On 25 January the Irish Government published long-awaited draft personal insolvency legislation. Minister for Justice and Equality Alan Shatter said at the time that, "In bringing forward this draft Bill the Government is delivering on a crucial promise made in the Programme for Government. The Bill will radically reform our insolvency legislation by prescribing new mechanisms for non judicial debt settlement in the public interest, in the interest of both debtors and creditors and, in particular, will assist those in unexpected difficulties as a result of the current fiscal, economic and employment conditions. When enacted this legislation will be one of the key legislative instruments for addressing the financial difficulties of general insolvency; mortgage debt and negative equity."
Under the Bill, non-judicial settlements of debt will be introduced and will include
The Bill also contains amendments to the Bankruptcy Act 1988, to continue the reform of bankruptcy law that started with the Civil Law (Miscellaneous Provisions) Act 2011. Proposed amendments include reducing the automatic bankruptcy discharge period from the current 12 years to 3 years after the date of adjudication.
Free Legal Advice Centres Ltd (FLAC) has said that the publication of the scheme is a "significant advance". Director Noeline Blackwell "welcomed provisions that take account of the need for people to maintain a minimum income, and the provisions which seek to ensure that not every serious debt situation will result in bankruptcy and the loss of the family home." However, FLAC "remains concerned at the level of power that remains vested in creditors to approve plans proposed by debtors."
Click here to see a press release from the Department of Justice and Equality.
Click here to see a copy of the draft bill.
As the Bulletin went to press, it was reported that a Dublin family are the first mortgage holders to benefit from the Irish government's new debt forgiveness scheme. This scheme, which was announced last November following the Keane report, allows mortgage-holders who can no longer service their debts to surrender their properties but remain in their homes as social housing tenants.
Also today, a Central Bank statistician is to discuss non-mortgage personal debt in Ireland with the Committee on Finance, Public Expenditure and Reform.