Personal Insolvency (Amendment) Bill 2020: Second Stage

I move: "That the Bill be now read a Second Time."

I am pleased to have this opportunity to move Second Stage of the Personal Insolvency (Amendment) Bill 2020. The main purpose of the Bill is to make a number of urgent amendments to the Personal Insolvency Act 2012 which will make it easier for insolvent persons, including those in financial difficulties arising from the economic impact of the Covid-19 pandemic, to avail of the legislation effectively.

A person is insolvent under the Act if he or she is unable to pay his or her debts in full as they fall due. The 2012 Act established three statutory mechanisms for resolving unsustainable debt: the debt relief notice, which is suitable for an insolvent person with little income or assets, and debts not exceeding €35,000; the debt settlement arrangement, which is suitable for an insolvent person with unsecured debt only; and the personal insolvency arrangement, which is suitable for an insolvent person with secured debt such as a mortgage, and it can also include unsecured debt. All three mechanisms must be initiated, and agreed, by the debtor.

A proposal for a debt settlement arrangement or a personal insolvency arrangement has to be agreed by the necessary majorities of the creditors. However, the Personal Insolvency (Amendment) Act 2015 added that if an insolvent debtor proposes a personal insolvency arrangement which includes resolving their home mortgage arrears, and their creditors reject that proposal, the debtor may apply to court for a review of the proposal and of the refusal. If the court is satisfied, after considering a number of balanced statutory criteria, that the proposal complies with all the statutory requirements, provides a better return to creditors than the available alternatives and is fair and reasonable to all parties, the court has the power to impose the rejected proposal on the creditors, allowing the debtor to remain in their home. This is the "personal insolvency court review", now at section 115A of the Act. I will be returning to it in the course of my remarks.

The main changes made by the Bill fall into three groups. First, there are two amendments to remove potential obstacles to an insolvent debtor being eligible to avail of the Personal Insolvency Act. Perhaps the most important amendment made by this Bill is in section 14(c), which amends the eligibility conditions for an insolvent debtor to apply for a court review, under section 115A of the Act, if the creditors reject the debtor's proposal for a personal insolvency arrangement which includes the debtor's home mortgage arrears. Under section 115A, the debtor is only eligible to apply for a court review if his or her home mortgage arrears date from before 1 January 2015. That condition perhaps made sense in 2015, when home mortgage arrears had become a steadily declining legacy from the last recession. However, post-Covid, it means that anyone whose financial difficulties arose after that date, for example, due to the economic impact of the pandemic, risks being ineligible to access the court review, which is a key protection for homeowners at risk of losing their homes due to mortgage arrears. The amendment, therefore, removes the requirement that the home mortgage arrears must have been first incurred before 1 January 2015 or, indeed, before any set date.

The other amendment concerned with eligibility is section 2 of the Bill, which increases the upper limit in the Act on personal assets, including savings, for an insolvent debtor to be eligible to propose a debt relief notice to his or her creditors. The amendment is to take account of certain social protection payments, such as fuel allowance or carer's allowance, which are paid in annual or biannual lump sums that can push the recipient temporarily over the current eligibility limit.

Second, the Bill allows a short extension of time to key deadlines under the Personal Insolvency Act, providing more flexibility to deal with last-minute events or exceptional circumstances, and more clarity and certainty for all parties concerned. Section 14(a) extends the 14-day time limit for a debtor to apply for a personal insolvency court review. Sections 10 and 13 allow the court to extend, in certain circumstances, the protective certificate, the 70-day period during which a debtor is temporarily protected against creditor enforcement, in order to facilitate his or her personal insolvency practitioner, PIP, putting together an arrangement to resolve the debts which is likely to be agreed by their creditors, or, under section 115A, to be upheld by the court.

Third, the Bill makes a number of practical changes to procedures to help debtors and their financial advisers to manage the personal insolvency process more effectively, as follows: sections 3 and 5 of the Bill allow key advisory meetings between the debtor and his or her statutory financial adviser to take place remotely, which is important during social distancing restrictions, subject to certain conditions; sections 7 and 17 provide a framework for a PIP to delegate work to another person working in the same firm, subject to certain conditions; and sections 15 and 16 provide for a simpler, less formal and less costly alternative option to a statutory declaration for debtors to solemnly confirm the facts of their financial difficulties.

Many of the amendments contained in the Bill arise from submissions made by stakeholders to the public consultation on the statutory review of the Personal Insolvency Acts. It was decided to bring them forward in this urgent Bill because of their relevance to the economic impact of the pandemic, to the particular health risks arising from the pandemic - for example, if a debtor or his or her financial adviser becomes unexpectedly ill due to the pandemic just before a key deadline - and to the logistical and practical challenges arising from necessary public health restrictions.

There has been extensive further consultation in 2020, in particular with the Insolvency Service of Ireland, the Money Advice and Budgeting Service, MABS, the Courts Service and associations representing personal insolvency practitioners on identifying the amendments most needed in the light of the pandemic and during the preparation of this Bill. I should emphasise, however, that the Bill does not limit the amendments to the duration of the pandemic as they are considered valuable beyond that period.

The Bill is a first delivery under the programme for Government commitment to "Introduce the necessary reforms to our personal insolvency legislation and ensure that sufficient supports are in place for mortgage holders with repayment difficulties." A further personal insolvency (amendment) Bill is also included in the Government legislation programme, published in January 2021. That is a larger Bill to address comprehensively the recommendations arising from the statutory review of the Personal Insolvency Acts. The report of the review is expected to be completed this summer and work will begin on the general scheme of that Bill later this year.

I will now address the main provisions of the Bill. Section 2 increases the limit on personal assets for an insolvent person to be eligible for a debt relief notice from €400 to €1,500. In addition to this figure, reasonably necessary household goods to a total value of €6,000 and a motor vehicle valued up to €5,000 are disregarded. The increase is important because certain social protection payments, such as fuel allowance or carer's allowance, are paid in annual or semi-annual lump sums that exceed €400. The Money Advice and Budgeting Service has advised that an insolvent person who receives one of these allowances can then appear to exceed the current ceiling when his or her financial circumstances are in fact suitable to a debt relief notice. Increasing the ceiling to €1,500 will remove this problem.

Sections 3 and 5 amend sections 27 and 49 of the Act, respectively, to allow the key advisory meeting between an insolvent person and an authorised financial adviser to be held remotely via electronic communications technology, subject to certain protective conditions, as an alternative to meeting in person. Section 3 refers to a meeting with an approved intermediary about seeking a debt relief notice, while section 5 refers to a meeting with a personal insolvency practitioner about seeking a debt settlement arrangement or a personal insolvency arrangement.

Section 4 is a consequential provision that supports the introduction of the new option for a debtor to sign a "confirmation of truth" instead of having to make a statutory declaration. Section 6 corrects an erroneous cross-reference in the Act to the maximum permitted duration of a personal insolvency arrangement.

Section 7 allows a personal insolvency practitioner to delegate the performance of his or her functions under the Act, subject to certain conditions, to a person employed by the PIP, or who works with the PIP in the same firm. The delegating PIP remains responsible for the performance of the function or act by the person to whom it is delegated. The Insolvency Service of Ireland, which is the professional regulatory body for PIPs, is empowered to make regulations to govern any delegation to a person who is not a PIP. Sections 8 and 9 are consequential provisions relating to the new option of making a confirmation of truth instead of a statutory declaration.

Sections 10 and 13 are important amendments which, as I outlined earlier, clarify the grounds on which a protective certificate may be extended and introduce a new additional ground, where the court considers that it would be just to extend protection by up to 40 days by reason of exceptional circumstances or other factors which are substantially outside the control of the debtor or the PIP. Sections 11 and 12 are further consequential provisions relating to the new option of making a confirmation of truth.

Section 14 is arguably the most important of the amendments. It makes three changes to section 115A of the Act concerning the personal insolvency court review. Section 14(a) extends the deadline for the debtor's PIP to apply for the court review. The current deadline is 14 days and the amendment extends the deadline, in all such applications under section 115A, to 28 days from the date of the creditor refusal. Section 14(b) clarifies that where a debtor's PIP applies for the court review within that 28-day period, whether before or after the expiry of the debtor's protective certificate, the debtor's protective certificate is continued in force until the court has decided the court review application. This provides more certainty and clarity to both debtors and creditors.

Section 14(c) is a key amendment. It removes the requirement that in order to be eligible for a court review under section 115A of the Act, the home mortgage included in the debtor's proposed personal insolvency arrangement must have already been in arrears before 1 January 2015 or indeed any set date. There is no set date put in instead of the original date.

Sections 15 and 16 are the substantial amendments that introduce the new option for a debtor to sign a "confirmation of truth", instead of having to make a statutory declaration, when applying to the Insolvency Service of Ireland for any of the three debt resolution mechanisms.

Section 17 is a consequential amendment to section 7, which provides for a personal insolvency practitioner to delegate certain functions or acts to another person working in the same firm, while remaining personally responsible for their exercise.

It is the Minister's strong view that this priority Bill is an important and urgent measure to make debt solutions more accessible to people who are in serious financial difficulties and one which will bring benefits to debtors, to creditors and to our economy and society more broadly. The Minister hopes that with the co-operation of all sides, we can facilitate its passage through the House with a view to an early enactment. I commend the Bill to the House.

I welcome the Bill. Sinn Féin will support the legislation. It is slightly overdue, in that the pandemic has been going on for more than a year now. The vast majority of measures in the Bill deal with issues that have arisen because of the pandemic and the delays people have had, not being able to meet and that type of circumstance. Many of the key things outlined in respect of section 14 around the court and going to an appeal probably constitute the big stuff that needs to be dealt with because it has had negative impact on people who have been trying to deal with PIPs. Speaking to people in MABS and working with Abhaile, it is something they have highlighted as needing to be fixed as soon as possible.

While the issues we deal with today are mainly around the pandemic, the broader context is worthy of note. The arrival of Abhaile on the scene as a scheme within MABS has been transformative for many people. Something that I suggest the Minister look at with some urgency is the sustainable future of that scheme within MABS to ensure it is properly funded and kept in place to ensure it is there for people. It provides a certain degree of security to people when they have the Abhaile voucher, which allows them to get legal advice on whether they are suitable to go into a PIP scheme in the first place. It ensures that if an arrangement is put in place by the practitioner and is rejected by the lending institution, the banks or whatever and it goes to court, people have a legal standing and are supported through all that. The Abhaile scheme does that and is absolutely vital and is one of the more necessary things that has come from all this.

Much of the debt people are dealing with may have originated as debt they had with one of the banks, such as AIB, Bank of Ireland or Ulster Bank, many of which have moved and sold those loans on when they became distressed, as they call it, and they are now in the hands of entities, some of which are not even banks at all, such as Pepper, Start Mortgages and Everyday Finance. People can find it very difficult to deal with some of these entities. I understand that with the arrival of Abhaile on the scene and the fact that there is support for the person in debt so that when they go to court, often the court will uphold the arrangement put in place, many of these organisations are now accepting the arrangement and are prepared to continue with it. Some of the banks are still resistant to it. I think Bank of Ireland, in which the State has a share, is one of the most difficult to deal with. That has been the experience of many people working in MABS and Abhaile. It is something to note.

Many of the banks have various sets of criteria they put in place as to arrangements they will facilitate. These vary between the different banks. There is work to be done on this. The Minister of State said the Department was hoping to deal with further legislation later in the year. Perhaps work could be done on that to bring some sense of regulation into that area to provide certainty that when people go to negotiate with the banks, the kind of arrangement they would get would not depend on which bank or vulture fund they owed the money to but that the arrangements would be clear and people would know what they were dealing with. Work might be needed on the code of conduct on mortgage arrears, and I am sure the Minister of State would acknowledge that.

The general issue many people have is that they fell into debt and they find themselves often able to repay that debt but, because arrears exist, the lending institution will progress proceedings against them and may even get a court order, particularly if the assets are more than the family home - they might have land or a piece of property - even though they are meeting the repayments. That is an issue that needs to be dealt with and acknowledged. Many of these lending institutions are looking at what is owed and what the asset is worth. If the asset is worth more than what is owed, they will pursue the people regardless of the impact that has on the human beings. We have to understand these are families in many cases, who feel very distressed and are under huge pressure because of the situation in which they find themselves, often because they tried to better themselves or to progress things. They might have tried to expand or develop a business they had and it did not work out for them. It certainly was not their intention to fall into debt, to defraud or anything like that, yet that is how the banks treat them, that is, as though they had set out to rob the bank. Often people's experience is the other way around, when they see the interest rates etc. we are being charged in this country by the main lending institutions.

At the core of all this is the problem in banking policy in this country and how that is to be resolved. It a big issue that the Government needs to come to terms with. Today, the average family home which is mortgaged is paying an interest rate almost double that of any other country in Europe, yet the money the bank borrowed to lend to the person with the average family home is borrowed at the same interest rate as in every other country in Europe, from the European Central Bank. There is clearly a problem here. When we investigate a little, we are told the main reason is because of bad debt in the past and the level of reserves banks need to have are higher because of the misdeeds of the past. Of course, these misdeeds were not those of the public or the people who went out to borrow money or even the person getting the mortgage today but were the misdeeds of the banking institutions themselves. Nevertheless, it is the public which has to carry the can. The unfairness of that clearly jars with a lot of people and if there is to be a move towards a resolution of the banking crisis we have had for the past ten or 15 years here, it is something we really need to get to grips with.

Many of the banks now talk of leaving and pulling out. Ulster Bank is talking about leaving and I understand it is most reluctant to enter into arrangements with people because of that. There are issues with other banks. There have been mergers and there are proposals in place but all have the same sense of setting out to make maximum profit at the expense of ordinary people in business and ordinary workers. The role of the Government in this regard is to provide a level playing field and to represent the vast majority of the ordinary people who are doing their best. People are doing their best but they often find themselves in difficult circumstances and find they are not protected as they would expect, with the banks and lending institutions having the upper hand. We need to rebalance that. The measure here today is pandemic-related but I hope the further work coming down the track will go a considerable distance to bring balance back to that situation.

Apart from working on the issues of insolvency and people in debt, we need to examine the bigger picture of banking policy in this country and how we are going to get over the clear difficulties. Those difficulties are not only a problem when people get into debt; they are also a problem for the functioning of our economy. That also needs to be recognised. Our economy cannot function as long as we have a broken banking system. The vast majority of people would state that is exactly what we have. When they need credit, they cannot get it. The people who have money are given more and more of it. It is one of these totally imbalanced sets of circumstances in which the Government needs to play a stronger role. It needs to be the hand that balances and regulates because if it is simply left the markets, they will run amok, as they have done in the past. Therefore, there is a strong role for the Government.

We will certainly be supporting this legislation. While we could, of course, say amendments are required and that there is this, that and the other to be done, the Bill's urgency requires its passage through these Houses with the utmost speed. I hope we can consider further legislation later on and introduce further measures to try to rebalance the situation.

This Bill, as the Minister has indicated, provides urgent amendments to the Personal Insolvency Act 2012, which was originally designed to make it easier for insolvent persons to legally resolve their indebtedness. It was designed at the height of the housing market collapse when people who never envisaged they would be in debt found themselves in it. The objective of the Bill was to give a path to recovery for people trapped in debt. The legislation originally had, and still has, graduated mechanisms to achieve this objective, depending on the level of debt and the nature of the debt involved. This legislation was championed by my former colleague, Willie Penrose, who had great experience as a barrister in dealing with intractable cases of debt. I remember his persistence at parliamentary party meetings, in the Dáil and with Ministers and I believe his voice was pivotal in putting the original 2012 Act, important legislation, on the Statute Book.

Concerns were raised initially to the effect that the co-operation of the creditor was required. That was addressed subsequently, in the amendment introduced in 2015, to ensure an avenue for a debtor to apply to the courts where home mortgage arrears were involved and the credit institution was resisting the resolution proposed. Consequent to the 2015 amendment, as the Minister will recall, the court can impose a resolution in these circumstances, notwithstanding the resistance of the institution.

Legislation of this nature has to be reviewed regularly. It has to be refined on the basis of its practical effect, or its outworkings in terms of real life and real cases. Is the legislation achieving the objective we have discussed here and set in the Oireachtas? Are the practical difficulties that we set out to address being resolved? This Bill seeks to update the legislation, which I welcome. We will support it. The requirement for a mortgage to be in arrears before January 2015, which was understandable in a Covid-free world, is to be removed, which is an obvious advance. There is no need for any date to be put in. This is a permanent mechanism for people who find themselves in the circumstances in question, not simply an emergency proposal. I hope that will apply.

As the Minister has said, the Bill also proposes to increase the upper limit of allowed personal assets to €1,500, for the reason he has set out: people could be debarred simply by getting a social welfare payment in a lump sum, which was never envisaged. The Minister set out other changes proposed in the Bill, including changes in respect of the time limit for the application of a personal insolvency court review and numerous other issues I do not have time to deal with individually, unfortunately.

Legislation of this nature is required. Our general bankruptcy and insolvency legislation has been hopelessly outdated. By comparison with that of other jurisdictions, it has been completely unsympathetic. Maybe it dates back to an attitude we had to bankruptcy in this country. In the United States, it is not regarded as indicating failure. We have seen many high-profile individuals residing abroad to avail of other jurisdictions' insolvency laws. It was important for us to update ours.

I can tell from experience in a job I once had that there is always concern in the Department of Finance of Central Bank about legislation of this kind. We need to ensure we have a competitive banking market and, more important, an affordable mortgage market in this economy. It is therefore very worrying that banks such as KBC Bank Ireland and Ulster Bank are withdrawing from this country, as alluded to by others. The reduction of competition in an already overly expensive mortgage market is deeply worrying. Private equity funds have bought distressed mortgages from banks and mortgage-givers and are now complaining, in some instances, that they have not made sufficient money from the acquisition at reduced rates of these distressed loans. They express concern that they are having difficulty in enforcing securities on unpaid mortgages. In the aftermath of the current Covid crisis, these matters are likely to be exacerbated and we will see an increasing number of cases involving people in extreme difficulty. We need to be able to take further action if that is the case. If companies that have acquired distressed loans and want to foreclose on the individuals, families or businesses concerned are going to be able to go to the courts to get judgments against them, based on their wanting to make an instant profit even though a repayment schedule is perfectly feasible, it is wholly unacceptable and we must be prepared to legislate to resist it. That is certainly an area that requires extreme vigilance on our part.

Issues such as Irish banking are very important for us. It is not an appropriate topic to discuss with the Minister for Justice but it is profoundly worrying for any of us who consider the Irish economy that we are now going to return, apparently, to a dominant duopoly involving Bank of Ireland and AIB. The role of the European Central Bank, ECB, in this matter has to be taken into account. The reserve required in Irish banks after the crash is unacceptable. Why have Irish banks uniquely to have a multiple of the reserves required in other banking systems in our common banking union? It is just not fair, equitable or acceptable. There is a genuine debate over what is required to ensure there will not be another banking crash but if we are to have a banking union, it must be based on equity. In other words, the interest rates that apply generally across the Union – the interest rates set by the European Central Bank – should apply here. There is almost a punitive attitude taken in that we have to have reserves that others do not.

There is an enduring debate on the necessity, or otherwise, of a State-owned bank. On this, I would argue in the affirmative. Those of us who have argued this for most of our political careers did not expect us to own virtually the entire banking system after the crash but we need to consider the initiatives taken in the early years of this State. The Agricultural Credit Corporation, ACC, was set up in 1927 to finance agricultural activity because it was required. It was seen that the private sector would not build a vibrant agricultural sector sufficiently.

That was followed by the establishment of the Industrial Credit Corporation, ICC, in 1933, during the Lemass era, to organise sustainable State investment and build an industrial base in this country. Both were later sold off, the ACC sold to RaboBank in 2002 and the ICC to Bank of Scotland in 2001, when, during the Celtic era, people lost the run of themselves and wanted to move to a position well beyond that for which those banks were designed. The Government of Bertie Ahern saw only an unending boom. As we know, as the boom got "boomier", catastrophe loomed.

We have to learn from the past. There are two things I want to say about the legislation. I strongly support the specific changes envisaged in the Bill but we need to be vigilant to see how we can do more if, in the post-Covid area, we see the necessity for further action. I would further argue that we need to have a vibrant, State-sponsored third force to ensure that the traditional duopoly that dominated banking in this State is not returned without competition. That would be bad for mortgage holders, bad for business and bad for our economy.

I acknowledge Deputy Howlin's role as a Minister in the Government that brought in this legislation. I also acknowledge the role of the then Minister for Justice and Equality, Alan Shatter. It was a priority in the civil law division of the Office of the Parliamentary Counsel and important legislation. I was thinking about our debate yesterday on the Private Security Services (Amendment) Bill and the mechanism for the enforcement of court orders to repossess property assets. What we are debating today is related to that and we speak about what we at one point referred to as "NAMA for debtors", the mechanism put in place by the State to help people who have got into difficulty with debt to avoid losing their assets or to restructure their personal finances in a way that helps them to retain some of those assets and move forward to the next stage of life with a greatly reduced debt burden.

The personal insolvency arrangement, PIA, regime is worthwhile and valuable. It incentivises debtors and creditors alike to restructure debts and distressed assets in a sustainable way without recourse to protracted litigation. Much of this is rooted in the housing and banking crises, as previous speakers have mentioned, the impact of both of which is still being felt more than 13 years after the crash.

Yesterday and again today, many Deputies have mentioned the need to have a competitive banking system in Ireland that mortgage interest rates were too high. We know from the Central Bank report yesterday that mortgage interest rates in Ireland are the highest in Europe which, coupled with the macroprudential limits on mortgage lending, makes life extremely difficult for first-time buyers and other mortgage holders. Mortgage holders must be aware that the extreme difficulty for banks to exercise their security in Ireland has significantly contributed to those high interest rates compared with Europe.

Those in mortgage arrears should be treated with compassion and given meaningful help. The PIA regime contributes to that, as do the Abhaile scheme and mortgage-to-rent schemes, all of which are designed by the State to protect the good faith person who cannot pay. Any insolvency regime must also be rigorous in order to ensure that it benefits only those people rather than those individuals who will not pay or indeed individuals who refuse to disclose assets. We know that they exist too. Most people in this situation are in modest circumstances and personal difficulties, including people with illnesses and people who sustained income loss and never managed to make it up because of circumstances. Most people are in modest and difficult circumstances, for example, older people with no opportunity to get new employment.

There are 25,000 mortgage accounts in long-term arrears at present but just 5,000 PIAs in place from the past eight years, with last year being the first year that we had 1,000 in a year. Why do we think that is when so many people are struggling with bank debt? Is it a persistent stigma? Is it a lack of information? Is it that bank letters themselves are terrifying and hard to read? Is it the transparency with which personal details are gone through in the courts? Is it unfamiliarity with the system generally? One gets a voucher from Abhaile to see a PIP and there is no other fee unless an arrangement is put in place. People need to know that this is available. I appreciate that this is in response to the effect of the pandemic and the loss of jobs and businesses. Those risks are considerable, notwithstanding the economic supports and efforts that the State has made to try to mitigate the risk involved. I accept that we have a good long way to go and it is important to deal with this in legislation now.

I want to raise the legal cost structures relating to the PIA regime. There is currently no real cost disincentive to taking a case or lodging an appeal on behalf of debtors, regardless of whether it is run. In each such instance, there is a fee to be taken by the PIP, solicitor and barrister involved. Creditors deal with their own fees. I would be interested to see what proportion of cases lodged or appealed by creditors are actually run compared with those taken by the representatives of debtors. There needs to be a more reasonable balance of risk. The State needs to be careful that it is not simply financing a small proportion of practitioners at the expense of the debtors they represent, with the State supporting them in restructuring their finances as they are entitled to do.

I welcome the opportunity to speak on this Bill. It is a timely proposal, given the times were are in when so many have been affected financially by the pandemic. People will tend to borrow more when times are good and they feel able to pay back a loan or meet a financial obligation. They are, however, at the mercy of developments in the wider economy. With employment becoming more and more precarious, it will be interesting to see how this legislation will affect things. Many workers have been badly affected by the pandemic and we in Sinn Féin strongly oppose the reduction of the pandemic unemployment payment. It will place many households in severe financial difficulty through no fault of their own. We need a commitment from the Government that the pandemic unemployment payment will continue for as long as it is needed to support working families.

I address the issue of mortgage sales. It is wrong that mortgages are being sold to foreign vulture funds and that mortgage holders are being subjected to repeated letters and phone calls from these vultures who pass loans around with no regard for the families involved. These are real families with real children and there needs to be better regulation to avoid pushing families over the edge. I am aware of people who come to my office where they are mentally completely stressed. The previous speaker referred to older people. Our older people are in severe financial difficulty and this Government needs to do much more to help them.

I broadly welcome this legislation. It is good to see that the Insolvency Service Of Ireland, MABS and the Citizens Information Board have all welcomed the Bill. Personal insolvency is an incredibly difficult situation for anyone to be in and we have to make every effort to ensure that the process is fair and does not put people through unnecessary hardship. Personal insolvency applications reached an all-time high in July last year, with 239 applications to the Insolvency Service of Ireland. That was a 125% increase from July 2019.

This Bill makes a number of changes to the process for personal insolvency. Most of these changes are welcome and some are long overdue. The value of assets which a person may still have to be eligible for debt relief will be raised from €400 to €1,500. The Government has stated that this has arisen as a result of issues relating to lump sums and social protection allowances, which tipped things over the limit. The intention behind this amendment is welcome. Social protection should never be counted towards somebody's available assets in an insolvency situation. Will the Minister of State outline how the specific number was arrived at? Have many cases been refused on those grounds? Will efforts be made to follow up in respect of those individuals?

The amendment to section 115A of the Personal Insolvency Act 2012 allows the courts to review a personal insolvency arrangement which has been denied, usually by a bank or a hedge fund. This Bill amends this section, removing the requirement that the mortgage in question must have been in arrears on 1 January 2015. Both practitioners and debtors alike have highlighted this previously. One would have to wonder why it has taken so long to make the change. It is welcome that it is being made. People who have fallen into mortgage arrears as a result of the pandemic should be able to avail of this review but so should others who fell into arrears between 2015 and 2020 who have been overlooked until now. Many people who have viable proposals to deal with personal insolvency have been rejected unreasonably merely because they were not in debt prior to January 2015.

Section 16 will allow a confirmation of truth to be submitted in place of a statutory declaration under certain situations where they are required.

It also creates a new offence of signing or making such a confirmation without an honest belief as to the truth of the same. Offences of this nature are already covered under sections 126 to 132, inclusive, of the Personal Insolvency Act 2012. These allow for prosecution in instances of false representation, omission, concealment, falsification of documents and so on. One would wonder why these sections would not come into play and why this provision is necessary. Have incidents occurred which were not captured by the provisions of those particular sections of the 2012 Act?

When we speak about debt and insolvency, it is important that we keep in mind that debt can happen to absolutely anyone. Covid has really demonstrated this, just as the crash did. Unfortunately, all too often, in both policy and the prevailing narrative, personal debt is often seen as a personal problem or a failing on the part of an individual. This adds to the stress. This narrow mindset ignores the macroeconomic causes of debt and the structural and political factors that lie beyond the control of many people who are in debt. In 2019, Ireland had the sixth highest level of household debt in the EU. Some 22% of households are in debt or are overburdened by debt repayments. When looking solely at low-income households, that figure increases to 32%.

People from all sections of society are struggling with debt but some are particularly vulnerable. Over 33% of renters in the private rented sectors are overburdened by debt repayments. Very often, people are paying more than 30% of their income in rent. This is a guideline which really should not be exceeded. These renters are nearly four times more likely to go without heating due to a lack of money than those who own their own homes or who have mortgages. Single-parent households have long been one of the groups most vulnerable to debt, with 27% of single parents facing mortgage or rental arrears while one in two state that housing costs are a very heavy burden.

Some 54,986 people were in arrears on their mortgages at the end of last year. Some of these have been in arrears for a relatively short duration but others have been in arrears for in excess of two years. Luckily, the pandemic has not had a significant impact on mortgage arrears levels so far. This is largely due to the payment breaks agreed between borrowers and lenders. However, the last of those breaks will be coming to an end in the coming weeks. This makes one question whether this is an issue that needs to be looked at again because some sectors are particularly exposed. Any delayed effect on mortgage arrears will only make itself known in this quarter.

Of course, an important thing to note when speaking of mortgages is the withdrawal of KBC and Ulster Bank from the market. Between the two, approximately 28% of the entire mortgage market is currently up for grabs. Many people around the country are anxiously waiting to see where their mortgage will end up. The performing loan books of KBC are likely to be acquired by Bank of Ireland, which means that the bank which provided the cheapest home loans will be acquired by the bank which provides the most expensive home loans. When it comes to loss-making loans, the vulture funds are circling. The relationship between borrowers and vulture funds is nothing short of abusive. While banks have at least some interest in negotiating with borrowers, vulture funds have none, nor do they have any reason to do so. Their business model relies on evictions to make profit.

When entering a personal insolvency arrangement, people are rightly allowed to continue to live in reasonable conditions, aligned with the minimum essential standards of living. There is a complete inequality in how the State treats people who were once well-off or those who are experiencing insolvency and how it treats those who have always experienced financial hardship. If the State is able and willing to take a humane approach towards those who are experiencing debt, perhaps the Government would take a closer look at the case of those in receipt of social welfare payments. It is absolutely unacceptable that people in receipt of social welfare payments are living below the agreed minimum essential standards of living. These are standards which should be available to everyone. Rather than being a ceiling for any State welfare payment, they should be a floor.

It is an unfortunate reality that many people in Ireland who experience financial hardship turn to moneylenders. The latest figures from the Central Bank show that 283,000 people borrowed a total of €151 million from moneylenders in 2020. The largest moneylender in the country, Provident Financial Group, announced on money that it would be ending its doorstep loan business. It can currently charge customers up to 288% a year. Its withdrawal may well expose people to an even bigger issue, that of unregulated moneylenders. It is really important that we consider the impact of this move at this stage.

It is important to state that debt does not arise in a vacuum. The policies of successive Governments have driven people into debt and, while this Bill is welcome, the root causes of debt need to be addressed. There can be no one-size-fits-all approach to personal debt but there are obvious solutions which would surely help. We have to look at the issue of moneylenders. We also have to look at the issues of housing policy and affordability. Looking at the information we got this week with regard to people under 35, we can see that there is a generation particularly exposed in terms of income and outgoings.

We will now move to Sinn Féin. I call on Deputy Ó Murchú. I am terribly sorry; the next speaker is Deputy O'Reilly. I did not think she was here.

That is fine. I thank the Cathaoirleach Gníomhach for the opportunity to speak today. The Bill at hand makes some important changes in the area of personal insolvency and to how supports operate. While it might seem technical in nature, the reality is that the legislation will have far-reaching consequences for those who may end up in the terrible situation of being indebted. This Bill, therefore, is important legislation, and even more important in the context of the pandemic. The twofold crisis of personal debt and small business debt is an issue hanging over this State like a dark cloud. As legislators and as decent people, we have to be aware of this crisis and do all within our power to help people and businesses that have run into difficulty, especially when as a result of the pandemic. The changes in this Bill are welcome in that regard but there is more that can, and should, be done, especially with regard to the debts of small and medium enterprises and small family-run businesses. These SMEs have collectively warehoused more than €1 billion in tax liabilities. Many also have commercial rent arrears and bank debt. All of this is in addition to the owners' personal debts because, as the Minister of State will be aware, business debt does not accumulate in a vacuum but is often accompanied by personal debt.

This matter needs resolution and perhaps the best way to find solutions would be through a forum on debt which would be inclusive of all stakeholders. We should look to the state aid our European counterparts provide to help businesses. For instance, in Sweden and other places, arbitration models for rent arrears have been introduced. I am not trying to be prescriptive because there are many models which could be considered and every state is different but the fact of the matter is that Ireland is ranked last in the European Union with regard to the amount of state aid provided to help companies deal with the pandemic in 2020. This is just food for thought for the Government, which claims to be a great supporter of enterprise while, on the basis of the metric I have just described, being the worst in the European Union. I therefore encourage the Government to look at small and medium enterprises and small family-run enterprises and to consider a debt forum so that ideas can be considered and solutions agreed to in order to save both jobs and businesses.

I am sorry that I could not see the Deputy. It is unusual for someone in the front row in a theatre not to be seen, but there we go. I next call Deputy Fitzpatrick, who, I understand, is sharing time with Deputy Tóibín.

I welcome the opportunity to contribute. I welcomed the introduction of the Personal Insolvency Act 2012 at the time. It brought a structure and a recognised framework through which people could address their debt issues. In hindsight, however, it is clear that, in many cases, those people got into debt as a result of actions over which they had little control. We all remember when the banks were throwing money at people with no regard for their ability to repay. The debt boom was fuelled by the banks and the fact that there was little control over their actions. Bank-fuelled debt led to house prices rising to a level that was unsustainable and left people with debts they could never repay. Without going over old ground, when the crash came, it was the banks that were saved while ordinary people were left carrying the can. That must never be allowed to happen again.

As stated, I welcomed the Act when it was introduced. It brought our laws up to date with our colleagues in Europe and gave hope to many thousands of people who, unfortunately, had gone into debt. There is now a way out for people who are willing to engage with the system. This amending Bill is to be welcomed in the main. I am particularly pleased that section 14(c) will remove a restrictive condition whereby a person could only avail of a court review if his or her home mortgage arrears had commenced prior to 1 January 2015.

As the country claws its way out of the pandemic, it is more important than ever that people be afforded every protection from creditors, particularly where their homes are concerned. Unfortunately, we will probably see a sharp rise in the number of people seeking protection because of the effects of the pandemic. It is vital that they be given every protection and opportunity to keep ownership of their homes during this difficult time.

In my constituency office in Dundalk, I regularly deal with people who are in financial difficulty. What is clear is that each and every one of them wants to remain in the family home. They are willing to enter into arrangements with their creditors so long as those arrangements are fair and reasonable. For this system to be successful, it must be understood that people cannot be left with nothing. They must be able to live as well. There is no point in forcing people into living a life with no hope at all. People undoubtedly overborrowed, but we must ask why. Did the banks do enough due diligence into people's ability to repay? We must also ask why the cost of houses was too high.

When we look back now, it is clear where the mistakes were made – the banks offered credit without doing proper due diligence, regulation by the Government was too weak and the general approach was to borrow as much as one could.

We must look to the future, though. If people are willing to engage in debt relationships, they should be given every opportunity to start again, but I fear that we are heading into another situation where the cost of housing is getting too high. It is clear that big landlords and vulture funds are purchasing large volumes of housing for the rental market. This is leading to unsustainable rents. In Dundalk, one can expect to pay more than €1,400 per month in rent for a three-bedroom house, which is €323 per week. This is another form of control by debt. If a person loses his or her home as a result of an unsustainable mortgage and becomes homeless, he or she is no different than someone who loses a home as a result of unsustainable rents. In some ways, people who have mortgages are afforded a certain level of protection under the Bill whereas renters do not have the same protections.

One amendment to the Bill would offer a better level of protection to mortgage holders, in particular older ones. Section 102(f) of the Act reads, "that the principal sum due on the secured debt be reduced provided that the secured creditor be granted a share in the debtor’s equity in the property the subject of the security". I propose that this be changed to read, "that the principal sum due on the secured debt be reduced provided that the secured creditor be granted a share in the debtor’s equity in the property the subject of the security without the agreement of the secured creditor". This small amendment could allow courts to force debt-for-equity solutions onto mortgage lenders, thereby removing many mortgage holders' fear of losing their homes.

There are people engaging with their creditors and they must be given every opportunity to get satisfactory solutions. We must not forget that we are dealing with real people in real situations. Unfortunately, banks simply treat debtors as file numbers in some cases. These are real people with real families and real lives.

It is incredible that we are debating this Bill now. Given that many families have already gone through a challenging and difficult time with the banks and courts over the past ten years, some might consider that the progress of this Bill and the Government has been slow. It is also incredible that there are still families winding through the courts and negotiating their indebtedness with the banks. They are the collateral damage of the previous crisis, yet we are discussing their situation at a time when we have already entered the next housing crisis. We have not even fixed the difficulties of the previous one, yet people are now dealing with spiking rents and house prices, 75 people died in homelessness on the streets of Dublin alone last year and 38 have died in homelessness so far this year. The Government feigns surprise that international investors and vulture funds are hoovering up housing units in competition with young families who are trying to purchase houses, but Fine Gael rolled out the red carpet for such funds just a number of years ago.

What has happened to this country? That is a big question that we have to ask ourselves. A generation or two ago, it was commonplace for a family living on a single income and potentially with more children than is the case nowadays to be able to buy a home. Today, most families are smaller and have two incomes but are struggling to pay rents or mortgages, if they can get one of the latter at all. Young people, many of whom have been maligned by Members of this House during the pandemic, are suffering the most in terms of being unable to afford rents and buy houses. They are suffering 25% unemployment in general. For certain cohorts of young people, the unemployment rate can be as high as 60%, which is incredible. There is no doubt in my mind that, when travel reopens, many of them will unfortunately do what young people in this country have done for generations, that being, leave for foreign shores for work purposes. That is incredible. We are discussing a society where this generation is worse off than the previous one. That is not progress, but regression in most people's lives. Any one of the issues of homeownership, mortgage repayments, rent, the commuter crisis, childcare costs, the cost of living, high levels of personal taxation, salary stagnation and economic instability is a significant challenge to a family on an average income and an insurmountable challenge for most families on low incomes.

Many of the banks have not done right by families in mortgage distress. I have dealt with hundreds of people, small businesses and farmers who were in mortgage distress or insolvency situations. The greatest issue they have been facing is that banks will not do business with them, will ignore them or will have their cases dealt with by ten different staff who are operating through call centres where no individual is identified to handle their needs.

This leads me back to what is happening in the banking market. The banking market is intrinsically linked to the housing crisis.

The Government created what was, in effect, a duopoly or two-pillar banking system, and that lack of competition has been further concentrated with the exiting from the market of Ulster Bank and KBC Bank. The more concentrated the system becomes, the less competition there is and the less ability customers have to influence those institutions to meet their needs.

I welcome the Bill and the changes it will bring. However, I cannot remember there being a Bill for a long time for which the phrase "too little, too late" was more apt.

We support the Personal Insolvency (Amendment) Bill 2020. I acknowledge that it is a technical Bill but there are anomalies in it that need to be addressed in the context of the particular situation in which we find ourselves with the Covid pandemic. I am sure that every Deputy in the Chamber and outside it has encountered multiple people who find themselves in the type of situation this Bill seeks to address. There are people still dealing with the outworkings of the financial crash. There are people who are struggling with the high cost of living in this State, as mentioned by a previous speaker. We have been talking a great deal this week about the housing crisis and making the point that the systems and policies that are in place are not delivering for people. Until that issue is addressed, we will be dealing with more people in situations like those being discussed today.

We also have a situation where people on the periphery and who are under pressure cannot access credit. They might previously have had a relationship with the local credit union, for example, that may not be available to them any more. People in that situation may end up turning to moneylenders. The legislation on this issue that was brought forward by Deputy Doherty needs to be looked at with a view, at least, to putting protections in place for people in those circumstances. We do not want more people to fall into a situation where they need those types of services. We must do everything we can to ensure security for people by dealing with the cost of living and housing and delivering real solutions if they do fall into circumstances such as personal insolvency.

I support the Bill that is before us today. However, in considering the provisions it contains, we have to look at the past. I spoke in the House last night about how, at the time of the financial crash in 2008, people went to the banks looking to negotiate. Many people were in trouble because of the inflation that led to the price of housing going through the roof. The banks would not deal with them, however, and they were just told that they had to keep paying. It was only when it got to the stage where people stopped paying that the banks listened to them.

I have been involved in construction since the late 1980s and am still involved in it. The inflation that is being brought into the housing market once again is making homes even more expensive and will add to people's difficulties. People may end up in trouble if they have to borrow more to get the same product. Over the past 12 months, the price of materials for housing has increased by 38%. The cost of insulation, timber, blocks, concrete and everything else has gone up, yet there is no functioning housing market. That is because there is no supply to meet the demand of people who need homes. Last night in the House, the Government voted against the motion introduced by the Rural Independent Group on Project Ireland 2040 that would have amended the plan to allow people to build houses in the rural areas, towns and villages in which they live. They can no longer do so because everything is being shoved into cities, where there is existing infrastructure.

In County Limerick, houses that were making €375,000 only six months ago have now soared in price to €450,000. This is because of supply and demand and, again, that situation will feed into the rate of insolvencies because people have to borrow more. A total of 34% of houses sold in Limerick in recent times were bought by people relocating from Dublin. People moving to Limerick from cities and towns elsewhere in the country can afford to pay higher prices than people living in Limerick. A three-bedroom or four-bedroom house in Dublin could sell for €700,000 to €800,000. People who sell their house for that price can come to Limerick and put people there out of the market.

We have seen people get into trouble with their mortgages through no fault of their own, perhaps because they lost their job. They tried to make deals with the banks, as I said, but they were not listened to. When they try to contact the banks, there is nobody to talk to or else they find themselves talking to someone in a different country. The banks took away the ability to make deals from local bank managers and staff and moved the whole process to a central telephone service. We need protections for people but we also need the capacity for people to make contact with banks and resolve their issues. There have been problems in that regard for the past ten years or more. Much of the fault lies with the unwillingness of the banks to negotiate with landowners and people who have got themselves into trouble. There is a minority of people who do not care about their debt, but it is a minority. There are an awful lot of people who wanted to sort out their issues but were not given the opportunity to do so.

There are many people in the country who are trying to get onto the first-time housing market but cannot do so because of inflation. The problem is not just the cost of housing and materials but also the price of labour. That has arisen because of the lack of investment in training apprentices. After 2008, the Government pushed everyone into higher level education, which led to a shortage of tradespeople and apprentices. We were told there were too many tradespeople but now we are ten years behind in training people to do the basic maintenance that is required in different areas. That is another factor that feeds into the overall problem. The tradespeople who are operating are charging a lot more than they might do if there was a balance between supply and demand. Again, this situation has happened because of a failure of Government.

We need to take a holistic approach to this issue. I was very disappointed that our motion on the 2040 plan was not even supported by rural Members of the parties in government. A failure to amend that plan will add to the problem of prices going up countrywide. I have to hand 25 pages detailing 63 cases in which people in rural areas of County Limerick have a problem with planning permission. Since I have been involved in politics and during all my time in construction, I have never had more than ten cases at a time where I am trying to help people with planning issues. My telephone is hopping with calls from people who know I have a construction background and do a lot of work on planning. They are scared for the future of their children and grandchildren because of the lack of vision by the Government and the lack of investment in rural areas that would enable us to balance supply and demand. The Government set up the Land Development Agency LDA, to invest in different areas but everything it is investing in is city-based.

We all want to help people to move forward and ensure they and the generation after them can continue to live in the areas in which they were born. This Bill will not help if we do not address the issues that are causing more inflation, leading to many more problems and putting families in trouble.

We will have to do our utmost to help. The Bill goes a long way towards helping but, as other speakers said, it is now a little too late. On one hand the Government is bringing in this Bill, which will help, and, on the other, it is actually creating a problem and lighting a fire that will spill out of control and that the Government will not be able to manage. While the Bill is welcome, the inflation the Government is causing under the 2040 plan will feed into this and cause more hardship, not only in the towns and the cities. The whole country will suffer because the Government's left hand does not know what its right hand is doing.

As I said, I support what the Bill does. It is a little too late but something that goes a little bit of the way will help. I hope the Government looks at the other side and understands that it has been the cause of an awful lot of the problems in this country because it does not know about supply and demand. Rural areas were able to do this themselves recently and now the Government is cutting off even that lifeline. The only way we will help this insolvency plan going forward and stop the price increases, which will stop people borrowing more money, is by investing in infrastructure and giving extra capacity to areas, towns and villages, which will drive down prices. Building more houses will bring down prices and people will not have to borrow as much. They can then live their lives and will not spend 40 years trying to pay off the mortgage on a house that should have taken only 20 years to pay off, as it did when I was growing up. I welcome the support the Bill will provide but, as I said, it is a little too late. I will, however, work with anything that is there to help.

This is a very important Bill. I acknowledge the Minister, Deputy McEntee, who introduced the Bill. I thank Deputies for their contributions and engagement. I welcome their comments and will consider carefully the various important points that have been raised.

Families and individuals do not enter into insolvency lightly. It is a very difficult situation and a difficult and challenging decision for anyone to take. When people enter into that process, we have to ensure they do not face undue hardship. We should allow as much compassion as possible in those circumstances. There is no shame in anybody entering into an insolvency. It can happen to anybody and it is usually beyond people's responsibility or control. Insolvency is certainly not an easy way out. It provides a pathway in order that people can get back to solvency and re-engage with society. In that respect, it is an extremely important mechanism. I thank MABS, the Free Legal Advice Centres, and other organisations and individuals who reach out and help people when they find themselves in these very challenging circumstances.

The original Bill was hugely important when it was introduced, and I acknowledge the role of the former Deputy, Willie Penrose, in that respect. At the time, brakes were placed on the legislation, which was radical for Ireland. Property rights are protected within our Constitution. There were some concerns that if the Bill went a little too far, it could be challenged in the courts. As I said, some brakes were put on the Bill at the time, understandably so. The legislation has proved to be extremely robust and the courts have interpreted it in a very fair manner. What we are attempting to do today is amend that legislation to take off the brakes to some extent and allow it to be even more compassionate for people in particular circumstances. A larger, more comprehensive Bill will be brought forward later. A review is being carried out and is expected to be completed at the end of the second quarter, with a scheme prepared at the end of this year to address some of the concerns Deputies have raised in this debate. That will be an important review.

I will now address some of the specific concerns and issues Deputies raised. Deputy Martin Kenny raised the issue of the sustainability of Abhaile. I assure the Deputy that funding to Abhaile has been extended until at least the end of 2022 and there is a further commitment to resource the service within the programme for Government. A comprehensive review of Abhaile's operation is being carried out but the Government is fully supportive of the service.

Deputy Catherine Murphy asked why confirmation of truth should be introduced when a declaration of truth was introduced in the Civil Law and Criminal Law (Miscellaneous Provisions) Act 2020. She pondered whether there may be some issue with the 2020 provision. I assure the Deputy there is no issue with the provision within the 2020 Act. The miscellaneous provisions Act of 2020 was about declarations of truth within the courts system. Here, however, we have a quasi-judicial situation. To ensure there is no difficulty or challenge around that, we have decided to include the declaration of truth in this legislation in respect of the Insolvency Service of Ireland where a declaration of truth is being used. This belt-and-braces approach will ensure there can be no challenge in that regard.

Deputy O'Reilly asked about SME debt. The Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Varadkar, is preparing a Bill to introduce a lighter, cheaper and quicker form of examinership to help SMEs restructure and recover their debts. That will be a very important part of the overall work the Government is doing to address insolvency for companies and businesses.

Deputy Fitzpatrick referred to his Committee Stage amendment. I will deal with amendments when they arise on Committee Stage.

Again, I thank all the Deputies who have contributed to the Bill to date. There are important amendments in the Bill. That is why they had to be brought forward before the more comprehensive reforming Bill, which will be introduced later to help people who find themselves, unfortunately, and through no fault of their own, in very serious financial circumstances as a result of the pandemic. While the Government has introduced substantial supports for individuals and businesses, inevitably and unfortunately, some will not make it through financially to the other side of the pandemic. That is why these amendments are so important and urgent. As I said, the Bill responds to real needs across the economy and society and forms part of a suite of amendments, supports and programmes brought in by the Government. With the co-operation of all sides of the House, I expect and hope it will have a swift passage through the House and be enacted as quickly as possible.

Question put and agreed to.