New bankruptcy regime ‘eases pain’ for distressed homeowners

The Government’s decision to reduce the term of bankruptcy from three years to one year has been hailed as “possibly the most important of its term in office”.

The Cabinet is set to approve the one-year bankruptcy rule at its weekly meeting today, as revealed by the Irish Examiner last week. The radical reduction in our bankruptcy laws will see the Republic of Ireland brought into line with Northern Ireland and Britain and it is expected that the legislation will be enacted before the end of the year.

David Hall, director of the Irish Mortgage Holders’ Organisation, last night said the move to one year would “end the torture” thousands of distressed mortgage holders have endured for more than seven years.

Yesterday Mr Hall said: “It is really hard to overestimate the importance of this decision and the relief it will bring to thousands of people who find themselves in distress”.

He said the safety net this will bring to people is very welcome and will also be a relief given how complicated the Government’s insolvency laws are.

“The insolvency regime is so flawed because the legislation is too complex. This hopefully will help address the balance, but it is a reflection of how bad the law is,” he said.

Mr Hall also praised Tánaiste Joan Burton and her Labour ministers for doggedly pushing the matter, despite stiff opposition from Fine Gael and the Department of Finance in particular.

“You can’t bash the Government all the time and especially when they do something you have been looking for. Credit is due to Willie Penrose, to Joan Burton and Alan Kelly for driving this to this point,” he said.

Mr Penrose said that he hoped the new regime would end the painful stigma around bankruptcy.

“It has been nine months in gestation and finally it is going through,” he said.

“It will bring a great deal of relief to people. I am still getting lorry loads of letters on this.

“We hear a lot of talk of this being a great place to do business. I am very pleased it is now happening. It will empower the distressed borrower to get back going again. Bankruptcy will have lost its stigma.

“This will force banks to wake up to reality, this will level the playing field. This will be a real benefit to the plain people of Ireland.”

The Oireachtas committee on justice, defence, and equality proposed that the term for bankruptcy be reduced to one year from the recently introduced three-year term in July.