Brendan Howlin urges coalition to back bankruptcy rule

A Labour minister has urged the Coalition to back plans to reduce bankruptcy rules from three years to one in a bid to stop people skipping the country to “avail of more favourable” terms in the UK.

Tue, 21 Apr, 2015 - 01:00

Fiachra Ó Cionnaith

Public Expenditure and Reform Minister Brendan Howlin issued the call for action amid an ongoing row within Government circles over Fine Gael concerns that the proposals could lead to a rise in repossessions.

Speaking at the launch of a €27m redevelopment plan for Kevin Street Garda Station in Dublin, Mr Howlin said it is essential that bankruptcy rules are changed to address a problem in the system.

He said the reduction from three years’ bankruptcy to one, outlined in a bill proposed by backbencher Willie Penrose, will stop people moving to the UK to benefit from single-year bankruptcies and could “leverage the banks” into cutting deals with struggling mortgage holders “in the manner they should”.

Mr Howlin said there is a need to ensure “through this mechanism or other mechanisms that banks live up to their responsibilities” and help to ensure “people retain ownership of their own homes and a roof over their heads”, adding that the public deserves a fairer system as banks were “at death’s door” before being saved by the State.

He said the proposals are part of a “suite of measures” being considered by the Department of Finance, and already have the full backing of Labour.

However, it is understood Fine Gael remains cool on the plans due to concerns they could lead to an increase in repossessions.

Tourism Minister Paschal Donohue (FG) said the Government “should be concentrating our efforts on arrangements reached through the personal insolvency legislation”.

He said he is disappointed at the low number of deals through this system to date, adding, “we need to look at why this has happened”.

Senior figures in the Labour Party had claimed a reduction in the maximum bankruptcy rate of three years is “a done deal”, despite ongoing opposition to the move by Fine Gael members in Cabinet.

The discussions have delayed related Government plans to tackle the escalating mortgage arrears crisis, which is seeing thousands of people facing the prospect of losing their homes because they cannot keep up with bank repayments.