REACTION:THE NEW Bill has been broadly welcomed by people representing those struggling with debt, though reservations have been expressed about the veto exercised by creditors.
Legal rights group Flac, which has been campaigning for personal debt reform, expressed its relief that the long-promised legislation had finally been released.
New Beginnings, which gives legal assistance to those facing the loss of their homes or who are otherwise overburdened with mortgage debt, said the Bill was designed to promote deals with the banks and was therefore welcome.
“This proposed law addresses issues on which Flac has been campaigning for the last 10 years,” said Flac director general Noeline Blackwell.
However, she added the State must offer a suite of solutions so people could understand them and negotiate for themselves.
She said her organisation continued to have concerns about the imbalance of power between banks and debtors, as the Bill preserved the creditors’ veto in relation to debt-settlement arrangements and personal insolvency arrangements.
“The proposed law as it stands still does not impose a legally binding obligation on lenders to accept reasonable applications from customers in arrears; neither does the new Bill provide a right for debtors to appeal a creditor’s decision in any of its options,” Ms Blackwell added.
Flac’s senior policy researcher Paul Joyce pointed out that where debtor applications were refused by creditors, the only options open to debtors under the legislation might be to apply for bankruptcy.
Senior counsel Ross Maguire of New Beginnings noted the creditors’ veto had been reduced from needing a majority of 75 per cent of total creditors to 65 per cent, but added: “Usually there is one big creditor. A better way to understand it is to look to the UK, where people can enter voluntary arrangements of bankruptcy.
“The reason the banks in the UK do deals is because of the threat of bankruptcy.
“Under this Bill, if you are completely honest after three years , the debt is gone. That is a solution. If banks know that, they are more likely to look to do deals.”