New Bill seeks to reduce debt fear

The Personal Insolvency Bill published by the Government last week has been broadly welcomed as TDs debate details of the legislation on debt issues.

“Overall it is a positive step for both businesses and individuals with the reduction of the bankruptcy term from 12 years to three years and with the introduction of the new debt settlement arrangements, particularly for individuals with personal loans, credit card debt and mortgage arrears,” commented Carla Manning, an accountant with CACM Accountants.

"Under the new arrangements once an agreement has been put in place and agreed by the parties, so long as the terms are been adhered to, no further actions can be taken by the creditors for the debts covered by the arrangements. Hopefully, this will allow provide some relief and a sufficient timeframe to get back on a more stable financial footing."

Measures also include a debt relief notice which allows the write off of unsecured debt up to €20,000, a debt settlement arrangement for the agreed settlement of debt over five years and a personal insolvency agreement of secured debt up to €3 million.

Cork South Central TD Ciarán Lynch welcomed the publication of the Bill as an essential part of measures that will “tackle the problem of personal and mortgage debt.”

This legislation will put pressure on the banks to negotiate with borrowers in a meaningful way,” said Deputy Lynch.

“It will address the imbalance that has existed between the banks and the borrower, providing greater strength to the borrower. This legislation creates a stimulus for the banks to engage with customers in a meaningful way by coming up with a process that is mutually acceptable.”

However, Deputy Lynch was keen to stress that the Bill was not blanket debt forgiveness and insisted that people will still have to meet financial obligation, as long as the obligations are reasonable and fair. 

Fianna Fáil TD for Cork North Central welcomed the Bill but expressed concern over the part that banks play in the Bill.

“The new Insolvency Service of Ireland needs to have the capacity to engage with families and mortgage holders and offer relevant advice and importantly be accessible,” said Deputy Kelleher.

“The Bill does nothing to break the monopoly the banks have over borrowers and the State. The Bill informs us that Creditors holding 65 per cent of a person’s debt must agree with the proposed debt settlement arrangement or personal insolvency arrangement. This changes little for mortgage holders and still places them at the mercy of the bank.”

Carla Manning insisted that the new Insolvency Service would have to give equal regard to both sides in a debt case and saw no reason to be fearful of an overreach of banking power.