Lorraine Higgins (Labour) | Oireachtas source

I commend the Minister and the Government for moving to put measures in place to alleviate the debt burden the Irish people have been drowning in over the past number of years. The Celtic tiger situation was most regrettable in that some people were engaged in an orgy of spending, which was encouraged by aggressive marketing by banks and light touch regulation. Times have now changed and the Government is now bringing the country and its people back from the brink, which must be welcomed. We find ourselves in an era in sharp contrast to the boom years and many people are concerned about debt management.

The introduction of this legislation will radically reform our insolvency legislation and must be welcomed. Three non-judicial debt resolution systems have been introduced to deal with unsustainable secured and unsecured debt. To avail of any one of these processes, an individual must be insolvent. Each proposal for dealing with an indebted situation must be done through a personal insolvency practitioner and one can only apply for relief under either procedure once in a lifetime. A debt relief notice will allow the write-off of qualifying debt up to ¤20,000. I join Senator Bacik in suggesting the amount should be increased. The provisions relating to debt settlement and personal insolvency arrangements have been addressed by the Minister in his speech. I do not propose to deal with it again. The absence of any real and direct involvement of the courts in these procedures is most welcome, as people who are indebted will not have to face the ignominy of having their private finances thrashed out in open court. It is a welcome new support for those genuinely experiencing severe financial difficulties.

However, those facing bankruptcy will get some considerable reprieve from the former legislation, where previously they were severely curtailed for a 12-year period. The Bill provides for a number of amendments to the Bankruptcy Act to include a new minimum amount for a creditor to petition for bankruptcy, ¤20,000, and the automatic discharge from bankruptcy three years from the date of adjudication. While I have no truck with individuals who recklessly borrowed and whose only pursuit was greed during the Celtic tiger era, it is important that some people get a second chance in life. It would be wrong for us as a country to give a message to some of the brightest and best entrepreneurs that they cannot realistically reinvent themselves in the country of their birth. I want to see these people encouraged back and to see their entrepreneurial spark and verve relit. I am glad the legislation goes no small way to supporting it. Through this encouragement, Irish entrepreneurs, particularly those living in rural Ireland, will help to create jobs in the country. Ultimately, the Exchequer tills will start to ring again.

While I warmly welcome the provisions in the Bill and the effort made by the Government to alleviate the debt burden some people are immersed in, it would be remiss of me not to mention the financial brokers who contacted me about their feelings of displacement from the marketplace. I refer to the appointment of members of the accountancy profession, who will now provide advisory services to mortgage holders in difficulty. There is a strong feeling that the service should be open to those operating as mortgage brokers, along with accountants, as they already undertake the role and are familiar with issues relating to personal debt. They have the qualifications, experience, professional indemnity insurance and independence to do so. In the interest of fairness and equity, it is important for the market to dictate the involvement of professions in this advisory capacity. An urgent review needs to be considered. I also request that we ensure a similar situation does not arise in respect of the appointment of personal insolvency practitioners under the Personal Insolvency Bill.

Further questions about the legislation remain. There is continued concern about the balance of power between creditors and debtors. This revolves specifically around the question of veto and whether the creditors retain a veto. The views on this are mixed and some argue that the existence of the personal insolvency process means banks will be more likely to reach informal agreements with debtors at an earlier stage than when they are engaged with the personal insolvency practitioner. They will be wary of triggering bankruptcy at that point. This, it is argued, strengthens the hand of debtors and addresses the concern of creditors that some, who will not pay, could freeload on those who genuinely cannot pay. However, FLAC, SIPTU and other business leaders continue to express concern that the banks have an effective veto because of the thresholds, at 60% and 50%, and the lack of a legal obligation on the banks to accept the personal insolvency practitioner's recommendation and the certificates of the court. Perhaps the Minister can address these concerns and provide a rationale for the thresholds.

I refer to the concerns expressed about the fees and costs and the residency requirement. That might affect emigrants with unsustainable debt in Ireland. What are the proposals for merging or keeping separate the mortgage information and advice service and MABS? Perhaps the Minister can shine some light on the topic. I thank the Minister for listening to the debate on the Bill and I look forward to the Bill becoming law so that those in financial difficulty can avail of its measures.