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

I know this is a well-intended amendment but it is odd for a reason I will come to in a moment.

Section 98 sets out a number of detailed requirements primarily in regard to valuation and treatment of the security held by a secured creditor, the personal insolvency arrangement. It is not clear in regard to the provisions of the section, what the Senator's proposal seeks to achieve. Clearly, he wants to encourage, and I agree, creditors to constructively engage. Where the creditors are banks we want them to constructively engage. To oblige someone to propose a solution to the borrower's problem would not work as one person's solution is another person's problem. For example, what would be the Senator's reaction if the secured creditor - let us presume it is a bank - proposed full and immediate payment of the entirety of the loan or, alternatively, repossession of the property? The financial institution might say the debtor has a problem and owes it a large amount of money and ask for the property. As far as the financial institution is concerned that solves the debtor's problem and it also serves the problem of the financial institution.

The provision of the new personal insolvency arrangement is a significant solution to addressing the problems of debt, in particular, where a home mortgage might be concerned. It involves an engagement, the personal insolvency practitioner having got a full disclosure of income, assets, liabilities, resources. The debtor then engages with creditors to find out what is due to them, examines the financial reality and draws up a proposal on behalf of the debtor. The hope is that the creditors will engage. The incentive for creditors to engage is that it involves the prospect of them recouping all or a portion of what is due to them in circumstances where they may not otherwise do so, or if they do it may be somewhat less. The other incentive is that if one does not do the deal and the debtor goes into bankruptcy one may also recover a great deal less. I understand the good intention behind the amendment but I do not think its inclusion in the Bill would add anything. It could create a perception that creditors could simply demand something which they would see as a benefit and which might, from their perspective, solve the debtor's problem, but it may not be a desirable solution from the debtor's perspective.