I welcome the Minister of State, Deputy James Browne, to the House. He is a regular visitor at this stage.
Personal Insolvency (Amendment) Bill 2020: Second Stage
On behalf of the Minister for Justice, Deputy McEntee, who very much regrets that she is unable to be in the House today, I am pleased to have this opportunity to introduce the Personal Insolvency (Amendment) Bill 2020.
The Bill's purpose is to make several urgent amendments to the Personal Insolvency Act 2012 which 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 their debts in full as they fall due. The 2012 Act established three statutory mechanisms for resolving unsustainable debt. First, the debt relief notice for an insolvent person with little income or assets and the debts not exceeding €35,000. Second, the debt settlement arrangement for an insolvent person with unsecured debt only. Third, the personal insolvency arrangement for an insolvent person with secured debt such as a mortgage. 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 also has to be agreed by the necessary majorities of the creditors.
The Personal Insolvency (Amendment) Act 2015 added that if an insolvent debtor proposes a personal insolvency arrangement which includes resolving his or her home mortgage arrears, and his or her 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 overall fair and reasonable to all parties, the court has power to impose the rejected proposal on the creditors, allowing the debtor to remain in his or her home. This is the personal insolvency court review, now section 115A of the Personal Insolvency Act 2012. I will be returning to it shortly in the course of my remarks.
The main changes made by the Bill fall into three groups. There are two amendments to remove potential obstacles to an insolvent debtor being eligible to avail of the Personal Insolvency Act. Section 14(c) of the Bill is a key amendment. Currently, an insolvent debtor is only eligible under the Act to apply for the personal insolvency court review, if his or her home mortgage was already in arrears 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. Post Covid, it will mean there will be a risk that anyone whose home mortgage arrears first arose from the economic impact of the pandemic will be 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.
Another amendment concerned with eligibility is section 2, which increases the upper limit in the Act relating to personal assets, including savings, for an insolvent debtor to be eligible to propose a debt relief notice to his or her creditors. 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. Increasing the ceiling to €1,500 will remove this problem. 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, which is the 70-day period during which a debtor is temporarily protected against creditor enforcement, in order to facilitate his or her personal insolvency practitioner to put together an arrangement to resolve his or her debts which is likely to be agreed by the creditors or, under section 115A, upheld by the court.
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. Sections 3 and 5 allow key advisory meetings between the debtor and their statutory financial adviser to take place remotely, subject to certain conditions. Sections 7 and 17 provide a framework for a personal insolvency practitioner to delegate work to another person working in the same firm, subject to certain conditions. 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 Bill because of their relevance to the economic impact of the pandemic, to its particular health risks, and to the logistical challenges arising from necessary public health restrictions. There has been further detailed consultation during the preparation of this Bill, particularly with the Insolvency Service of Ireland, the Money Advice and Budgeting Service, the Courts Service, and associations representing personal insolvency practitioners. I emphasise that the Bill does not limit the amendments to the duration of the pandemic, as they are considered valuable beyond that period.
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. Sections 3 and 5 amend sections 27 and 49 of the Act to allow the key advisory meeting between a debtor and an authorised financial adviser to be held remotely via electronic communications technology, subject to certain conditions, as an alternative to meeting in person.
Sections 4, 8, 9, 11 and 12 are consequential provisions regarding the new option of a "confirmation of truth", instead of having to make a statutory declaration.
Section 6 corrects an erroneous cross-reference in section 54(d) of the Act to the maximum permitted duration of a personal insolvency arrangement, which is wrongly mentioned as five years. In fact, the maximum duration is six years, as set out in section 99(2)(b) of the Act.
Sections 7 and 17 allow a personal insolvency practitioner, PIP, to delegate the performance of his or her functions, subject to certain conditions, to his or her employee or colleague working in the same firm. The delegating PIP remains responsible for the performance of the function by the person to whom it is delegated. The Insolvency Service of Ireland is empowered to make regulations to govern any such delegation.
Sections 10 and 13, as I outlined earlier, clarify the grounds on which a protective certificate may be extended. They also 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.
Section 14 makes three changes to section 115A of the Act. Section 14(a) extends the deadline for the debtor's PIP to apply for the personal insolvency court review, from 14 to 28 days. 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), as already mentioned, removes the current requirement that to be eligible for a personal insolvency court review, the debtor's home mortgage must have been in arrears before 1 January 2015.
Sections 15 and 16 create the new option for a debtor to sign a "confirmation of truth", instead of having to make a statutory declaration, when applying for any of the three debt resolution mechanisms.
It is the Minister's strong view that this priority Bill is a much-needed measure to make debt solutions more accessible to people in serious financial difficulties, and is one which will bring benefits to debtors, creditors, and our economy and society more broadly. The Minister hopes that, with the co-operation of all sides, we can facilitate its swift passage through this House with a view to early enactment.
I commend the Bill to the House.
Cuirim fáilte roimh an Aire Stáit ar ais go dtí an Teach agus gabhaim buíochas leis as ucht an méid atá ráite aige fós faoin mBille freisin. On behalf of Fine Gael, I welcome the Bill. It is important amending legislation that corrects a number of aspects of the personal insolvency legislation but also adds to what is there in terms of practical solutions to some of the issues have arisen in the past decade or so.
The Minister of State correctly referred to the timeline of legislation in this area from 2012, including the amendment Bill of 2015. It is important to look at why that happened. After the crash in 2010, or around then, we as a country got to a stage where we had an exceptional number of mortgage arrears, particularly relative to other countries within the OECD, and it was important for the Government at that time to put in place measures to deal with that. The 2012 Act was very much that solution and it worked in many ways. Ireland was behind the curve in dealing with personal insolvency and bankruptcy. Many people who found themselves in insurmountable difficulties with their finances had to leave Ireland, usually going to the UK where there was a much more reasonable and more modern approach to insolvency than there was here. As a result we lost many people, and some of those still have not come back. They stayed and re-established themselves in the UK. It is not the way to treat our citizens because the reality is that debt can occur to anyone. There is no shame associated with it but there is a great deal of difficulty.
I have heard people, primarily, I suppose, in particular financial sectors, being critical of the regime we have here, but nobody should be under the misapprehension that entering into a personal insolvency arrangement or other of the systems provided for in this legislation is in any way an easy way out. It is not. It is something that, no matter what, will follow people at one level or another for the rest of their lives, but it is an important mechanism by which we allow people to re-engage in a functional way with society. If we tar and feather those who are in debt difficulty or who have become bankrupt, often through no fault of their own, then we have a situation where they are essentially excluded from being a functional part of society. That was wrong. It is important we changed the measures.
It is important we change the measures. I was glad we did that in 2012. The 2015 amending legislation furthered that regime and improved things in many respects.
I welcome this legislation. It has a number of common sense aspects to it. The Minister made reference to a number of them. The affirmation of truth follows on from the Civil Law and Criminal Law (Miscellaneous Provisions) Act 2020 in relation to court proceedings and allows people to move away from the necessary requirements to sign affidavits or swear on oath. As a modern democracy, we need to consider solutions like this and it makes perfect sense. It does not mean it is a less powerful affirmation of the truth or that they are less liable to issues arising from mistruths or lies. That is not the case. This is a modern and progressive way of dealing with issues that have arisen, during Covid-19 in particular.
Sections 3 and 5 dealing with remote meetings with the personal insolvency practitioner is a common sense measure that deals with our new reality. It is a horrible phrase but a nonetheless pertinent one in the context of Covid-19. More of us are having online meetings, often one after the other during the day. It is wonderful in many respects because it allows us to connect with people in many different places in a short period of time. However, it is tiring and impersonal and one loses the benefit of meeting in the margins or speaking to someone after a meeting.
In the context of this Bill, it would be a mistake to frustrate the operation of the personal insolvency practitioner, PIP, scheme which allows that person to deal with the client online so I welcome the provisions in sections 3 and 5.
I have a few issues with how the Bill is phrased and I am aware the Minister has outlined the primary changes. I want to consider in the first instance section 14(c) of the Bill which amends a section of the 2012 Act. It removes a sunset clause that had been in existence from the genesis of this stream of legislation which required the arrears to have accrued before 1 January 2015. It meant that only a certain category of mortgage was eligible to be in the process and benefit from the provisions of this legislation.
I have frequently been critical of the banks in this Chamber and elsewhere. I maintain the banks are less about serving the people than serving themselves. Banks are bodies that give one an umbrella on a sunny day and ask for it back when it starts raining. It is the experience we have had banks and it is unfortunate. I have met with the banks over situations relating to mortgages. It is insanely difficult for young people in particular to get mortgages or to get them at the level they need to buy houses or apartments where they want to. It is also a function of the cost of property and we must deal with that.
In that context, the Central Statistics Office, CSO, today published figures which show that Blackrock, which is my area, has the highest property prices in the country. It is wonderful for people who own houses in Blackrock and I understand that. However, it makes it difficult for their children to buy houses in Blackrock.
As someone who is applying for a mortgage at present, the experience of dealing with the banks is difficult. The manner in which they approach it is almost obstructionist. Part of it is a function of the magnitude mortgages have gotten to and the rules the Central Bank imposes on them and that is understandable. However, I think banks are unwilling to engage in any kind of risk.
The problem I have is that if we remove that sunset clause, as is proposed in section 14(c), all mortgages will come under the provisions of this legislation. That means that, according to Central Bank rules, banks will have to put in place provisions for the risk attached to all mortgages they give henceforth. The danger is it will increase mortgage rates and decrease the amount of money the banks give out in mortgages. There might be an unintended corollary effect, which would be unfortunate for young people applying for mortgages to live in the places they are from. Has the Minister considered what that is? Could another sunset clause be put in at a date henceforth, perhaps at the conclusion at the restrictive measures because undoubtedly Covid-19 will result in people going into arrears?
Is the blanket removal of the sunset clause wise in all the circumstances?
I mention section 115A which extends the period within which an application can be made to a bank from two weeks to four weeks. That is very welcome. The 2015 Act removed the essential veto the banks had and that is a good thing. It is good that we will also extend the period to allow people to make those applications.
This is a good and important Bill which makes important changes. I wonder if consideration has been given to the ancillary effects it might have on the lending and mortgage market to ensure we do not further cripple young people who are trying to get mortgages.
Cuirim fáilte roimh an Aire go dtí an Teach tráthnóna. I welcome the Minister of State to the House to discuss this very important legislation. On behalf of the Fianna Fáil Party, I very much welcome the Bill which reforms personal insolvency legislation to help borrowers hit by Covid-19 and offers those borrowers whose income has been severely affected the protection of the personal insolvency Acts. The measure will also help borrowers at risk of losing their homes and that is vitally important. I am delighted there is a commitment in the programme for Government that the Government will address the issue of personal insolvency with a view to bringing in reforms. I welcome the Government standing over that reform.
The burden of debt is a huge issue for many families, causing great stress, not just on the borrower but on the entire family household, including children, both from an mental health and physical health perspective. I have recently seen figures from the Insolvency Service of Ireland. Since that service was launched, almost 11,000 protective certificates have been issued and 7,659 settlements have been reached with individual borrowers. That is very much welcome as it allows them to get their lives back on track. As Senator Ward outlined in his contribution, it will stay with borrowers forever, but at least it gives them a second chance to get up and running and to lift the stressful burden of debt that hangs over them and the entire household.
The Personal Solvency (Amendment) Act 2015 introduced a key protection for insolvent homeowners who were struggling to pay their mortgage debt. It allowed them the right to seek a review by a court of a mortgage lender, or other creditors, where they refused even a proposal for a personal insolvency arrangement. That was very much welcome. However, the protection currently only applies to home mortgage arrears dating from 1 January 2015. This Bill will address that particular condition in that mortgage arrears must predate 1 January 2015. Post-Covid, that condition means a person who now finds himself or herself insolvent and in home mortgage arrears arising from a unforeseeable loss of income will be shut out from accessing this vital core protection. The last thing in the world we want to do is close the door to any debtor or family who find themselves in this position. The Bill also removes an obstacle for an insolvent person with very little income, or assets, to resolving their debts under the personal insolvency Acts by means of a debt relief notice.
It has a number of other conditions, one of which is in line with Covid, where meetings will be allowed to take place remotely. That is a sensible, realistic step based on the times that are in it. It helps to move that process on and that is very much welcome. It also adjusts the asset ceiling for an insolvent person applying for a debt relief notice, the debt restructure designed for people with very little income or assets to remove an obstacle for recipients of lump sum payments under some social protection allowances - for example, fuel allowance, carers support and so on.
This Bill has, thankfully, been welcomed by the Insolvency Service of Ireland which has been very complimentary about it. It stated that the Bill will assist many people who are struggling with unsustainable debts, which the economic impact of Covid-19 has only exacerbated as well as creating a new debt problem for many families.
Many families were struggling with debt burdens prior to Covid-19 but this has been further exasperated by Covid-19, with a reduction in income for these unfortunate individuals.
The Bill has also been welcomed by the Citizens Information Board, which is very happy with it, particularly in the context of the increase in the asset threshold from €400 to €1,500 for a debtor. This will make the threshold more accessible to many people who have debts up to €35,000 written off.
There are other provisions in the Bill. Section 2 increases the personal assets ceiling for a debtor to be eligible for post-debt relief from €400 to €1,500. Again, this is sensible and a practical step forward and I welcome it. In addition, a debtor must also have total debts not exceeding €35,000 and net disposable income not exceeding €60 per month, including social welfare payments other than child benefit but excluding reasonable living expenses, and no likelihood of the financial situation improving in a three-year period. In a case where the financial situation improves in a three-year period, there is a mechanism in place whereby it can be revisited.
Senator Ward touched on the burden of unsustainable debt and the effect it has on debtors. Earlier, I provided some statistics. Behind every one of these statistics is a family who, I can only imagine, is stressed out beyond comprehension in trying to lift this burden of debt that is upon them.
An aspect that has been brought to my attention, and on which I would welcome the comments of the Minister of State when he is summing up, is with regard to debt that is not attached to a principal private residence. The family holding of a farmer could be incorporated in the farmland. There may be no debt attached to someone's principal private residence but, nevertheless, there is debt attached to the land and the land is the only form of income the farm family may have. This particular situation is not addressed in the Bill and I would welcome an amendment at a later date. I am sure there are many others outside of the farming community who have debts and whose principal private residence might not be burdened, as such, with debt but perhaps other debts that need to be addressed are a burden to the particular borrower and family. I would welcome if this issue could be looked at with a view to bringing forward an amendment at a later date to try to address it.
I compliment the Minister of State on bringing forward the legislation and I look forward to its speedy passage through the House.
The Green Party also welcomes the Bill. It is apt, timely and pressingly required. A few short years ago, if I can turn back the clock prior to enactment of the 2012 legislation, which was groundbreaking for Ireland, personal debtors were in a very dark place. There was chaos. They were being pushed around and intimidated by lenders. They had nowhere to go and no place to turn. There was no civil legal aid for them. The fallout was horrendous. This scars and suffering of those families, some of whom lost homes, will always be with us. It was a dark moment for society, particularly when one considers that we let the banks of the hook. We bailed out the banks but we forgot about the private dwellers. In fairness to the Minister of the day, Alan Shatter, he brought into being a very complex Act. At the time, like many, I was involved as a proud co-founder of New Beginning, a group of lawyers, which lobbied the then Minister to bring us up to a modern European standard with a little NAMA for personal debtors.
Thereafter, his successor as Minister, Frances Fitzgerald, introduced the groundbreaking section 115A, which put down a marker that banks would not get it all their own way. I am told there were a thousand of those cases last year and at least 50% were successful. These were cases where the banks refused to negotiate and had to be hauled through the courts. I would like to see the number of debt victories increase further for the personal debtor.
I will also mention a former Member of the Oireachtas, now back in the Law Library, former Deputy Willie Penrose, who did revolutionary work on the bankruptcy regime in Ireland bringing it in line with the UK. The first head of the Insolvency Service of Ireland, Mr. Lorcan O'Connor, also did mammoth work.
I welcome the fact this restores a level of fairness. Up to now arrears had to exist or pertain before 1 January 2015 but this was an unfair and restrictive threshold. I commend the Government on grasping the reality of the position, as with this legislation, we will be saving family homes. This is not fallout from the first Celtic tiger crash but rather, it involves people who through no fault of their own have suffered due to the economic downturn of the pandemic. They can at long last turn to a system that can protect them.
Heads 2 and 3 of the general scheme of the Bill are to be welcomed as they introduce remote communications meetings. It was not clear in the principal Act that these should not happen but a very learned judge taking the bankruptcy list interpreted that face-to-face meetings were essential, although that was not expressly in the Act. That was later made a rule of the High Court. This will be music to the ears of big insolvency houses, including respected houses like McCambridge Duffy in Donegal and IRS Ireland in County Waterford. Good luck to them if it is more convenient. If it is more convenient, it will be more accessible. Most of all, it will mean stressed debtors will not have to travel the length and breadth of the country to have that essential first meeting, certificate and opinion from the personal insolvency practitioner.
Head 10 of the general scheme of the Bill proposes the making of a statement of truth. It would replace the archaic affidavit or statutory declaration. Only a couple of days ago a learned judge, Judge Lambe, adjourned a matter. I am not making a criticism and she probably read it carefully but she felt her hands might have been tied by the current Act's provisions for a statutory declaration. That example from only a couple of days ago indicates the protection of debtors has been stalled due to no fault of the judge. Especially in this regime, there must be rigid interpretation of the statute.
Head 1, relating to debt relief notices, indicates the asset ceiling is rising from €400 to €1,500. This may not affect many people but is there room to push this further? This will not go to the heart of saving family homes because these are unsecured debts but why has this stopped at €1,500 and not a greater sum?
I know personal insolvency practitioners throughout Ireland would like to see section 91(1)(a) of the principal Act removed as to qualify for a personal insolvency arrangement, the aggregate of the debt of the debtors that are secured must be less than €3 million. This will not be considered by the Seanad today but has the Minister and Department formed a view on this? The reality is that receivers are supposed to receive a property to sell it and not become accidental short to medium-term landlords.
However, the reality on the ground is that receivers, for one reason or another - sometimes it is due to an asset becoming inadvertently lost while at others it is a protracted matter in the court - do not sell on the debt and there is a ratcheting up of the fees the receivers charge for holding these assets. They do not sell them promptly. In other cases, one secured aspect of the debt can survive and that holds the debtor over a barrel and he or she cannot access this wonderful protective legislation. I only care about the family home and that is what this addresses more than anywhere else in Europe. We have the pre-eminent position of the private dwelling in the Constitution and that is reflected in this legislation. I welcome that.
I emphasise that this system is for everyone, regardless of whether one is famous or not famous, unpopular with the media, known, unknown, a known unknown or whatever. The judges do not judge if a person is a celebrity. Everyone has equal access to the law but, at the moment, lenders do not contract out. If all lenders for secured debt contracted out, the threshold of less than €3 million would not apply but that is not the case at the moment.
A further reality is that it is outside the control of the debtor because the debtor has long since lost control of the asset but cannot seek refuge within the threshold of the €3 million at the moment. There are reports from PIPs that the Minister of State is considering legislation in that respect, hopefully later this year.
I can safely say that all Senators will agree that everyone is equal before the law. The mechanisms we apply and the protections we provide for debtors must be fair, transparent and equitable and this Bill goes a long way to making personal insolvency protections more accessible and readily available to more people. I unreservedly welcome the Bill and congratulate the Minister of State. I ask him to pass on to the senior Minister the wishes of the Green Party. We wish her the best of luck and happiness.
Tá fáilte is fiche roimh an Aire Stáit chuig an Seanad don phlé inniu. Sinn Féin will support this Bill to the next Stage as it represents an important legislation in the context of the pandemic. Our general approach has been to facilitate changes to the law which are sensible and address the outworkings of Covid and the attendant restrictions within wider society. The Bill falls into this category and it is interesting that we would have supported some of these measures regardless of the pandemic.
I will begin by speaking to three provisions within the Bill. The first is section 2, which relates to the thresholds for receiving a debt relief notice. This section increases the calculated assets which an eligible person can hold from €400 to €1,500. This is an important expansion as many people would meet the income criteria but would hold negligible assets, which would disqualify them from getting a debt relief notice.
The second is section 3, which allows for remote meetings between debtors and personal insolvency practitioners. There have been a number of amendments across the legal code to allow for remote meetings, which are important to facilitate people in staying safe. It is notable there are extensive factors outlined to decide where such a remote meeting can take place. Many people do not have the ability or experience to deal with such matters over video calls so the balance on paper looks good. I would be interested if the Minister of State could take steps to ensure the practice does not become entirely remote-meeting focused and those who need to access face-to-face meetings can do so with the appropriate measures put in place.
The final specific provisions I wish to speak to are sections 10 and 13, which allow courts to take into account exceptional circumstances when adjudicating on the granting of a protective certificate. This is intended to address the pandemic and the obvious difficulty a debtor may have in coming to a resolution that satisfies their creditors. However, it can equally apply to the prevailing macroeconomic conditions.
People will tend to borrow when times are good and they feel that they can pay back a loan or meet a financial obligation. They are, however, often at the mercy of developments in the wider economy too. With employment becoming more and more precarious, it will be interesting to see how this amendment will apply in reality.
While the Bill is welcome, it does not, as is the case with all law reform, operate in a vacuum. The pandemic has had the effect of polarising income equality. The State had the sixth highest level of household debt in the EU in 2019. Although banks' savings and deposits have gone up overall, it is not the case for certain professions that have been hit hard by the necessary restrictions. Hospitality and retail workers in particular were badly affected and we in Sinn Féin strongly oppose the reduction of the pandemic unemployment payment given that it would place many households in severe financial difficulty through no fault of their own. People want to do the right thing, which is to stay home and protect the most vulnerable in our society and they should not suffer financial ruin as a result of doing that.
At times, the Government has acted as if we all have access to the same resources in terms of finance and housing. that is simply not the case. At the start of the pandemic, Cabinet Ministers talked about growing vegetables or rooting around in attics, which is not really possible for renters or those in smaller houses or flats. The latter demonstrated how out of touch Government can be. The reality of the pandemic, nearly a year on, has now become clear and the urgent need for this Bill tells us there are many people out there who are more concerned about losing their home than they are about renovations.
The other important thing to note is the influence of mortgages being transferred from the traditional pillar banks to vulture funds. Expanding the number of people who can access the services of a PIP looks good on paper, but the reality of many of the interactions between borrowers and the vulture funds is horrific. The business model of a bank traditionally means that it holds some form of interest in negotiating with its customers, but the vulture funds have no such interest as their business model relies on evictions to realise a profit.
The withdrawal of Ulster Bank from operations in the Twenty-six Counties will lead to serious consequences. As highlighted by Teachta Pearse Doherty, the vulture fund Cerberus is circling Ulster Bank's entire €20.5 billion loan book. Non-performing home loans would likely be first on the list for a quick buck. This could be a potential disaster for many homeowners and it is important to consider developments such as these alongside with the measures in the Bill. That said, Sinn Féin supports the Bill through to the next stage and we look forward to teasing out some of these issues I have raised as we progress the legislation through the House.
Before I conclude, I must apologise to the Leas-Chathaoirleach and the Minister of State because, unfortunately, I have a clash and will not be here for the remainder of the debate. I commit to reading the debate for the Minister of State's response and I look forward to engaging with him on the next Stages of the Bill.
Tá sé sin ceart go leor. Níl deacracht leis sin.
I thank the Minister of State for being here today. I really welcome this Bill and the updates of the provisions within personal insolvency. They are very much needed and they get my absolute and entire support.
I had the pleasure of meeting Senator Martin for the very first time when I was newly called to the Bar and I volunteered with New Beginning in its early days. Perhaps much of my perspective around this matter is framed by the extraordinary line of people who came in seeking support. I would sit in with Senator Martin or others for consultations and listen to the sheer plight of people who found themselves, in many cases through absolutely no fault of their own, in horrific circumstances and with the risk of losing their home. I view everything through that lens and have done since. I have gone on in a voluntary capacity, in other guises and through FLAC, other organisations and on a one-to-one basis, to supporting families as they have navigated this.
It is a really sad situation we find ourselves in that we are looking at an economic or other set of circumstances where another whole cohort of people will be relying on these provisions and looking to this to afford themselves an opportunity for a restart. I thank all of the people in Money Advice and Budgeting Service who do a fantastic job all of the time in supporting individuals and families, and I also thank FLAC for what it does.
I acknowledge all of the really great changes in this proposed legislation, but one thing remains that I have a distaste for, which is the expenditure norms that are set out in the updated document for reasonable living expenses, background information, last published in August 2020.
Anyone wishing to engage with the provision of the primary legislation here must compile a budget and outline detailed reasonable living expenses. They must go down that route in the document set out by the Insolvency Service of Ireland.
Nobody looks down the barrel of insolvency lightly. By the time a person makes the decision to engage a personal insolvency practitioner, PIP, he or she has probably tried every other possible avenue within his or her control. The idea of a person putting himself or herself in a regime for anything up to six years can be quite onerous. He or she does it as a last resort. I am sure, therefore, the process of detailing all one's expenses on paper and eliminating what costs can be eliminated must be quite an experience of mourning and loss.
Appendix B of the Reasonable Living Expenses Background Information: Tackling Problem Debt, Together document sets out the reasonable living expenses and to be honest, I find them quite extraordinary. The costs detailed within the table in appendix B are set out as monthly costs. Food, clothing and personal care are perhaps reasonable for a couple of people, and perhaps children, in a household. I can see how that can be reasonable. However, heating at a cost of €70.80 per month and home insurance at €12.25 per month amounts to €147 per year. Car insurance at a cost of €24.25 per month amounts to €291 per year. I have brought this up several times in this House. I have written to the Minister previously about it. I would sincerely like to meet the people who set these as budgetary norms. I would like to hand them my finances and let them give me back all the amazing savings. I would be in a better position if I could live within those norms. They are completely out of sync with the average cost of car and home insurance. They bear no resemblance to reality and cause much hardship for people with whom I have spoken.
The table sets out a personal cost allowance of 97 cent per month, which is €11.64 per year; let us go really mad and call it 23 cent per week. I am not sure what was behind setting that out in the table. It is, however, thoughtless and careless to the plight and real experience of people as they sit down to use this as their navigating document.
I believe we can do better.
I completely appreciate the need for the State to ensure that nobody does this lightly, and that the insolvency regime is not exploited or easily engaged in. However, setting expenditure levels like that is completely disingenuous to those most in need of them. I ask that they are reviewed and proofed against real and established living costs.
I welcome the opportunity to say a few words on the Personal Insolvency (Amendment) Bill 2020. It is a very important piece of legislation. I welcome the Minister of State to the House. I wish him well with the new Bill and with the extra portfolio he will get for the next couple of months.
Before I start, I wish to be associated with a proposal that was made by Senator McGahon earlier during the Order of Business regarding a plaque being placed within the precincts of the Leinster House complex in honour of former Senator and Deputy, Billy Fox, on the anniversary of his murder. He is only the second person to be murdered, by political assassination of a Member of the Oireachtas and of this House, in almost 100 years since the foundation of our State. Therefore, I support that proposal.
I welcome the Bill, particularly section 14(c), which removes the requirement that an insolvent debtor is only eligible under the Act to apply for the insolvency court review if his or her home mortgage was already in arrears before 1 January 2015.
The amendment removes that from the Bill, which is very welcome.
I will not go over what other Members of the House have said. However, I agree with everything that Senator Seery Kearney said about the budgetary norms, as laid down, being completely out of date. One could not agree with these norms and the Minister of State must personally intervene.
Senator Martin complimented the former Ministers, Alan Shatter and Frances Fitzgerald, for starting out on the road to this insolvency Bill for which I compliment them. I was a member of the finance committee during that period, when many people wrote to us about their cases. We heard about harrowing situations where people were in ferocious debt and losing their houses, which led to family break-ups and so on. It was an horrific time. I am sure there will more such cases after the pandemic we are going through at the moment. This Bill is very welcome at this point in time. I hope it will bring some finality to the predicaments in which some people find themselves.
I would like to raise an issue that is not mentioned in the Bill but is one that I have raised in the House on a number of occasions. What happens if self-employed people and sole traders who employ people lose their business for some reason or other and must close down? We saw such cases during the financial crash, we are seeing them now and we will see more of them because of the pandemic that is taking place. When such a business closes down, there is a requirement that the employer must pay two weeks' redundancy per year for each member of staff. It is right that staff should get their redundancy. I have no problem at all with that. If the employer is unable to pay the two weeks' redundancy per year, he or she can plead inability to pay. In such circumstances, the State steps in to pay the redundancy to the employees. However, the Department of Social Protection then goes after the employer for the two weeks' redundancy per year. If he or she cannot pay, the money is eventually taken from his or her estate, which means the family home.
Given that this legislation is about protecting the family home, I think the Minister of State should consider this matter. I am preparing a Private Members' Bill that would exclude the family home from any charges that would be brought by the State due to an inability to pay the two weeks' redundancy per year to members of staff. Many people have lost their businesses and the State has had to pay the redundancy. While the State has not put any charges on any estate so far, a day of reckoning will come. There are many cases of families having a sick child or whatever. Such families may always have felt that when the parents died, the family home would be there for this particular son or daughter, thereby giving them a sense of security in respect of the family member concerned. This area should be looked at. Maybe it could be included in this Bill at some stage.
I welcome the Minister of State to the House. I wish him well in his work, which will get busier from next month on. I would like to take this opportunity to support the proposal made by my colleague, Senator John McGahon, that a plaque in memory of the assassinated Senator Billy Fox would be erected in the precincts of Leinster House. I believe that is appropriate.
Billy Fox was murdered by the IRA. He was a serving Member of this House at the time. I believe we should honour his memory by erecting a plaque in the precincts of Leinster House, given that he was murdered 47 years ago yesterday, 11 March.
I welcome this legislation, which is an improvement in terms of personal insolvency. The sunset clause was a difficulty and a challenge, of that there is no doubt. The removal of that sunset clause facilitates other people who may find themselves in financial difficulty in accessing the personal insolvency structure.
I believe this area is a moveable feast. When we move to the post-pandemic period there will be people caught up in serious financial difficulties. We have seen hundreds of thousands of people on the pandemic unemployment payment, PUP. Unfortunately, some of them will not be able to return to their jobs. Some will find themselves in financial difficulty. We have a duty of care to ensure that those people get the helping hand they need to restructure their finances and their lives to allow them to continue to make a meaningful contribution to society.
We have been very much behind the curve when it comes to giving people options to get out of financial difficulty. We have seen many things done to help corporations and financial institutions restructure and prosper. We need to do more to allow people who, through no fault of their own much of the time, end up in financial difficulty. They, too, should be allowed to restructure and prosper.
This legislation is not the panacea that will resolve all the problems but it is a clear, incremental step in the right direction. I would say to the Minister of State, however, that it has to be constantly reviewed. We have to constantly identify ways of assisting people. Nobody expects every debt to be written off. Personal responsibility is certainly a key component but when people are prepared to take personal responsibility the building blocks and the structure should be available within the State to give them all the assistance possible to allow them rebuild their lives, their future and, ultimately, play their part in rebuilding society and our country.
I very much welcome this legislation. I sincerely hope it is dealt with by the Houses swiftly and that there will be no delay in its passing because it is necessary. I again thank the Minister of State for coming to the House. It has been a constructive debate and I look forward to seeing this legislation become law in the not too distant future.
I welcome the Minister of State here today and wish everyone Lá Fhéile Pádraig sona. I almost forgot that St. Patrick's Day will be next week.
I support this Personal Insolvency (Amendment) Bill and the amendments. As the Minister of State mentioned, it is a priority Bill to reform the Personal Insolvency Act 2012 and the Personal Insolvency (Amendment) Act 2015 to support people facing personal debt. When we are talking about personal debt it could be people simply facing credit card debt as well as those facing mortgage debt. The Bill is to support people with all levels of debt.
I welcome that the Bill will support people in a time of immense stress and anxiety as a result of the pandemic. One aspect I particularly welcome in this Bill is the debt relief notice. If someone has debts amounting to less than €35,000 and a low number of disposable assets, the asset amount that can be considered is increased from €400 to €1,500, which is phenomenal. Many of the support agencies see that as an important measure.
This allows more people to be eligible to apply for this debt relief notice. As I mentioned, this could be for people with debts less than €35,000, so, therefore, for a lower amount of debt.
The option is there as well to apply to court if creditors refuse to accept the arrangement. I know that the Minister of State has suggested here also to extend the time to apply to court from 14 to 28 days. This is in the case where creditors have unreasonably refused personal insolvency arrangements.
Another really key point is that mortgages which go into arrears after 2015 can now be eligible. This is so important, particularly for people who have lost their jobs in the recent past, particularly those at the lower socioeconomic level. We can see that there are more women who have lost jobs in this category. Families and particular groups are struggling.
I also welcome the debt settlement arrangement and the protective certificate that can be extended for up to 40 days and also to the bringing in of remote working. We are seeing this happening everywhere. It is also important to bring it into legislation to allow personal insolvency practitioners to be able to meet with their debtors.
The goal of these personal insolvency measures is to protect people and that is what we need to do. That is what we have been doing with emergency priority legislation over the past number of months and what I have seen since I have come here to the House.
One thing I would like to advise and to remind people of is that the Money Advice & Budgeting Service, MABS, is a key support and a crucial service that supports people in managing their budgets. It is free, confidential and it is worth noting that there are 60 offices around Ireland and that people can call, email, log in and do a live-chat.
There are many supports out there and people should not feel that they are on their own when dealing with debt and with difficult circumstances. People should know that there are people to talk to, where they can get advice and that it is independent and confidential. I thank the Minister of State and very much welcome the amendments in this Bill.
I will try to address a number of the points and we will have a greater opportunity on Committee Stage to get into more detail.
Senator Ward raised a number of points. There were extensive consultations both with the Department of Finance and with the Central Bank and at no stage was any objection raised but I hear the Senator’s concerns on whether there could be an unintended consequence or negative effect on young people being able to avail of a mortgage. The scheme of the Personal Insolvency (Amendment) (No. 2) Bill will be published at the end of this year but before that, in the second quarter of the year, a full and extensive review will be undertaken of all of the different provisions within the insolvency regime. I certainly hope and expect that the point made by the Senator of a potential negative consequence will be considered within that review. Our only real reason for bringing forward these particular provisions is because of the pandemic and its potential impact, which is why we are moving quickly on this, together with the continued economic uncertainty.
Senator Gallagher raised the issue around secured debt on farmland. The Minister, Deputy McEntee, and I had a meeting with the IFA earlier this week and this very issue was discussed and considered. There are two challenges here. There are very real concerns for the farming community, especially as some vulture funds are now taking on secured debt from other financial institutions. One of the challenges concerns the Constitution which, of course, is very important, and the issue of property rights, where people have secured the debt of businesses with financial institutions and they have property rights. We have to be very careful not to risk the entire regime.
The second issue is around secured debt. If one has property as a member of the farming community, it is very important to be able to use that property to leverage funds as needed. If lending institutions were of the view that they may not be able to get repayment on that debt by way of their security this may make it more difficult again - in a somewhat similar way to the concerns raised by Senator Ward - to secure lending in the first place. This is something the Minister, Deputy McEntee, and I have discussed with the IFA and we have undertaken to give further consideration to those issues and will do so over the coming months.
Senator Martin also raised a number of important issues, one of which was why the asset limit was increased to €1,500. There are, of course, a number of other assets that are also taken into consideration such as household goods, a motor car and a piece of personal jewellery, which one may also add up together. MABS was consulted on this and was satisfied with this particular figure. However, with the broader of review that is happening in the summer, this issue will again be taken into consideration. This review will not involve just past legislation but will consider this Bill also.
Again, the €3 million cap on secure debt is also part of the broader consideration in the review. All those broader issues will be taken into consideration.
A number of other matters were raised. Senator Seery Kearney referred to the specific figures. I will raise that with the Insolvency Service of Ireland and seek an explanation on how it all ties up. Personal insolvency is a very complex process. It was made to be that way initially because of fears of constitutional challenges but that has made it very difficult due to the set of procedures and the legalese relating to it. There will be an attempt with the second Bill to streamline it and make the procedures more straightforward and easier to attain because it is a very complex situation. I understand the reasons it was made so complex but it is much more settled now and we can have more confidence that we are making necessary changes, without the risk of the process being found to be unconstitutional because of the property rights issue.
We can consider anything I have not touched on in detail on Committee Stage. On my behalf and on that of the Minister, who sends her apologies for not being able to be here, I thank the Senators for their contributions and clear support for the intent behind the Bill. It is a positive and important amendment that will give relief to people who are in a very difficult situation, often through no fault of their own. The Bill responds to needs across our economy and society and forms part of the Government's commitment to introduce necessary reforms to the personal insolvency legislation. It will ensure that sufficient supports are in place for those in serious financial difficulties, including mortgage holders with repayment difficulties. With the co-operation of those on all sides of the House, we believe we can get this amending legislation through the Houses as quickly as possible and help give relief to people who are in very difficult situations.
When is it proposed to take Committee Stage?
Dé Luain seo chugainn.
Is that agreed? Agreed.