Alan Shatter (Dublin South, Fine Gael) | Oireachtas source

All of these amendments relate to the issue of reasonable expenses. Amendment No. 6 empowers the insolvency service to draw up guidelines in regard to reasonable living expenses for debtors. These guidelines are referenced in sections 24, 60(4), 95(4) and 85D, as inserted by section 146 of the Bankruptcy Act 1988, and will be required for the information of all concerned in the new processes.

The new section sets out the principles and policies which will set the parameters for the guidelines on living expenses. The insolvency service is required under subsection (2) to consult with the Minister, the Minister for Finance, the Minister for Social Protection and such other persons or bodies as the service considers appropriate or as the Minister may direct.

Subsection (3) sets out the matters the service is required to have regard to in the course of drawing up guidelines. These include poverty indicators as set out in Government publications on poverty and social inclusion, statistical information collated by the Central Statistics Office on household income and expenditure, the consumer price index and household composition. Subsection (4) commits the service to giving examples in the guidelines of expenses that may be allowed as reasonable living expenses and expenses that should not be allowed. Subsection (5) provides that the guidelines are to be published on the insolvency service's website. Subsection (6) provides that the insolvency service is required to issue guidelines on reasonable expenditure at intervals of no longer than one year. That will take account of changes that are occurring.

I will make reference to amendments Nos. 17 and 18. Both of these amendments seek to raise the limit for the amount of disposable income above that permitted for necessary household expenses from ¤60 to either ¤80 or ¤150. With regard to the ¤60 provision, that is the limit of the qualifying amount of money left to the debtor after meeting his or her reasonable household living expenses in the context of the legislation. I am loath to use this phrase but it is a simple way of expressing it: it is money surplus to what is identified as being required for reasonable household expenses. Certain assets that an individual would use in his or her daily life are expressly excluded from being regarded as relevant in the context of his or her circumstances when facilitating the write-off of debt. If somebody has money in excess of reasonable expenses, there is a point at which it is reasonable that it be used to discharge some of the debt he or she owes to creditors, who may be local traders, tradesmen or local credit unions. We have set that point at ¤60.

I emphasise to Senators that this legislation should not be seen in isolation from everything that is relevant to it. There are issues we must address to ensure the legislation does not have unintended detrimental consequences. It is essentially a balancing act. It is probably just as reasonable to argue that the net disposable income allowed to a debtor after reasonable household expenses should be ¤80, ¤150 or ¤160. These are subjective judgments to be made. We have made judgments based on the experience in other jurisdictions and it is important to remember in the context of moneys owing that those who are creditors are entitled to have moneys repaid to them. I highlight particularly the example of a credit union, which is dependent for its solvency and liquidity on the members of the credit union discharging their debts to it. It is of particular importance that if individuals have money that is in excess of what is regarded as reasonable living expenses, they be given some latitude, and ¤60 is the latitude we are proposing in these circumstances. I cannot accept the amendments proposed by the Senators.

It is our intention that the amounts will be kept under review and may be the subject of future revision by way of regulation. It will not be ¤60 into eternity, but that is the initial sum prescribed in the legislation to ensure we maintain a balance in terms of allowing individuals in major financial difficulty to retain certain assets and have available to them reasonable living expenses. They should be allowed something in excess of that, but after that their primary obligation is to meet their obligations to creditors. We regard the alternative figures of ¤80 or ¤150 proposed in the amendments as being inappropriate in the current circumstances.

I want to make reference to my amendment No. 22, which refines the provisions of section 24(5) to better set out how net disposable income is to be calculated in the context of an application for a debt relief notice. The existing provisions have been expanded to provide greater clarity in regard to this matter by making specific references to tax and other deductions. This amendment also sets out the way in which excluded and excludable debts, which we discussed yesterday, are to be treated in the calculation of net disposable income for the purpose of a debt relief notice.

Opposition amendment No. 23 would require the Minister for Justice and Equality to publish detailed guidelines defining reasonable household expenses for the purposes of the Bill. I thank the Senators for raising this matter. However, the Senators' amendment would impose a duty on the Minister to define a reasonable standard of living for each and every applicant for a debt relief notice. The Senators will recognise the inherent difficulties this proposal would present. The financial circumstances of debtors will vary greatly in the context of their own personal circumstances and the circumstances of family members who are dependent on them. This area will be addressed by the insolvency service in the context of the provisions that apply to its operations. I can assure the Senators that there will be no undue delay in addressing this aspect of the debt relief notice process. However, I believe it would be unwise to commit to a specific timeframe. The main approved intermediary for the processing of applications for debt relief notices will be the Money Advice and Budgeting Service, MABS, which is familiar with dealing with individuals in financial difficulty and particularly individuals who have low-level debt as opposed to debts of hundreds of thousands of euro. That organisation already has significant experience and knowledge regarding the devising of debt plans and is conscious of what is required by persons with debt difficulties in being able to retain enough income to provide adequately for themselves by way of reasonable living expenses and to provide for their dependants while at the same time addressing debt problems. The insolvency service will work closely with MABS and other organisations with expertise and interest in seeking to devise broad, realistic and workable guidelines for calculating net disposable income in the context of an application for a debt relief notice.

I do not believe, nor do I imagine do Senators, that we can arrive at an individually tailored figure for each of the applicants, potentially several thousand. It is neither practical, workable nor desirable because it is important that we do this through a form of guidelines. There will remain flexibility within the guidelines. In the context of individual circumstances, where individuals are in debt difficulties, issues may arise for which guidelines do not make provision. That is why it is important, as a general provision in legislation, that it prescribes that regard must be had to reasonable living expenses. I have no doubt the initial guidelines, over a period of having the experience of working the legislation, will be revised to take account of new issues and new circumstances that arise.

The situations and needs of individuals vary on a case-by-case basis and guidelines of a broad nature may be required. I will leave that to the expertise of the insolvency agency in the context of the consultative process in which it is engaged. I am opposed to amendment No. 23.

Amendment No. 30 is proposed by Senators Cullinane, Ó Clochartaigh and Reilly. The major approved intermediary for the processing of applications for debt relief notices, MABS, has the necessary expertise in devising, in respect of each individual application, the household items that are essential to the person's domestic requirements. The insolvency service will work closely with MABS and other organisations with expertise and interest in the area, and in that context it would not be wise to commit to a specific timeframe. I oppose amendment No. 30.

Amendment No. 31 proposes to amend the provisions of section 24(7) to include a specific reference at paragraph (d) to the guidelines in respect of living expenses to be issued pursuant to provisions of the new section 23.

Amendment No. 33 is essentially a drafting amendment and I hope it gives rise to no controversy. The proposal is to amend the provisions of section 24(14) to include specific reference to the guidelines in respect of reasonable living expenses, which are to be issued pursuant to the provisions contained in the new section 23.

Amendment No. 61 proposes to replace section 60(4) with new text that takes account of the provisions provided in section 23 with regard to reasonable living expenses. It is essentially a tidying up measure in the context of the content of section 23.

Amendment No. 101 proposes to replace section 95(4) with new text, which takes account of the new provisions provided in section 23 with regard to reasonable living expenses.