Mabs may be proposed to run personal insolvency service

OIREACHTAS JUSTICE COMMITTEE:MONEY ADVICE and Budgeting Service (Mabs) may be proposed as the new State-run insolvency service to mediate between banks and people in debt.

The insolvency service to be set up under the Personal Insolvency Bill is aimed at helping people to manage personal debt through budgeting advice and new arrangements with lenders. The Bill will also introduce debt settlement outside of formal court insolvency, and cut the bankruptcy period from 12 to three years.

Up to a quarter of all Irish mortgage debt could be written down under proposals contained in the Bill, ratings agency Moody’s said yesterday.

Speaking after she chaired a meeting of the Oireachtas Committee on Justice yesterday, Labour TD Anne Ferris said she would seek her committee’s support for the nomination of Mabs, when insolvency practitioners address the committee next week.

Among the groups invited to address the committee next week are Mabs, Free Legal Advice Centres (Flac) and advocacy group New Beginning.

Ms Ferris said Mabs had knowledge and experience of handling individual budgeting issues and liaising with the banks on behalf of individuals.

She said the organisation had over 60 offices across the State and seemed the “obvious choice to be the designated intermediary under the insolvency Bill”.

The Citizens Information Board currently has statutory responsibility for Mabs but Ms Ferris’s proposal would see the agency attain statutory responsibility in its own right. “It is not just about mortgage difficulties, there is the whole range of credit card bills and bank loans that people are struggling with,” she said. While almost 13 per cent of private mortgages are estimated to be in arrears or have already been restructured, Ms Ferris said there was much more to be done.

Committee members next week will question various groups about their proposals for debt forgiveness and/or restructuring and the economic implications of such a strategy. It is estimated that up to 30,000 homeowners could benefit from the legislation.

Minister for Finance Michael Noonan has said the full text of the Bill will not be released until April.

One of the new proposals being considered would see the introduction of debt relief certification allowing people who owe up to €20,000 in unsecured loans apply for a debt relief certificate if they meet certain criteria. Once granted, their debt would be frozen for a year and then written off.