Dáil Éireann Debate, Thursday - 6 February 2014
142. Deputy Denis Naughten asked the Minister for Justice and Equality if he will review the operation of the new personal insolvency system in view of the significant costs associated with its operation that are blocking those who require the service from availing of it; and if he will make a statement on the matter. [6115/14]
View answerContrary to some recent media reports, I can confirm that there is no intention to amend the law on personal insolvency. The enactment of the Personal Insolvency Act in December 2012, the establishment of the Insolvency Service of Ireland (ISI) in March 2013, and the reforms to the bankruptcy regime which took effect from 3 December 2013 already constitute a far-reaching, substantial and comprehensive reform of our insolvency and bankruptcy law.
It is now time to allow the new legislation to take effect. Operational issues which may arise will be addressed by the ISI. The ISI has rapidly established the necessary infrastructure of trained and accredited insolvency practitioners and intermediaries, and began accepting applications for personal insolvency solutions last September. A number of these cases have already been referred to the Courts for protection orders or final approval, and the ISI expects the volume of such cases to increase significantly in the coming weeks and months. So while huge progress has been made, we are still in the early stages of implementation, and the legislation should be allowed time to bed down. There have also been media references to a proposed insolvency protocol. I can clarify that this is purely an operational matter and does not require any amendment to the existing legislation. Such a protocol is simply a working template for an insolvency or debt agreement, agreed with stakeholder consultation, to facilitate and streamline insolvency applications. Developing such a protocol is an initiative of the ISI, based on best practice in other jurisdictions.
With regard to costs, in the case of a Debt Relief Notice, there are no significant costs for an eligible insolvent debtor associated with its operation as the approved intermediary provides the supports necessary to make an application at no charge. It should be noted that in the case of both a Debt Settlement Arrangement and a Personal Insolvency Arrangement, these solutions are predicated on a voluntary agreement being arranged by a personal insolvency practitioner between debtor and creditor(s). The practitioner's fees will be paid from contributions made during the term of the agreement. In a case where a debtor is not in a position to make some level of payment to his or her creditor(s), whether by way of income payments or the disposal of assets, it is difficult to see how an arrangement could be put in place. Bankruptcy, the term of which has recently been reduced from twelve to three years, may be the most appropriate option in such cases.
