David Stanton (Cork East, Fine Gael) | Oireachtas source

There is a procedure for asking a speaker to give way, which is not used here, as the Leas-Cheann Comhairle knows, but it should be used more often.

There is a stigma or a shame attached to bankruptcy. That dates back to when people were lodged in debtors' prisons for not being able to discharge their bankruptcy. That stigma still prevails. One of the submissions suggested that we should stop using the word "bankruptcy" and should use a word such as some form of debt relief or something like that. We all know people and families who have been impacted by bankruptcy. I know one family which lost their home and are now renting a house. That family are three years in bankruptcy and it will take another five years to for them to pay off their debts, so they will have a term of eight years. That period is now being reduced to a total of four years. A certain amount of that family's income has to go to pay their debt. Families such as that family will be impacted in a positive way by this legislation in that they will also benefit from the reductions, even though there are currently in the system, with the giving of a six-month lead-in time or that of one year, whichever is the longer period. I understand that the gross incomes of such families are taken into account when it comes to issues such as the granting of approval for social housing. Will the Minister of State, Deputy Kevin Humphreys, check that with his colleagues because that is not very fair? I know an individual who went into bankruptcy; he has a good job but his gross income is taken into account, even though his net income is quite low because he has to give so much to pay the debt every month. Also, where medical cards are concerned, the same applies. We should examine this aspect of the legislation and examine the impact of bankruptcy on other payments and supports that families have. Bankruptcy is not easy, whether it is for a term of one year or three years. One virtually loses everything. There is a provision in the legislation to safeguard the family home, which I welcome. It reassigns the home back to the person after a period of time. That is a new provision and many people have not picked up on it.

I note Deputy Niall Collins said that we should not rush into this, that we should take our time and that there should be more debate on it but we have debated this issue. Two committees - the Joint Committee on Finance, Public Expenditure and Reform and the Joint Committee on Justice, Defence and Equality - have examined it. We sought submissions on it and received 122. We held hearings and we prepared an official report on it. This issue has been examined in detail and at length. Not everybody who wrote to us was in favour of reducing the bankruptcy term to one year but, on balance, the committee unanimously felt we should reduce it. We presented our report to the Minister at the start of the summer. The legislation was produced quite quickly and we are processing it today. From what I gather, nobody is opposing it, which is welcome.

My good friend and colleague from Sinn Féin, Deputy Mac Lochlainn, said we were not proceeding as quickly as we should be on this. I have been a Member of this House for quite a while and I think this legislation has been produced quite quickly. What is proposed in this legislation is not trivial, rather it is quite serious. Some people have major reservations about what this legislation proposes but the safeguards built into it are quite good. They go beyond what the joint committee sought. For instance, in extreme cases, people can have their period of bankruptcy extended by the High Court to 15 years where they do not divulge their full assets and so forth. That should act as a major deterrent to people who might try to blackguard the legislation in some way or other.

The joint committee observed that a one-year term would encourage the financial institutions to engage more with debtors in reaching meaningful solutions and would encourage further engagement with debt settlement arrangement, DSA, or personal insolvency arrangement, PIA, processes. We also recommended in our initial report a number of years ago that there should be an appeals mechanism. At the time, it was felt that we should try it without one but I note that there is now an appeals mechanism involved where the financial institutions veto the arrangements. I welcome that mechanism.

The reduced bankruptcy term would pass on the benefits of an economic recovery to all citizens by allowing people with crippling debt associated with credit obtained during the economic boom to move on from that debt. I note from some observations - I think a previous speaker made this point - that people like Henry Ford, Walt Disney and others went bankrupt at one stage, came out of it and contributed very positively to society. We want to see people return to economic activity faster than they can at present. A particular context for this would be the issue of negative equity. This would bring us in line with Northern Ireland and other common law jurisdictions, which is quite important.

We were told that a family home should be offered a certain element of protection and that is included in this legislation, which is good. One submission expressed the view that banks may be willing to offer forbearance on mortgage debt for one year while the bankrupt goes through the process.

That is good. Credit unions said the debt "represents other members' savings and the debtor undertaking a level of endurance before it can be written off is argued as equitable". Bankruptcy is hard, whether it is one or three years. Once one is in it, one is in it. We are giving people an opportunity to emerge from bankruptcy in a faster time than in the past, when it was 12 years.

We are moving away from bankruptcy being seen as a thing of shame. In the US, people try and fail and then try again. Others say at least the person tried, had a go, is back again and is benefitting his or her family, himself or herself and the economy and perhaps is employing people as well. We want to move away from the notion of bankrupts being seen somehow as crooks.

Many people were caught through no fault of their own because of the economic downturn and ended up facing bankruptcy or other major financial difficulties. I concur with the Minister's call on people to engage with financial institutions and to seek help early if they are under financial pressure. We are trying to make it easier for people to do that in the legislation.

The argument was made to my committee that the official assignee should be given the right to apply to the High Court to discharge the bankrupt earlier and this would occur where he or she had co-operated with the process and there was nothing further to be gained from enforcing the full three-year term. I am also happy about the appeals mechanism. There was overwhelming support for reducing the term from three years to one and reducing the associated income payments order from five years to three, which is important and which is also provided for in the legislation.

On behalf of colleagues on the committee, I am happy to welcome the Bill and to recognise the fact that there was detailed discussion and consultation with experts in the area. We invited people to make submissions and we received 122 detailed submissions, many of which were personal stories, which we could not use because of the confidentiality involved. People found themselves in bankruptcy and they had struggled for three years or more. This is good legislation, which is being introduced at a good time. I am delighted it will be enacted. The moral hazard issue has been dealt with as well and I am delighted this recommendation from the committee has been taken on board.

I congratulate Deputy Penrose on initiating this process.

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