Niamh Smyth (Cavan-Monaghan, Fianna Fail)
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177. To ask the Minister for Finance the rules on exiting bankruptcy; the length of time this should affect a person’s credit rating when trying to obtain a mortgage; and if he will make a statement on the matter. [36373/24]

Jack Chambers (Dublin West, Fianna Fail)
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Responsibility for policy and operational matters on bankruptcy and personal insolvency is a matter for my colleague the Minister for Justice but I can indicate that, generally speaking, a cooperating debtor will normally be automatically discharged from bankruptcy after a period of one year.

The Credit Reporting Act 2013 provided for the establishment and operation of the Central Credit Register (CCR) by the Central Bank. In relation to the issue of a person’s credit rating in the context of an application for a mortgage, according to that Act, lenders must submit personal and credit information to the CCR on all loans for €500 or more. In addition, lenders must make an enquiry on the CCR when considering a credit application for €2,000 or more.

Credit information submitted by lenders in respect of new credit applications is held on the CCR for a period of 6 months from the date on which the information is entered on the register. Credit information submitted by lenders in respect of loan agreements (such as missed payments, if loans were written off or were subject to legal proceeding) are generally held on the CCR for a period of 5 years after the loan is repaid, written off or discharged.

However, it should be noted that the CCR does not contain any information relating to bankruptcy or insolvency. Instead the maintenance of statutory registers on bankruptcy and other personal insolvency arrangements are a matter for the Courts Service and the Insolvency Service of Ireland. In addition, it should be noted that the CCR does not produce borrower credit ratings or credit scores and neither does it contain any guidance or recommendation on the decision a lender should make on an application for credit.

There are, however, certain consumer protection and prudential requirements on lenders when considering an application for mortgage credit. In addition to the requirement to access the CCR, lenders are also required to assess the creditworthiness of a mortgage applicant. They further provide that mortgage credit should only be provided in circumstances where it is assessed that the applicant is likely to be met the repayment obligations in the manner required under the agreement.

Lenders must provide mortgages within the applicable macro prudential residential mortgage lending requirements. In the context of these mortgage lending rules it can be noted that, from a “fresh start” perspective, a borrower who previously had a mortgage loan but who subsequently has undergone bankruptcy or insolvency may, where he or she no longer has an interest in the previous property, be considered a 'first-time-buyer' for the purposes of a future mortgage loan.

Within this general framework, it is then solely a business matter for lenders to make their own decisions on mortgage loan applications having regard to their own lending policy criteria and decision making framework.