Dáil Éireann Debate, Wednesday - 15 June 2016
76. Deputy Michael McGrath asked the Tánaiste and Minister for Justice and Equality further to Parliamentary Question No. 209 of 31 May 2016, if she is considering widening the circumstances whereby an insolvency court can overrule a bank veto and, in particular, to situations where a family home is no longer involved because it has been sold under pressure or instruction from the bank; and if she will make a statement on the matter. [16295/16]
View answerThe Deputy will be aware that the new court review introduced in the Personal Insolvency (Amendment) Act 2015 became effective from 20 November 2015.
Under the new provisions an insolvent borrower who has proposed a Personal Insolvency Arrangement under the 2012 Act, can apply for a court review if the proposal:
- has been refused by his or her creditors,
- includes a mortgage (or other debt) secured on their home - their principal private residence,
- and the borrower was in arrears on that debt on 1 January 2015 (or having been in arrears before that date, has entered a restructure with their lender, but the borrower remains insolvent).
This represents a major change for the borrower in arrears, in providing for independent review by the courts where creditors reject the borrower's proposal for a Personal Insolvency Arrangement. Previously, such a rejection was final.
The review criteria were carefully designed, following legal advice, to ensure that the review process takes full and fair account of the situation and rights of both the borrower and the creditors, while also taking account of the public interest in restoring insolvent borrowers to solvency, enabling creditors to recover debts to the extent that the debtor’s financial situation reasonably allows, and keeping people in their homes where that is reasonably practicable.
The review provisions reflected the Government priority to help people in serious mortgage arrears on their home and particularly those at risk of losing their home. That was also the strongest public policy justification for the new court review.
The courts are currently deciding the first review applications and the initial outcomes are encouraging. I have also introduced changes to the Civil Legal Aid rules, to ensure that insolvent borrowers can access legal aid where needed to bring the new court review (Civil Legal Aid Regulations 2016, S.I. no. 272 of 2016, taking effect from 23 May).
I can confirm to the Deputy that in this early stage of implementation, I am not considering widening the scope of the legislation. However, as the Deputy will be aware, a number of commitments in relation to the mortgage arrears situation are made in the new Programme for Government, and the Government will be announcing actions in relation to these in the coming weeks.
