Simon Harris (Wicklow, Fine Gael)
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To ask the Minister for Justice and Equality the implications that he envisages the personal insolvency legislation will have for persons who have act as co-guarantor on mortgages; the assistance, if any, the State will provide to persons who find themselves in difficulty with a mortgage in which they are co-guarantor; and if he will make a statement on the matter. [41565/12]

Alan Shatter (Dublin South, Fine Gael)
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The normal legal position in bankruptcy and corporate insolvency is that a person who agrees to guarantee, in whole or in part, the financial obligations of another person is liable, in the event of default or some other specified event, to be required to make good those obligations. This would apply to mortgage finance as to other forms of finance and it may well have been a key basis for the advance of the loan in the first instance. My understanding is that this is also the normal position in other comparable legal systems so that the insolvency procedure and any discharge of debt has no alleviating effect on the liability of the guarantor to the creditor.

This position under existing Irish law and internationally, is reflected in the Personal Insolvency Bill 2012 as currently drafted. A debtor’s entering into one of the new debt resolution processes does not prejudice the legal right of a creditor to seek payment from the guarantor under the guarantee. However, I am conscious of the difficulties which can arise with respect to guarantees in the context of insolvency processes, for all parties concerned and so I will give this matter consideration as work progresses on the Bill. However, I am sure that the Deputy will agree that this is a complex matter.

In relation to the query as to State assistance, if the Deputy is enquiring as to whether some form of assistance, financial or otherwise, might be provided for guarantors, such as family members and others close to an insolvent debtor, who are affected by the debtor’s financial difficulties because they have personally guaranteed the loan of the debtor, I do not believe that such a proposition arises for the State.