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

This section deals with debt settlement arrangements and the terms of a proposal for a debt settlement arrangement. Debt settlement arrangements are applied to unsecured debt without any particular limits being set. To take a simple example, if somebody has a debt of ¤30,000 that is not secured - let us assume it is not a mortgage - it can be dealt with pursuant to the debt settlement arrangement. However, if two people are unemployed, the debt settlement arrangement envisages that they will over a period of time have a financial capacity to discharge their debts, make payments towards discharging the debt or, if the creditors are agreeable, apply an amount of money at a lesser level to pay off the debt over the period of years provided for in the debt settlement arrangement.

If two people suddenly become unemployed the question arises of what other financial resources they possess and how they propose to deal with the debt. Does the personal insolvency practitioner present to creditors a scheme which would facilitate, over a period of years, that debt being discharged? To take it at its simplest, if an individual with no assets, income or resources owed ¤30,000, a debt settlement arrangement clearly could not be entered into because no arrangement could be made with creditors. The option for that individual would be bankruptcy. If the ¤30,000 debt was secured on, for example, a family home it would fall into the personal insolvency arrangement category, and the same issue would arise.

If the answer to whether incomes, assets or resources available to facilitate, over a period of time, the debt being discharged is that there is nothing and the proposal is "We have nothing, we are going to pay nothing", the creditor may do nothing at all if he or she believes the borrower has nothing, and the matter may remain as is for a very long time. However, if the creditor sued on the debt and the debt was not paid, he or she would be entitled to put the debtor into bankruptcy. The latter may also petition for bankruptcy to avoid all of that. It is a question of the person's or, in the case of a joint debt, persons' individual circumstances.