Ann Phelan (Carlow-Kilkenny, Labour) | Oireachtas source

I accept Deputy Joan Collins' bona fides in introducing this Bill. I accept it is a response to the very tragic circumstances in which people have found themselves and I am aware of the human tragedies that have accompanied this mess. Most of us have no sympathy for the banks.

Deputy Collins seeks to introduce an Act that will, among other things, provide for the restructuring and disposal of certain mortgage arrears and, where practical, the retention of the principal private residence - the family home - for the debtor. This Bill suggests the introduction of a new approach in a personal insolvency arrangement, namely, a mortgage restructuring arrangement. This would provide that a personal insolvency practitioner could propose a once-off mortgage restructuring arrangement on behalf of a debtor for a secured debt on a principal private residence or where the debtor owns only one property.

What I regard as somewhat unusual is that it would add a fourth option in debt resolution to the three already set up by the Government in the Personal Insolvency Act 2012. The Bill borrows from that Act certain criteria for eligibility for assistance. The main proposal would allow the forced restructuring of a secure mortgage debt on a creditor by effectively forcing the individual to write off part of the debt. For example, the proposed process allows a debtor to appoint a PIP who would then prepare a proposal for a mortgage restructuring arrangement to submit to the creditors. Mandatory provisions require that repayment be made on the terms laid out by the PIP alone and these would be binding on the creditor. The creditor would not be permitted to take any enforcement or other actions against the debtor. The creditor would, however, be allowed to appeal the decision of the PIP to the court, but only so long as he or she is deemed to have fully co-operated with the PIP. There is a possibility that the rights of secured creditors under the Constitution would be infringed. I can understand the Deputy's wish to help those in trouble but this Bill is not workable in its present state, nor does it take into the account the difference between those who cannot pay and those who will not pay. There is a risk that people would decide to default if they think the law is on their side. This also runs contrary to the arrangement set out in the Personal Insolvency Act 2012. There could be many creditors such as local authorities which employ many staff and create much employment. I ask whether they are to write off such debts. The Personal Insolvency Act has put in place a code of conduct for those unfortunate enough to find themselves in mortgage arrears. The resolution targets set out by the Central Bank for financial institutions and the protection by the courts of those seeking the adjournment of a repossession action constitute a significant set of responses by the Government to the mortgage arrears problem. The newly established personal insolvency arrangement needs time to settle in, but I accept the Deputy's bona fides.

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