Thursday, 17 December 2015
Bankruptcy (Amendment) Bill 2015: Second Stage
I welcome the Minister of State to the House. I support the Bill but it has been a very long time coming and I do not direct my comment solely at this Government but at many Governments. The issue has lain on the sideline for a long number of years and been thrown from one committee to the next. All of the committees have pretty much made the same recommendations. The general public's support has always been for a one-year bankruptcy period. It is welcome that we are moving to adopting such a term.
A balance must be struck between encouraging entrepreneurship, which is what we want to do, and taking risks. When people take risks it does not always work out. In addition, not everybody is going to be successful in business and because of the nature of business, people will lose their jobs. People, in their personal lives, will also make mistakes with their finances. There are also people who are reckless in business through making bad decisions about borrowing and investments. Many of those decisions were based on greed. During the Celtic tiger period many people borrowed huge amounts of money to purchase lands and properties which ended up being worth a fraction of what their loans were. People will not have the same sympathy for them as for a person who is a mortgage holder or took out a mortgage to buy a home.
Having said that, we cannot look at the minority of cases and, instead, we must look at this matter in the round. We need risk takers and entrepreneurs. We need to encourage people to take a risk and set up businesses. Not all of the businesses will work so a safety net and way out of debt should be provided. The current system certainly did not provide that. The current system and the previous system certainly did not work. In comparison with European countries, the situation here was not good.
I welcome the fact that an Irish person, or someone who is resident in this State, who decides that bankruptcy is his or her best option will now face the same general rules in Cavan as in Fermanagh. The provision is welcome and it is a step forward. The people most likely to benefit from the provision are those with the larger and more diverse debts that I spoke about earlier. This is mainly a solution for the business person or person with many debts, both business and personal, rather than for a homeowner whose debt is concentrated in a mortgage for the family home or even a buy-to-let property.It is mainly a solution for the business person or person with many debts, both business and personal, rather than for the home owner whose debt is concentrated in a mortgage on a family home or buy to let property. The latter are the debtors who will continue to be faced with an unbending bank but who will have no backing from the State. We must join up our policies. I acknowledge the Government has put in place some measures to support those in mortgage distress but they are not working. The banks, by and large, still have a veto. Many of the banks are not playing ball with regard to options like split mortgages or mortgage to rent schemes. It does not take a genius to work that out. The figures show that there were 206 repossessions in the most recent quarter for which data are available. This does not include so-called voluntary surrenders. A total of 422 families lost their homes during this period, the same number as in the previous quarter and four families are losing their homes per day. The banks are not playing ball with all of those in mortgage distress.
I support the Bill but it is not a silver bullet. It will help some people but only a minority. While I welcome that, I note that this legislation is being processed very late in the day, at the very end of this Government's term. That said, anything that helps people is welcome. Many people, however, will still see this as a drop in the ocean in the context of what is required to deal with the overall debt crisis, which is not just about the matters we are dealing with today. We were told that 18,000 people would use the insolvency service in its first year but up to now, only 3,000 people have made applications. That is why we are here; the insolvency system set up by the Government has failed to tackle the crisis. Bankruptcy was supposed to be the last hope for people swimming in debt and the Government said it would provide hope for such people but that element of the Government's policy has not worked.
There is no guarantee that this legislation will keep even one family in its home. Indeed, the Minister of State cannot give such a guarantee. Bankruptcy in the vast majority of cases, whether it is a three year or one year term, means losing the family home. That is the reality and tinkering with the terms does not change that. A system that was supposed to prevent hundreds of thousands of people facing bankruptcy has failed miserably. This Government has backed the banks at all costs and thousands are paying the price for that.
I hope this Bill helps and will work for those for whom it is intended but we have a lot more work to do in this area. In the coming months, we will be having a very interesting conversation on a whole range of issues in the course of the general election campaign. I am sure the issues which are the subject of this debate will feature in that conversation. We will have a new Government, of whatever colour or persuasion, next year and I hope that it will do a lot more to help the majority of those who are in debt, not just those who took business risks and who had considerable assets. The new Government must focus its efforts on those who are in mortgage distress. I hope that during the lifetime of the next Government, more can be done for them. Again, I support the Bill and the intention of its provisions.