Changes sought to insolvency proposals

A CROSS-PARTY Oireachtas committee will today recommend several key changes to the Government’s draft personal insolvency Bill. It will also call for an appeal mechanism and an early evaluation of the effectiveness of the legislation.

The Committee on Justice, Defence and Equality will publish its report on the heads of the Personal Insolvency Bill, a little over a month after receiving the draft legislation from Minister for Justice Alan Shatter.

Some 10 written submissions were received by the committee, which held a public hearing on February 15th to discuss issues of concern.

Several members of the committee, chaired by Fine Gael TD David Stanton, believed that the very limited time they had to examine a far-reaching piece of legislation – which will reduce the period of bankruptcy from 10 years to three – meant that only a cursory evaluation of the legislation was made.

However, after hearing submissions, the committee concluded there were several possible shortcomings that needed to be addressed. One was the need to include an appeal mechanism for people whose applications for protection in relation to debt had been refused, or who believed that rulings made were unjust.

Another recommendation is that the threshold values set by the draft legislation for various reliefs were too low. Another key finding of the committee, said a source, is that as the legislation marks a radical departure from previous insolvency and bankruptcy schemes, it would need to be evaluated at a relatively early stage.

“There is a 10-year deadline included with the draft Bill but we feel there should be a much shorter period inserted, to allow its efficacy to be monitored,” said the source.

The report makes other recommendations on the heads of the Bill, which is designed to help tackle the problem of overindebtedness and personal insolvency in Ireland.

The draft Bill also includes the establishment of an insolvency service, to be set up by the State.

It also proposes to introduce the concept of a debt relief certificate of forgiveness for persons with no assets and no income that are unable to meet qualifying debts totalling not more than €20,000.

The rationale behind this is to create an efficient non-judicial way for people to resolve unsecured debt problems that have become unmanageable. The certificate does place restrictions on the debtor from applying for credit.

It is the third time in recent months that the committee has evaluated and reported on proposed legislation in recent months.

The legislation is also a requirement under Ireland’s bailout package with the troika.