Dáil Éireann Debate, Wednesday - 16 January 2013
757. Deputy Gerald Nash asked the Minister for Justice and Equality if he will consider lack of engagement from the banks in relation to the provisions of the Personal Insolvency Act 2012 to be in breach of the law; if he will provide details on the sanctions he will use against banks who fail to comply with the law; and if he will make a statement on the matter. [58126/12]
View answerThe Personal Insolvency Act 2012, was passed by both Houses of the Oireachtas on 19 December, 2012 and signed into law by the President on 26 December, 2012. The Act will be commenced in due course as the necessary preparations for administration of its provisions are finalised.
The Act provides for the introduction of three new debt resolution processes, which though requiring approval by the court, are essentially non-judicial in nature:
- The Debt Relief Notice (DRN) will allow for the write-off of qualifying unsecured debt up to €20,000, subject to a three year supervision period.
- The Debt Settlement Arrangement (DSA) provides for the agreed settlement of unsecured debt, with no limit involved, normally over five years.
- The Personal Insolvency Arrangement (PIA) will enable the agreed settlement of secured debt up to €3 million, although this cap may be increased with the consent of all secured creditors, and unsecured debt without limit, normally over six years.
The Act also continues the reform of the Bankruptcy Act 1988, begun in the Civil Law (Miscellaneous Provisions) Act 2011 and will include, critically, the introduction of automatic discharge from bankruptcy, subject to certain conditions, after 3 years in place of the current 12 years.
The Deputy will appreciate that we have to see how the new legislation works, for some months at least. It is not for me to speculate as to the future conduct of any of the participants in an insolvency process. However, I am of the view that new personal insolvency laws, including the bankruptcy law reform, should provide a significant incentive for financial institutions to develop and implement realistic agreements to manage or settle debt with their customers. Such agreements should in time become the norm as the most sensible and cost-effective arrangements, particularly where the issue is one of dealing with repayment difficulties for a single major debt, secured or otherwise. These agreements could include measures to address mortgage arrears.
However, let there be no doubt that financial institutions must constructively engage under this legislation in the public interest, the interest of those in financial difficulties and the interest of their own institutions and credibility. If I find within a short period during the operation of this legislation that all or some of the financial institutions are intent on not engaging constructively with the personal insolvency arrangement provisions for whatever reason, I will not be slow to bring proposals to Government to amend the legislation.
The Government has engaged with the financial institutions in the lead-in to the enactment of this legislation. They understand exactly where the Government is coming from, what our concerns are and what they should do in the context of operating the legislation constructively and sensibly, engaging with personal insolvency practitioners and the circumstances of their customers and ensuring appropriate and sensible arrangements are made.
