Peter Fitzpatrick (Louth, Independent) | Oireachtas source

I welcome the opportunity to contribute. I welcomed the introduction of the Personal Insolvency Act 2012 at the time. It brought a structure and a recognised framework through which people could address their debt issues. In hindsight, however, it is clear that, in many cases, those people got into debt as a result of actions over which they had little control. We all remember when the banks were throwing money at people with no regard for their ability to repay. The debt boom was fuelled by the banks and the fact that there was little control over their actions. Bank-fuelled debt led to house prices rising to a level that was unsustainable and left people with debts they could never repay. Without going over old ground, when the crash came, it was the banks that were saved while ordinary people were left carrying the can. That must never be allowed to happen again.

As stated, I welcomed the Act when it was introduced. It brought our laws up to date with our colleagues in Europe and gave hope to many thousands of people who, unfortunately, had gone into debt. There is now a way out for people who are willing to engage with the system. This amending Bill is to be welcomed in the main. I am particularly pleased that section 14(c) will remove a restrictive condition whereby a person could only avail of a court review if his or her home mortgage arrears had commenced prior to 1 January 2015.

As the country claws its way out of the pandemic, it is more important than ever that people be afforded every protection from creditors, particularly where their homes are concerned. Unfortunately, we will probably see a sharp rise in the number of people seeking protection because of the effects of the pandemic. It is vital that they be given every protection and opportunity to keep ownership of their homes during this difficult time.

In my constituency office in Dundalk, I regularly deal with people who are in financial difficulty. What is clear is that each and every one of them wants to remain in the family home. They are willing to enter into arrangements with their creditors so long as those arrangements are fair and reasonable. For this system to be successful, it must be understood that people cannot be left with nothing. They must be able to live as well. There is no point in forcing people into living a life with no hope at all. People undoubtedly overborrowed, but we must ask why. Did the banks do enough due diligence into people's ability to repay? We must also ask why the cost of houses was too high.

When we look back now, it is clear where the mistakes were made – the banks offered credit without doing proper due diligence, regulation by the Government was too weak and the general approach was to borrow as much as one could.

We must look to the future, though. If people are willing to engage in debt relationships, they should be given every opportunity to start again, but I fear that we are heading into another situation where the cost of housing is getting too high. It is clear that big landlords and vulture funds are purchasing large volumes of housing for the rental market. This is leading to unsustainable rents. In Dundalk, one can expect to pay more than €1,400 per month in rent for a three-bedroom house, which is €323 per week. This is another form of control by debt. If a person loses his or her home as a result of an unsustainable mortgage and becomes homeless, he or she is no different than someone who loses a home as a result of unsustainable rents. In some ways, people who have mortgages are afforded a certain level of protection under the Bill whereas renters do not have the same protections.

One amendment to the Bill would offer a better level of protection to mortgage holders, in particular older ones. Section 102(f) of the Act reads, "that the principal sum due on the secured debt be reduced provided that the secured creditor be granted a share in the debtor’s equity in the property the subject of the security". I propose that this be changed to read, "that the principal sum due on the secured debt be reduced provided that the secured creditor be granted a share in the debtor’s equity in the property the subject of the security without the agreement of the secured creditor". This small amendment could allow courts to force debt-for-equity solutions onto mortgage lenders, thereby removing many mortgage holders' fear of losing their homes.

There are people engaging with their creditors and they must be given every opportunity to get satisfactory solutions. We must not forget that we are dealing with real people in real situations. Unfortunately, banks simply treat debtors as file numbers in some cases. These are real people with real families and real lives.

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