Jonathan O'Brien (Cork North Central, Sinn Fein)
Link to this: Individually | In context

Question 34: To ask the Minister for Justice and Equality his plans to update the personal insolvency laws and when he intends to do this; and if he will make a statement on the matter. [12046/11]

Alan Shatter (Dublin South, Fine Gael)
Link to this: Individually | In context

A personal insolvency Bill is in the course of being developed in my Department to provide for a new framework for settlement and enforcement of debt and for personal insolvency. I have engaged in detailed discussions with officials in my Department with regard to the content of such a Bill. The provision of this legislation is a commitment under the EU-IMF programme and is intended for publication in the first quarter of 2012. However, it is my objective to publish, if possible, the measure ahead of the EU-IMF deadline given the importance of addressing this area of our law and putting it into a modern framework.

In developing the Bill, account is being taken of the recommendations of the Law Reform Commission in its recent report on personal debt management and debt enforcement. That report provided an in-depth review of the personal debt regime. The economic and financial effects of certain of the new arrangements are being carefully assessed to ensure that all relevant issues are addressed and their impact is fully anticipated and understood. It must be clearly understood that the reform of the law with regard to bankruptcy and insolvency is not simply a matter of a change of legal structure. There are consequences of an economic and financial nature which impact on individuals and the wider community in the context of the reforms we ultimately adopt.

The civil law (miscellaneous provisions) Bill, which is being drafted with a view to publication as soon as possible this year, will contain some interim measures on reform of the law on bankruptcy. The previous Government published a Bill which contained certain measures in that area and I have engaged in a review of that legislation. There will be some modification of its content, as will be clear when the new Bill is published. As it stands, the Bankruptcy Act 1988 does not meet the needs of modern social and economic conditions. Consideration is currently being given to the specific measures that will be contained in this Bill, which I envisage will comprehensively reform the law in this area.

Jonathan O'Brien (Cork North Central, Sinn Fein)
Link to this: Individually | In context

I welcome the Minister's comments on the legislation due for the first quarter of 2012 in regard to his desire to introduce it ahead of schedule if possible. The recent comments by the Master of the High Court, Mr. Ed Honohan, focused our attention on the stark reality faced by many families. This House spent several days discussing the issue of suicide. Mr. Honohan's comments on the actions of banks which are pursuing people for mortgages, credit card debt and personal loans gives rise to the question as to how these institutions operate. When one considers that most of these loans have already been written off by the banks, this behaviour is a disgrace.

In regard to the legislation the Minister hopes to introduce before the end of the year, how quickly does he think he can have it prepared? How complex is the issue and will the legislation cover all forms of personal debt and debt forgiveness?

Alan Shatter (Dublin South, Fine Gael)
Link to this: Individually | In context

What is envisaged is the enactment of comprehensive legislation in the area of insolvency which will substantially reform current law and provide new structures to facilitate addressing issues of debt. The structures will vary depending on the level of debt and the nature of the debts held by the individuals concerned. I am sure the Deputy will appreciate that as we are in the developmental stages of the legislation I do not wish to address it in full detail at this stage. It will reflect some of the proposals in the reports that have been published but will not rigidly stick to them because we are looking at better and more realistic solutions in some areas than those which have been proposed. The legislation is scheduled for publication in the first quarter of 2012. With the assistance and support of my officials in the Department, the work we are doing has led us to be optimistic that we can publish the Bill ahead of schedule. It is usually the opposite in the case of legislation. However, I do not want to give a specific date. If we do not manage to publish the Bill ahead of schedule, I give an absolute commitment that it will be published early in the first quarter of 2012. However, I am hopeful we will see it some time prior to Christmas.

I am aware of the remarks made by the Master of the High Court, Master Honohan, and am certain he means well in highlighting an issue that is of concern to many people and of which he has been made aware by way of proceedings in his court. However, Master Honohan referred in his comments to his proposed solution to all of this as a "back of the envelope" solution that appeared to be very simple. It is anything but simple, and indeed back of the envelope solutions can be extraordinarily dangerous. It is correct to say that in the due diligence that has been undertaken on financial institutions there has been factored in possible losses that may arise, for example, in the home mortgage area. However, there is a national interest and hope that some of those losses will not materialise and that people will be able to meet their financial obligations. We must be wary in how we draft this legislation to ensure we do not precipitate some additional financial difficulty or crisis that should be avoided and that we do not create a situation where people who can meet their financial commitments are provided with a mechanism simply to renege on them to the overall detriment of the community and to the further detriment of our financial institutions. While I am anxious that we introduce comprehensive reform we must do so bearing in mind the economic circumstances and the financial impact of any reforms that may be introduced while having a clear vision of the social issues that must also inform the legislation.