Thursday, 17 December 2015
Bankruptcy (Amendment) Bill 2015: Second Stage
On behalf of the Minister for Justice and Equality, I thank Senators for their interest in the Bill and for their contributions to this debate. This is a significant, reforming Bill which will complement the reforms already introduced to personal insolvency legislation. The most important element of the legislation is the reduction of the bankruptcy term from three years to one year, a fundamental change which follows the recommendations of the Joint Oireachtas Committee on Justice, Defence and Equality as well as the efforts of my party colleague, Deputy Penrose. This will ease the impact of bankruptcy on people who have already been struggling with unsustainable debt and living on very reduced incomes for several years. The provision for revesting the family home, if steps have not been taken for its sale within three years of bankruptcy, is another practical and humane solution. At this stage, a bankrupt would normally be discharged from bankruptcy and cleared of any unsecured debts which can help in making mortgage repayments more affordable.The High Court's new power to extend the bankruptcy term to 15 years in serious cases of non-co-operation or concealment of assets is significant and will address the small minority of situations where a bankrupt person seeks to hide assets or income from creditors. Another very important change is the new power for the official assignee to disclaim properties to avoid a situation where standing liabilities must be borne by the taxpayer when any proceeds of sale are retained by secured creditors. There are also the traditional provisions which ensure people already in bankruptcy can benefit directly from the changes introduced by the Bill with a transitional period of up to six months.
It is essential to underline that bankruptcy is never an easy option and is not the right solution for everyone. Bankruptcy does not wipe out mortgage arrears. Personal insolvency solutions may work better for some households which is why section 14 of the Bankruptcy Act requires the High Court to consider whether a personal insolvency solution would be more appropriate to a debtor's circumstances before agreeing to the application to be adjudged bankrupt.
Senator Hayden asked about personal insolvency reviews. The court review contains an express provision exempting a case from the requirement to show consent of a class of creditor if there is only one creditor. This is an important features of the review. Where there is only one creditor, the court passes directly to considering the fairness criteria of the review and does not need proof of consent from one class of creditor.
I appreciate Senator Power's support of the Bill. As I indicated earlier, with regard to her question on the transitional arrangements and the risk of backlogs, the Bill will put in place arrangements for a smooth transition for all existing bankruptcies. The official assignee and the insolvency service have been fully consulted on the transitional arrangements and we are satisfied the provisions of the Bill are manageable. Additional measures in the Bill to reform and streamline bankruptcy procedures will also free up resources in the courts and for the official assignee and will further ensure no backlogs arise.
Senator Mooney raised a number of issues but he is no longer in the House.