David Cullinane (Sinn Fein) | Oireachtas source

I move amendment No. 74:

In page 76, between lines 39 and 40, to insert the following:?(6) Once a Personal Insolvency Arrangement comes into effect, all interest on debts, which are the subject matter of the arrangement, shall cease to accrue and the creditor will be prevented from charging interest or the earning of interest during the term of the Personal Insolvency Arrangement.?.

We have tabled amendments Nos. 74 and 84 on foot of recommendations which were made by the Credit Union Development Association. I note that CUDA has been in contact with the Department. I would like to set out the logic for them and will then listen to the Minister's response. It does them justice to table the amendments and to elicit the Minister's response.

The repayments that debtors have entered into with their banks, which might be interest only, just serve the purpose of kicking the can down the road. The substantial capital sum still remains to be repaid, which is a serious problem currently facing many individuals and families.

In trying to address this issue, the Credit Union Development Association has proposed an amendment to the Department that once the creditor enters this process all interest on debts, which are the subject matter of the arrangement, shall cease to accrue. In addition, all creditors would be prevented from charging or earning interest.

Under section 98, a personal insolvency practitioner has the option to include in the arrangement, for the benefit of the secured creditor, that a debtor pays interest and only part capital under section 98a, or makes interest-only repayments under sections 98b and so on.

CUDA is of the view that a mechanism is needed to address the fact that a substantial sum still remains unpaid. While the practitioner has many options to choose from when drawing up a proposed arrangement, as a principle there should not be an option to allow the payment of interest during the arrangement, nor should interest accrue for the duration. That is what both amendments have the effect of doing.

CUDA is also concerned that credit unions, as small creditors, will not cope financially with the impact of the proposed legislation. While they agree there is a need for legislation, they believe there is an imbalance between the rights of a large secured creditor and a small unsecured creditor, such as a credit union. They argue that a situation should not arise whereby the capital of a credit union loan, which in effect is other people's money, that is, other members' money from that credit union, is sacrificed for the payment of interest on a secured debt to a large retail bank. This is the logic or rationale. I note the organisation has been in contact with the Department of Justice and Equality in this regard. While I am not privy to the response it received, I thought I should do it justice by tabling the amendments, listening to the Minister's response and deciding how to deal with the amendments thereafter.