Reform far-reaching
Saturday, June 30, 2012
Justice Minister Alan Shatter published the long-awaited Personal Insolvency Bill yesterday.
Under the terms of the EU/IMF bailout, the Government was required to introduce new measures to deal with personal and mortgage debt.
The legislation, which amounts to a comprehensive reform of insolvency law, proposes to reduce the period of bankruptcy from 12 years to three years. It further proposes to establish a new, non-judicial debt resolution process.
The proposed debt resolution process outlines a provision for an agreed settlement of unsecured debt over five years and a debt relief arrangement that would allow unsecured debt of up to €20,000 to be written off.
The non-judicial resolution process must be agreed by both sides. While the banks would have a veto over any agreement, Mr Shatter was at pains to emphasise that the borrowers would have the same power of veto.
A majority of an individual’s creditors would be able to veto an arrangement, but borrowers would have the advantage of being able to declare themselves bankrupt, if the banks or other lenders make unrealistic demands.
Efforts to provide for non-judicial resolution of such problems should be welcomed. Of course, there are aspects of the bill that should be teased out in the course of thorough Oireachtas debate.