THE GOVERNMENT will this week face calls to alter incoming personal insolvency legislation so the €3 million upper limit of debt is reduced and debtors will not have to sell engagement rings.
The European Commission has warned that the debt threshold is too high for a scheme aimed at struggling homeowners.
Minister for Justice Alan Shatter has said expensive jewellery could not be exempt from debt relief mechanisms.
Mr Shatter, who is sponsoring the legislation that will allow debtors to emerge from bankruptcy after three years instead of 12, has said he is open to amendments when the proposed law returns to the Oireachtas for discussion on Thursday.
Fianna Fáil spokesman on finance Michael McGrath has said property speculators and professional investors could benefit at the expense of owner-occupiers in distress with personal mortgages.
“As I understand it, the main purpose of the Personal Insolvency Bill is to provide for a fresh start for individuals and families unable to repay their mortgage and other forms of personal debt,” Mr McGrath said.
“People with debts of up to €3 million will have an equal standing in law as people struggling to keep the family home and will essentially be competing for scarce resources from the personal insolvency service,” he added.
He also cautioned the best personal insolvency practitioners could gravitate towards larger cases where the perceived fee-earning capacity would be higher.
He said Fianna Fáil would put forward an amendment to the legislation to ensure that “one item of jewellery of ceremonial significance” is among the items not taken into account when debtors’ assets are calculated.
The piece of jewellery could be an engagement ring, wedding ring or other item of sentimental as well as monetary value.
When the matter was last discussed in the Dáil in July, Mr Shatter said individuals in the State had jewellery “worth hundreds of thousands of euro” and no one could seriously suggest the items should be exempt from the legislation.
“I would need to hear very convincing arguments as to why a person applying for a full debt write-off of up to €20,000 from his or her creditors should be allowed to retain expensive items of jewellery which might be sold to repay some of the debt incurred,” he said.
Mr Shatter said he was “mindful of the sentimental, as much as actual, value of items such as engagement rings” but saw potential for the misuse of such an exemption.
He confirmed that a wedding band “which cost €200 or €300” would not be categorised as an expensive item of jewellery.
Items proposed to for exemption include a car worth less than €1,200; equipment such as tools and books needed for work and “essential household appliances”.
