Michael McGrath (Cork South Central, Fianna Fail)
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To ask the Minister for Finance the discussions he has had with the Irish Banking Federation in relation to its recently issues protocols on unsecured debt; his views that the protocol will be of assistance in dealing with mortgage arrears; and if he will make a statement on the matter. [6458/13]

Michael McGrath (Cork South Central, Fianna Fail)
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To ask the Minister for Finance his views that credit unions, that are outside the terms of the recently issued protocol by the Irish Banking Federation in relation to unsecured debt, will be adversely impacted by their application; and if he will make a statement on the matter. [6459/13]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 55 and 56 together.

I note the launch of a protocol on unsecured credit which was an initiative of the IBF.

Initiatives such as the IBF protocol can certainly assist in encouraging and facilitating creditors and debtors to engage with one another in an open, constructive manner to address debt arrears and genuine debt difficulty. This can resolve positions of over indebtedness in a way that is as fair as possible to both the debtor and creditors and will be a beneficial voluntary addition to the broader debt resolution framework.

However, any voluntary initiative or bilateral approach can only be successful if all parties are in agreement. Where this does not arise, it is necessary to have an effective statutory insolvency process. Therefore voluntary initiatives, while welcome, do not remove the need for the insolvency reforms as provided for in the recent Personal Insolvency Act. As the Deputy is aware, under the legislation an insolvent debtor can, through the personal insolvency practitioner, formally make a Debt Settlement Arrangement or a Personal Insolvency Arrangement proposal to their creditors, which may include credit unions. This will allow for an efficient framework whereby the creditors can engage with and consider a proposal from the debtor to deal with their insolvent circumstances short of the full judicial bankruptcy process.