Frances Fitzgerald (Dublin Mid West, Fine Gael) | Oireachtas source

I move amendment No. 1:

In page 3, line 7, to delete “Act,” and substitute the following:

“Act; to provide for court review of proposed Personal Insolvency Arrangements in certain circumstances; to amend the eligibility criteria for Debt Relief Notices; to further provide for the regulation and supervision of personal insolvency practitioners;”.

Amendment No. 1 is to amend the Long Title of the Bill. It takes account of the further amendments that I will be tabling to provide for a court review of proposed personal insolvency arrangements, to increase eligibility threshold for debt relief notices and to improve regulatory and supervisory functions of the Insolvency Service of Ireland regarding personal insolvency practitioners. Amendment No. 3 provides for the change to DRN thresholds.

Deputies will recall that the Government announced a new strategy for tackling the mortgage arrears situation in May this year, in particular for dealing with those who are in chronic long-term mortgage arrears. A flagship element of this strategy is to introduce a new facility whereby a personal insolvency arrangement, which has been rejected by creditors under the arrangements in place at present, can be brought in certain circumstances to the Circuit Court for review and, subject to the tests set out, the court may decide to impose the rejected arrangement on the parties. This will present new options and hope to those borrowers who have under present arrangements run out of road. We will discuss this further in due course when the amendments to introduce this are moved.

The second major element of what is being proposed is to strengthen the regulatory powers of the Insolvency Service of Ireland vis-à-visthe personal insolvency practitioners, PIPs. This will increase confidence among debtors, creditors and other stakeholders that the Insolvency Service of Ireland has the full suite of regulatory powers necessary to oversee PIPs who, as we know, play a key role in the insolvency resolution processes.

I will come shortly to the third element which is, as proposed under amendment No. 3, to increase the threshold for eligibility for a debt relief notice from the current limit of €20,000 to €35,000. This has been requested in a number of quarters and will again bring a number of people, who would not qualify under current limits, to the possibility of a DRN which applies to those who have little or no income or assets but have accumulated amounts of debt which they have little or no hope of being able to pay in full.

In tandem with these new measures, the Government is working intensively, in a way which is co-ordinated across all relevant Departments and agencies, in delivering on the wider elements of the mortgage arrears initiative including arrangements to deliver assistance and advice through MABS and ISI in the courts when repossession actions are taking place; enhanced and expanded arrangements for mortgage to rent; and a nationwide information and publicity campaign aimed at getting those in serious mortgage arrears to engage with their lenders and with the courts where repossession proceedings have been initiated, coupled with an undertaking that, when they engage, co-ordinated services will be there to assist them.

These measures are being implemented across the system currently and everything will be in place and operational by September. Obviously, if the House approves the amendments I am tabling, including the measure for a court review of personal insolvency arrangements rejected by the banks, they also will be up and running in the next period.

Amendment No. 3 is to increase the upper limit of qualifying debts for debt relief notices under the Personal Insolvency Act. A debt relief notice, DRN, is a different debt settlement measure from a personal insolvency arrangement, which is the main focus of these amendments, but is also provided under the Personal Insolvency Act 2012.

It is aimed at people with very limited means, being limited to an insolvent person whose net disposable income after reasonable living expenses, which are defined, is less than €60 per month and who has assets of €400 or less, excluding basic household goods or tools, and a motor vehicle worth €2,000 or less.

Currently, the person’s debts may not exceed €20,000.

I am glad to say this amendment will widen the scope of debt relief notices, DRNs, under the Personal Insolvency Act by increasing the limit of the debt that may be subject to a DRN, from €20,000 to €35,000 per person. During the Department's review of the insolvency legislation the Money Advice and Budgeting Service, MABS, and other organisations working with people in debt pointed out that the €20,000 limit included in the Act was overly stringent and excluded many indebted persons from returning to solvency. The amount of debt held by insolvent persons approaching the MABS to seek a DRN is commonly up to €35,000, which is the reason for selecting this figure which more accurately responds to real needs. The issue was also raised by Deputy Pádraig Mac Lochlainn on Committee Stage who proposed an increase in the threshold to €30,000. The amendment will, I believe, open up the DRN solution to those who are not able to benefit from the other arrangements under the legislation. It will help people on very low incomes who do not own a property or significant assets and are weighed down by debts they cannot pay.

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