NEW LEGISLATION to reform Ireland’s “arcane” bankruptcy laws and assist householders struggling with mortgage debt will be outlined in detail by senior Government Ministers this morning.
Minister for Finance Michael Noonan and Minister for Justice Alan Shatter will unveil the Personal Insolvency Bill, which will allow debtors to emerge from bankruptcy after three years rather than the current 12.
The proposed law will also include new voluntary non-judicial debt settlement systems aimed at providing alternatives to formal court insolvency, such as the introduction of a personal insolvency arrangement for the agreed settlement of both unsecured and secured debt of more than €20,000.
A Government spokesman described the Bill as “a radical set of proposals designed to tackle the issue of debt in particular forms”.
He said while it represented a “major step” in addressing the mortgage difficulties many people found themselves in, further measures would follow in this area.
The heads of the complex Bill, which will reform the Bankruptcy Act of 1988, were approved at yesterday’s Cabinet meeting and will be published. The Bill will allow for an introduction of automatic discharge from bankruptcy after three years rather than 12.
The insolvency period in the North and Britain is one year and the Government is keen to ensure people are not incentivised to seek to affect insolvency outside the jurisdiction.
There will also be a series of non-judicial elements to the Bill, aimed at providing a rebalancing of interests between lenders and borrowers. These include the introduction of a debt relief certificate to allow for the full write-off of qualifying unsecured debt up to €20,000 after a one-year moratorium period.
A debt settlement arrangement for the agreed settlement of unsecured debt of more than €20,000 will also be introduced if the Bill is enacted as proposed. The third measure, the personal insolvency arrangement, would cover mortgage debt and speculation has centred on an arrangement lasting some six or seven years in this area.
A new State agency will be established to oversee the new insolvency measures, the Government spokesman confirmed.
He stressed that the proposed legislation would go before the Oireachtas justice and defence committee, where it would be “discussed exhaustively” and there would be an “absolute open approach to all the stakeholders”. He described the proposed new laws as challenging and necessary.
Separate proposals arising from the recent Keane report on mortgage arrears and personal debt are expected to follow the publication of the Bill. “It is a major step, with more measures to follow, in relation to addressing the mortgage difficulties many people find themselves in.” The publication of the Bill is a condition imposed by the EU and the IMF as part of the bailout package. In the latest revision to the memorandum of understanding, publication of the proposed legislation was deferred until the end of April.
Mr Noonan and Mr Shatter have insisted there was no dispute between them during the drafting of the proposals.
