living in severe hardship. Such people have seen the value of their houses cut almost in half, yet they are stuck with huge mortgages that are well out of whack, so to speak, with the real value, and this legislation will lock them into poverty for possibly another eight years. That is my interpretation of it, and it is the interpretation of many groups outside the Dáil.

All of this is stacked in favour of the credit institutions and the banks, and that is fundamentally wrong. An income payment order should run concurrently with the bankruptcy term at the very least. Furthermore, there is no disincentive for a debtor to travel to the United Kingdom to declare bankruptcy. The period for automatic discharge in the UK is up to 12 months, with a maximum three-year income payment order which runs concurrently from the date the bankruptcy is declared.

To comprehensively protect mortgage debtors who may need to use the terms of this new legislation, the Government must outline clearly defined yet flexible social housing responses which can be offered at the same point as the insolvency provisions are enacted. We should carefully consider that. I urge the Minister to commit to putting aside a budget for an awareness campaign on the details of this Bill to make people who are desperately seeking a solution aware of their rights.

I understand that the Government believes this Personal Insolvency Bill will help, and parts of it will help, but I make an appeal to the Minister based on the history of the banks up to last week and incidents involving people I am dealing with whose lives are in turmoil because of harassment by credit institutions and banks. It does not matter what the Minister thinks or what the banks and credit institutions say to him. I repeat what the Minister, Deputy Noonan, stated last week or the week before: we cannot trust the banks.

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