Personal Insolvency Bill Debate – Dail Eireann – Pat Breen T.D.

July 26th, 2012 - Pat Breen

Deputy Pat Breen: I welcome the opportunity to speak to the Bill. Like Deputy Eoghan Murphy, I am delighted that it is going through the House before the summer recess, even if we have to sit until midnight, as it is extremely important.
I congratulate the Minister and his colleagues on producing this radical legislation which will overhaul the personal insolvency procedures. I welcome the Bill and thank the Government for delivering on the commitment to help families who are struggling to repay their mortgage. The Bill gives hope to thousands who are in mortgage arrears because it provides light at the end of the tunnel. When we went into government, we made a commitment that we would try to help the people concerned. Like other Deputies, I am well aware of the problems mortgage arrears pose for families. I am assisting a number of families in my constituency who are in such a position. It is not easy for them. I have had lots of tears in my office from people encountering such problems. The current process is cumbersome and provides little solace for those in trouble. Previous speakers have stated negotiations with various interests can be difficult. Some banks offer no leeway in negotiations with householders. That is why a new and innovative approach is required.
In the wake of the property bubble and the resulting recession the number in mortgage arrears has accelerated. According to the Central Bank, at the end of March there were 764,138 private residential mortgage accounts in total, of which 77,630, or 10% of mortgages, were in arrears for more than 90 days. When we look at restructured mortgages, it is interesting to note that of the total stock of such mortgages at the end of March, just over 40,000 were in arrears of varying length. In essence, a sizeable number of people are still in mortgage difficulties, even where restructuring arrangements have been put in place. We have all seen evidence of this.
The scale of the problem is compounded by personal indebtedness. In 2008, for example, the level of personal indebtedness equated to every household borrowing €158 for every €100 earned, which speaks for itself. There is no simple or quick-fix solution because of the complexity of the problem. I welcome the provisions included in the Bill that provide for a number of solutions for people in various circumstances. It is also welcome that the Bill recognises those who ran up a substantial personal debt and whose circumstances have changed since they first took on the debt. That is the case for many householders because at the height of the Celtic tiger people were encouraged to borrow and there were a number of cases in which people had taken out loans had since lost their jobs and were in real difficulty in paying back their debt. The provision of debt relief certificate provides the opportunity for persons who have accumulated unsecured debts of up to €20,000 to wipe the slate clean. That is a welcome move.
As well as being in mortgage arrears many people have substantial unsecured debts and are struggling to pay off their debts because their incomes have reduced substantially since they took on the original debt. The debt settlement arrangements provided for in the Bill will allow such persons to apply to the insolvency service for a protective certificate while they are preparing a debt settlement arrangement.
The biggest complaint of my constituents in this category concerns the unwillingness of the lending institutions to give them adequate time to sort out their affairs. This proposal will give people some breathing space as they try to resolve their situation.
The protection which the Bill offers for principal private residences in cases where individuals have entered into a personal insolvency agreement is something for which people have been waiting for some time. Repossession orders should be a thing of the past. Repossessions are in nobody’s interests, especially in a period when house prices are falling. While the lender might recoup some finance from the sale of a repossessed house, the entire process is extremely traumatic for the families involved and in any case it is the taxpayer who ends up picking up the tab for those who have to be rehoused by local authorities or through the payment of rent supplement.
The family home is hugely important to Irish people. It may be as a result of historical experiences that this country is ranked sixth in the world in home ownership, with economies such as the United Kingdom, the United States and Germany. The statutory duty placed on the insolvency trustee ensures that in preparing the personal insolvency agreement the debtor will be allowed to remain in his or her own house. That is a significant move which will ease worries for families living with the threat of eviction.
I wish to address the proposals set out for the new insolvency service. It is proposed that the necessary resources be given to the service in order that it can deal with the scale of the applications likely to come before it once the legislation is enacted. I would like to see the MABS involved in the process. I welcome the Minister’s commitment that it will continue to have a valuable role in assisting and advising people with debt problems. I cannot speak highly enough of the professional advice and financial statements produced by it to support people in trouble and I am pleased that it will have a role in the new system.
It is important that the financial institutions buy into the new insolvency legislation. I appeal to them to embrace it and work with us in that regard. I meet families every day who are struggling to pay their debts and I am conscious of the pain and upset they must endure. The legislation provides a lifeline for them. People are most anxious to have the provisions in the Bill enacted as soon as possible. I, therefore, appeal to the House to support the legislation.