James Browne (Wexford, Fianna Fail) | Oireachtas source

On behalf of the Minister for Justice, Deputy McEntee, who very much regrets that she is unable to be in the House today, I am pleased to have this opportunity to introduce the Personal Insolvency (Amendment) Bill 2020.

The Bill's purpose is to make several urgent amendments to the Personal Insolvency Act 2012 which make it easier for insolvent persons, including those in financial difficulties arising from the economic impact of the Covid-19 pandemic, to avail of the legislation effectively. A person is insolvent under the Act if he or she is unable to pay their debts in full as they fall due. The 2012 Act established three statutory mechanisms for resolving unsustainable debt. First, the debt relief notice for an insolvent person with little income or assets and the debts not exceeding €35,000. Second, the debt settlement arrangement for an insolvent person with unsecured debt only. Third, the personal insolvency arrangement for an insolvent person with secured debt such as a mortgage. It can also include unsecured debt.All three mechanisms must be initiated and agreed by the debtor. A proposal for a debt settlement arrangement or a personal insolvency arrangement also has to be agreed by the necessary majorities of the creditors.

The Personal Insolvency (Amendment) Act 2015 added that if an insolvent debtor proposes a personal insolvency arrangement which includes resolving his or her home mortgage arrears, and his or her creditors reject that proposal, the debtor may apply to court for a review of the proposal and of the refusal. If the court is satisfied, after considering a number of balanced statutory criteria, that the proposal complies with all the statutory requirements, provides a better return to creditors than the available alternatives, and is overall fair and reasonable to all parties, the court has power to impose the rejected proposal on the creditors, allowing the debtor to remain in his or her home. This is the personal insolvency court review, now section 115A of the Personal Insolvency Act 2012. I will be returning to it shortly in the course of my remarks.

The main changes made by the Bill fall into three groups. There are two amendments to remove potential obstacles to an insolvent debtor being eligible to avail of the Personal Insolvency Act. Section 14(c) of the Bill is a key amendment. Currently, an insolvent debtor is only eligible under the Act to apply for the personal insolvency court review, if his or her home mortgage was already in arrears before 1 January 2015. That condition perhaps made sense in 2015, when home mortgage arrears had become a steadily declining legacy from the last recession. Post Covid, it will mean there will be a risk that anyone whose home mortgage arrears first arose from the economic impact of the pandemic will be ineligible to access the court review, which is a key protection for homeowners at risk of losing their homes due to mortgage arrears. The amendment therefore removes the requirement that the home mortgage arrears must have been first incurred before 1 January 2015 or indeed before any set date.

Another amendment concerned with eligibility is section 2, which increases the upper limit in the Act relating to personal assets, including savings, for an insolvent debtor to be eligible to propose a debt relief notice to his or her creditors. The increase is important because certain social protection payments, such as fuel allowance or carer's allowance, are paid in annual or semi-annual lump sums that exceed €400. Increasing the ceiling to €1,500 will remove this problem. The Bill allows a short extension of time to key deadlines under the Personal Insolvency Act, providing more flexibility to deal with last-minute events or exceptional circumstances, and more clarity and certainty for all parties concerned.

Section 14(a) extends the 14-day time limit for a debtor to apply for a personal insolvency court review. Sections 10 and 13 allow the Court to extend, in certain circumstances, the protective certificate, which is the 70-day period during which a debtor is temporarily protected against creditor enforcement, in order to facilitate his or her personal insolvency practitioner to put together an arrangement to resolve his or her debts which is likely to be agreed by the creditors or, under section 115A, upheld by the court.

The Bill makes a number of practical changes to procedures to help debtors and their financial advisers to manage the personal insolvency process more effectively. Sections 3 and 5 allow key advisory meetings between the debtor and their statutory financial adviser to take place remotely, subject to certain conditions. Sections 7 and 17 provide a framework for a personal insolvency practitioner to delegate work to another person working in the same firm, subject to certain conditions. Sections 15 and 16 provide for a simpler, less formal and less costly alternative option to a statutory declaration, for debtors to solemnly confirm the facts of their financial difficulties.

Many of the amendments contained in the Bill arise from submissions made by stakeholders to the public consultation on the statutory review of the personal insolvency Acts. It was decided to bring them forward in this Bill because of their relevance to the economic impact of the pandemic, to its particular health risks, and to the logistical challenges arising from necessary public health restrictions. There has been further detailed consultation during the preparation of this Bill, particularly with the Insolvency Service of Ireland, the Money Advice and Budgeting Service, the Courts Service, and associations representing personal insolvency practitioners. I emphasise that the Bill does not limit the amendments to the duration of the pandemic, as they are considered valuable beyond that period.

I will now address the main provisions of the Bill. Section 2 increases the limit on personal assets for an insolvent person to be eligible for a debt relief notice from €400 to €1,500. Sections 3 and 5 amend sections 27 and 49 of the Act to allow the key advisory meeting between a debtor and an authorised financial adviser to be held remotely via electronic communications technology, subject to certain conditions, as an alternative to meeting in person.Sections 4, 8, 9, 11 and 12 are consequential provisions regarding the new option of a "confirmation of truth", instead of having to make a statutory declaration.

Section 6 corrects an erroneous cross-reference in section 54(d) of the Act to the maximum permitted duration of a personal insolvency arrangement, which is wrongly mentioned as five years. In fact, the maximum duration is six years, as set out in section 99(2)(b) of the Act.

Sections 7 and 17 allow a personal insolvency practitioner, PIP, to delegate the performance of his or her functions, subject to certain conditions, to his or her employee or colleague working in the same firm. The delegating PIP remains responsible for the performance of the function by the person to whom it is delegated. The Insolvency Service of Ireland is empowered to make regulations to govern any such delegation.

Sections 10 and 13, as I outlined earlier, clarify the grounds on which a protective certificate may be extended. They also introduce a new additional ground where the court considers that it would be just to extend protection by up to 40 days by reason of exceptional circumstances or other factors which are substantially outside the control of the debtor or the PIP.

Section 14 makes three changes to section 115A of the Act. Section 14(a) extends the deadline for the debtor's PIP to apply for the personal insolvency court review, from 14 to 28 days. Section 14(b) clarifies that where a debtor's PIP applies for the court review within that 28-day period, whether before or after the expiry of the debtor's protective certificate, the debtor's protective certificate is continued in force until the court has decided the court review application. This provides more certainty and clarity to both debtors and creditors. Section 14(c), as already mentioned, removes the current requirement that to be eligible for a personal insolvency court review, the debtor's home mortgage must have been in arrears before 1 January 2015.

Sections 15 and 16 create the new option for a debtor to sign a "confirmation of truth", instead of having to make a statutory declaration, when applying for any of the three debt resolution mechanisms.

It is the Minister's strong view that this priority Bill is a much-needed measure to make debt solutions more accessible to people in serious financial difficulties, and is one which will bring benefits to debtors, creditors, and our economy and society more broadly. The Minister hopes that, with the co-operation of all sides, we can facilitate its swift passage through this House with a view to early enactment.

I commend the Bill to the House.