Minister for Justice Alan Shatter said the launch of the Insolvency Service of Ireland (ISI) yesterday was "a good day" for tens of thousands of people who were "attempting to navigate, without assistance, the tightrope of their personal finances".
He pointed to the “devastating impact” unsustainable personal debt could have on people and said he anticipated that between 15,000 and 20,000 people would register with the ISI within the first year.
He said the service would offer individuals and families who are insolvent “without any reasonable prospect of being able to repay their debts. . . a light at the end of the tunnel”.
Mr Shatter said the service would facilitate only those who were genuinely unable to service their debts and not people who had decided to strategically default on their loans.
He said the new insolvency arrangements would be “of substantial assistance to thousands of individuals and families” and claimed they would have “the capacity to provide certainty for those crippled by unsustainable debt”.
The Minister described the guidelines on reasonable expenses as an “essential defensive shield” which would ensure financial institutions could not try and deprive debtors of money needed for “reasonable household and family expenditure”. He said it was of central importance that people would be “able to remain in their homes” and suggested that the new arrangement facilitated “workable, sustainable and voluntary solutions to protect the family home”.
Mr Shatter insisted, however, that assistance would have to be targeted “at those who cannot pay, as opposed to those who will not pay”.
He defended the minimum income guidelines which were published yesterday and said people could not expect “to maintain a lifestyle which is well beyond their means and at the same time expect financial institutions to reschedule or write off outstanding debt and taxpayers to carry the burden of their doing so.”
Effective veto
He defended the decision to allow the financial institutions an effective veto on debt settlement arrangements and said that if an independent arbitrator could compel either side to sign up to a deal it would move from a voluntary arrangement to a compulsory one.
He suggested that if this happened the insolvency system would have to be executed through the courts system which would add substantially to the costs of borrowers and lenders.
