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Personal Insolvency Bill

Dáil Éireann Debate, Thursday - 10 May 2012

Thursday, 10 May 2012

Ceisteanna (129)

Terence Flanagan

Ceist:

130 Deputy Terence Flanagan asked the Minister for Justice and Equality the role the Money Advice and Budgeting Service will play when the Insolvency Bill is enacted; his views on personal insolvency trustees; and if he will make a statement on the matter. [23532/12]

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Freagraí scríofa

The Personal Insolvency Bill, the Heads of which I published on 25 January 2012, introduces a number of new non-judicial debt settlement systems. One of those systems — the Debt Relief Certificate (DRC) — provides for the writing-off of debt where debtors with no assets and no income may be unable to meet qualifying debts totalling not more than €20,000. The purpose is to create an efficient non-judicial means, of allowing persons to resolve unmanageable unsecured debt problems.

The intention is that the approved intermediary will assist debtors at the application stages of the process and will submit the completed applications on their behalf to the Insolvency Service for decision. While it is not stated in the Heads of the Bill, organisations such as MABS could operate as the approved intermediary if they wish. In this regard I am pleased to say that MABS has recently agreed to take on the role of approved intermediary (as recommended by the Law Reform Commission in their Report on Personal Debt). The detailed arrangements will be finalised with MABS and the Department of Social Protection in due course.

Other organisations might also be involved in the processing of DRC applications. These would most likely be non-profit organisations as a viable business model for money advisors or personal insolvency trustees would not appear to apply in the context of a DRC.

Two of the proposed arrangements in the Personal Insolvency Bill — Debt Settlement Arrangement and the Personal Insolvency Arrangement — will require the involvement of a Personal Insolvency Trustee.

The intention is that the Personal Insolvency Trustee will act as an intermediary between the debtor and his or her creditors. The General Scheme of Bill sets out in some detail the duties of the Trustee from initial assessment of the debtor's suitability for a particular arrangement, to negotiation of the arrangement and through to its completion. The role of the Trustee is critical to the proper functioning of the debt settlement arrangements as it is vital that debtors be properly and independently advised as to the implications of all options available to them prior to arriving at a decision. The average debtor is at a disadvantage vis a vis credit institutions and creditors in terms of experience, advice and expertise. Once a debt settlement is agreed and registered, effectively the personal insolvency becomes the custodian of the arrangement.

The Trustee will be selected by the debtor and, similar to debt settlement schemes which operate in other jurisdictions, it is intended that the fees involved in the arrangement will be borne by the creditors on the assumption that this will facilitate the maximum debt recovery.

The Deputy will appreciate that a number of matters still require to be finalised in relation to the proposed legislation such as the detailed arrangements for licensing and regulation of personal insolvency trustees and parameters in regard to appropriate costs and remuneration. As these are essentially financial services, my Department is in consultation with the Department of Finance and the Central Bank to see how these issues might best be addressed within the context of regulation of financial advisory services generally.

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