SPEAKING on the Personal Insolvency Bill in the Dáil last night, Labour T.D., Ciaran Lynch, said the Bill provides a range of workable options for those in mortgage or personal debt distress and presents a real opportunity for our country to recover as a society.
“Mortgage debt – a dead-weight on households throughout the country – will finally be dealt with under the new legislation through Personal Insolvency Arrangements. Struggling homeowners will now be able to enter into arrangements on meeting certain criteria with their lenders to provide for some of their debt to be restructured. Options will also allow for families and individuals to remain in their own homes or down-size to an alternative home.
“Blanket debt forgiveness is not on offer as this would be unjust, allowing those who won’t pay to piggy-back on those who can’t pay.
“The Bill also addresses the relationship between borrower and lender, rebalancing this relationship and ultimately easing pressure on distressed mortgage owners.
“Banks faced with the prospect of no payment or some, will be incentivised to engage in a meaningful way with borrowers to each other’s long-term benefit and over time this will help normalise the mortgage market.
“Additionally, the creation of Debt Relief Certificates will allow for qualifying sums of unsecured debt of up to €20,000 to be written off, subject to three years supervision. Debt Settlement Arrangements will also allow for a settlement of greater unsecured debt over a period of five years.
“The inclusion of both secured and unsecured debt, through Personal Insolvency Arrangements, is seen as placing Ireland to the forefront of States that are seeking to address the devastating impact of unsustainable debt by providing for settlement arrangements of both types of debt at the same time.
“Labour Minister Jan O’Sullivan has in conjunction to the Bill, rolled out the Mortgage to Rent Scheme on a national basis to help families find a way out of what would otherwise be impossible situations.
“Piloted in February 2012, this scheme allows families in severe difficulty to arrange for their home to be bought by a housing authority from the bank at the current market rate. The family can then rent the house, completely unknown to neighbours or even loved ones, and keep their children in the local schools, sports clubs and activities that make their house their home and their local area their community. It could also allow over time, for the person to buy back their home if their economic situation improves.
“The Personal Insolvency Bill is a mammoth and complex piece of legislation, running to 150 pages, it reforms legislation which has been in place for over a century and it looks set to ensure that in coming years, better structures are in place for all families, not only those in difficulty.
“Labour has consistently and clearly promised that we would introduce legislation that would help assist those who are struggling to pay their mortgage, deal with their credit card debt or other personal debt. This legislation is delivering on this promise as outlined in the Programme for Government last year.
“It is not, however, a blanket debt forgiveness scheme. It has been put in place for those who are making an honest effort to pay their debts but can no longer afford their repayments. A key principle of the Bill is that it is not about the size of the debt but rather the affordability to service it. There is no one size fits all solution and each case will be dealt with on an individual basis.
“The last administration left behind an appalling legacy which saw crippling debts being saddled upon the shoulders of Irish citizens. After 15 years of mismanagement however, we finally have a radical and workable piece of legislation to deal with the debt crisis.
“Those struggling to pay their debts can make an application through the Personal Insolvency Practitioner (PIP). They will sit down with the borrower and put the best plan in place for them to deal with their debt. Regulation will also be put in place monitor the various provisions within the legislation.
“We must make sure that the mistakes of the past are not repeated and to achieve this, in addition to Personal Insolvency Bill, a house price database is being created. This database will make it easier to track house prices in order to get a more accurate idea of their real value.
“While this legislation does set to correct the madness of the past, we must not forget that Ireland is a home buying nation and will continue to be so. In addition to this, it is about normalising the housing market and putting proper rules in place for the future so that people can once more begin to buy a home and in doing so, not be competing in a market where houses at one time were favoured by Government policy as a commodity for investment purposes.”