Catherine Murphy (Kildare North, Social Democrats) | Oireachtas source

I broadly welcome this legislation. It is good to see that the Insolvency Service Of Ireland, MABS and the Citizens Information Board have all welcomed the Bill. Personal insolvency is an incredibly difficult situation for anyone to be in and we have to make every effort to ensure that the process is fair and does not put people through unnecessary hardship. Personal insolvency applications reached an all-time high in July last year, with 239 applications to the Insolvency Service of Ireland. That was a 125% increase from July 2019.

This Bill makes a number of changes to the process for personal insolvency. Most of these changes are welcome and some are long overdue. The value of assets which a person may still have to be eligible for debt relief will be raised from €400 to €1,500. The Government has stated that this has arisen as a result of issues relating to lump sums and social protection allowances, which tipped things over the limit. The intention behind this amendment is welcome. Social protection should never be counted towards somebody's available assets in an insolvency situation. Will the Minister of State outline how the specific number was arrived at? Have many cases been refused on those grounds? Will efforts be made to follow up in respect of those individuals?

The amendment to section 115A of the Personal Insolvency Act 2012 allows the courts to review a personal insolvency arrangement which has been denied, usually by a bank or a hedge fund. This Bill amends this section, removing the requirement that the mortgage in question must have been in arrears on 1 January 2015. Both practitioners and debtors alike have highlighted this previously. One would have to wonder why it has taken so long to make the change. It is welcome that it is being made. People who have fallen into mortgage arrears as a result of the pandemic should be able to avail of this review but so should others who fell into arrears between 2015 and 2020 who have been overlooked until now. Many people who have viable proposals to deal with personal insolvency have been rejected unreasonably merely because they were not in debt prior to January 2015.

Section 16 will allow a confirmation of truth to be submitted in place of a statutory declaration under certain situations where they are required.

It also creates a new offence of signing or making such a confirmation without an honest belief as to the truth of the same. Offences of this nature are already covered under sections 126 to 132, inclusive, of the Personal Insolvency Act 2012. These allow for prosecution in instances of false representation, omission, concealment, falsification of documents and so on. One would wonder why these sections would not come into play and why this provision is necessary. Have incidents occurred which were not captured by the provisions of those particular sections of the 2021 Act?

When we speak about debt and insolvency, it is important that we keep in mind that debt can happen to absolutely anyone. Covid has really demonstrated this, just as the crash did. Unfortunately, all too often, in both policy and the prevailing narrative, personal debt is often seen as a personal problem or a failing on the part of an individual. This adds to the stress. This narrow mindset ignores the macroeconomic causes of debt and the structural and political factors that lie beyond the control of many people who are in debt. In 2019, Ireland had the sixth highest level of household debt in the EU. Some 22% of households are in debt or are overburdened by debt repayments. When looking solely at low-income households, that figure increases to 32%.

People from all sections of society are struggling with debt but some are particularly vulnerable. Over 33% of renters in the private rented sectors are overburdened by debt repayments. Very often, people are paying more than 30% of their income in rent. This is a guideline which really should not be exceeded. These renters are nearly four times more likely to go without heating due to a lack of money than those who own their own homes or who have mortgages. Single-parent households have long been one of the groups most vulnerable to debt, with 27% of single parents facing mortgage or rental arrears while one in two state that housing costs are a very heavy burden.

Some 54,986 people were in arrears on their mortgages at the end of last year. Some of these have been in arrears for a relatively short duration but others have been in arrears for in excess of two years. Luckily, the pandemic has not had a significant impact on mortgage arrears levels so far. This is largely due to the payment breaks agreed between borrowers and lenders. However, the last of those breaks will be coming to an end in the coming weeks. This makes one question whether this is an issue that needs to be looked at again because some sectors are particularly exposed. Any delayed effect on mortgage arrears will only make itself known in this quarter.

Of course, an important thing to note when speaking of mortgages is the withdrawal of KBC and Ulster Bank from the market. Between the two, approximately 28% of the entire mortgage market is currently up for grabs. Many people around the country are anxiously waiting to see where their mortgage will end up. The performing loan books of KBC are likely to be acquired by Bank of Ireland, which means that the bank which provided the cheapest home loans will be acquired by the bank which provides the most expensive home loans. When it comes to loss-making loans, the vulture funds are circling. The relationship between borrowers and vulture funds is nothing short of abusive. While banks have at least some interest in negotiating with borrowers, vulture funds have none, nor do they have any reason to do so. Their business model relies on evictions to make profit.

When entering a personal insolvency arrangement, people are rightly allowed to continue to live in reasonable conditions, aligned with the minimum essential standards of living. There is a complete inequality in how the State treats people who were once well-off or those who are experiencing insolvency and how it treats those who have always experienced financial hardship. If the State is able and willing to take a humane approach towards those who are experiencing debt, perhaps the Government would take a closer look at the case of those in receipt of social welfare payments. It is absolutely unacceptable that people in receipt of social welfare payments are living below the agreed minimum essential standards of living. These are standards which should be available to everyone. Rather than being a ceiling for any State welfare payment, they should be a floor.

It is an unfortunate reality that many people in Ireland who experience financial hardship turn to moneylenders. The latest figures from the Central Bank show that 283,000 people borrowed a total of €151 million from moneylenders in 2020. The largest moneylender in the country, Provident Financial Group, announced on money that it would be ending its doorstep loan business. It can currently charge customers up to 288% a year. Its withdrawal may well expose people to an even bigger issue, that of unregulated moneylenders. It is really important that we consider the impact of this move at this stage.

It is important to state that debt does not arise in a vacuum. The policies of successive Governments have driven people into debt and, while this Bill is welcome, the root causes of debt need to be addressed. There can be no one-size-fits-all approach to personal debt but there are obvious solutions which would surely help. We have to look at the issue of moneylenders. We also have to look at the issues of housing policy and affordability. Looking at the information we got this week with regard to people under 35, we can see that there is a generation particularly exposed in terms of income and outgoings.

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