PUBLIC ANGER against those who got us into the financial mess we are in has barely abated – and understandably so. It is an undifferentiated rage against bankers, politicians, public servants, and also business people that makes the climate most unpropitious for measures aimed at easing the plight of those of the latter who may also have found themselves victims of the crash.
The stigma in Ireland of bankruptcy, with its strong overtones of the moral culpability of those who find themselves there, perceived as undeserving victims of their own irresponsibility, washes into that climate. However, it appears the Government wants to stand against that tide of public opinion and make it easier for bankrupts to resume abandoned careers more quickly. Its urgency in this regard may reflect a sense that economic recession means more “ordinary” business people may be heading in this direction.
There is a case for doing so and for confronting that stigma. Elsewhere, not least in the US, bankruptcy is viewed more as an inevitable and less culpable feature of the business risk system and a means of managing debt. If it involves irresponsible trading that is a separate matter, but it is believed the normal bankrupt should be rehabilitated reasonably quickly. In Britain for instance, one can be substantially free from bankruptcy within a year.
Through the Civil Law (Miscellaneous Provisions) Bill published on Monday, Minister for Justice Dermot Ahern is proposing to allow bankrupts to be discharged from bankruptcy after six years rather than the current 12, although their estate will have to be fully realised and various costs and payments will have to be made before the application may be granted. And the proposed amendments to the Bankruptcy Act (1988) provide for automatic discharge of a bankruptcy after 20 years.
The new proposals come as the courts deal with increasing though still relatively small numbers of bankruptcies, debt and insolvency cases. Bankruptcies doubled last year to 17 and by July this year there had already been another 10. Speaking in May at the launch of the Law Reform Commissions interim Consultation Paper on Personal Debt Management and Debt Enforcement, Mr Ahern said a wider, comprehensive overhaul of debt-related legislation would follow the commission's final report. But he promised an earlier amendment to the law to reduce the discharge period. That overall review is overdue and, hopefully, will provide new non-judicial means of consolidating debt with the assistance of the Money Advice and Budgeting Service and of negotiating repayment agreements between debtors and creditors.
But in the interim, as a writer to The Irish Timesput it: "Essentially, the bankruptcy process in this country is too expensive to enter, too restrictive to live within and too difficult to leave". The proposed reforms are a welcome first step in remedying that situation provided they are matched by a corresponding determination on the State's part to police financial irresponsibility.