REACTION:ORGANISATIONS WORKING with people in debt have welcomed proposed new legislation to help tackle insolvency.
The Money Advice and Budgeting Service (Mabs) and the Free Legal Advice Centres (Flac) have said the draft Insolvency Bill is a significant advance toward addressing the problems of indebted households.
Noeline Blackwell, director of Flac, said the proposed legislation had the capacity to make a significant improvement for those who were struggling financially.
She said it was much more comprehensive than anything that currently exists. She welcomed the provisions that take account of the need for people to maintain a minimum income, as well as the provisions that aim to ensure not every serious debt would result in bankruptcy and the loss of the family home.
Ms Blackwell also welcomed the news that the scheme would be debated in the Oireachtas before the final text was settled.
But she said Flac remained concerned at the level of power that “remains vested in creditors to approve plans proposed by debtors”.
Flac would be making further comment following “more detailed analysis of the complex text”, she added.
Mabs spokesman Michael Culloty said they had been looking for changes to the law on debt for over a decade and the proposals would provide some “light at the end of the tunnel” for “can’t pay debtors”.
He said they had not yet seen the detail, but wondered if the terms of arrangements for debtors, of five or six years, might be too long “to be in a straitjacket”. He also queried the restrictions on access to credit in the long term.
Mr Culloty said some of the roles that would be given to insolvency trustees under the legislation were work already being carried out by Mabs. It remained to be seen how Mabs would fit into the schemes, he said.
“The legislation might need tweaking, but it is a very welcome development,” he said.
The Irish Banking Federation said it would carefully examine the proposed legislation over the coming days.
Public affairs director Felix O’Regan said it broadly supported new resolution processes, but it was important the final legislation “struck the appropriate balance” between the interests of debtors and creditors. A distinction should be drawn between the borrower with sustainable debt over the long term and the borrower with unsustainable debt, he said.
And there should be “clear evidence of good faith by the borrower” in his or her prior engagement with the bank before entering the personal insolvency process.
“The borrower has to have addressed issues with the bank in an open and constructive way and genuinely have explored all options,” he said. Each borrower’s situation should be assessed “on a case-by-case basis”.
He said federation members would make submissions to Minister for Justice Alan Shatter about the legislation.
