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A report on hearings in relation to the Personal Insolvency Bill was launched today at the meeting ofthe Oireachtas Committee on Justice, Defence and Equality.

The report recommends:

  • An appeals mechanism should creditors refuse a proposed arrangement;
  • Binding consequence for a creditor who acts in an unreasonable manner;
  • Secured and un-secured debt should not be segregated when considering a Personal Insolvency Arrangement – credit card bills, utility bills, etc should all be taken into account in the framing of any arrangement;
  • Sustainable mortgages should not be allowed to enter an insolvency regime – a decision on determining when a mortgage is viable or becomes unsustainable should be made by the Credit Review Office, or a similar body;
  • Concerns were raised about the minimum protected income that any debtor applicant should be allowed to retain, free from creditor distribution. In particular, concerns were raised about interest only payments which leave debtors ‘standing still’ and serve only to sustain the profits of the financial institution in question without helping the position of the debtor;
  • The Committee stressed that a ‘clawback’ in the event of an uplift  following a successful Personal Insolvency Arrangement should not act as a disincentive to people seeking career advancement and that the appeals body would make a decision in relation to this;
  • The Committee agreed with the initial bankruptcy period of three years, but considers the additional period harsh, with potential for an income attachment over a further five years amounting to a de facto eight year bankruptcy;
  • Issues round bankruptcy tourism should be examined by the Department;
  • The thresholds provided in the Bill for the various debt settlement regimes were generally too low and a two-tier insolvency system may emerge from the current thresholds;
  • The Committee would favour the use of the Circuit Court for insolvency proceedings. The current jurisdiction of the High Court on insolvency poceedings places excessive cost on applicants.
  • The 10 year evaluation for the operation of the Bill is too long and the Committee recommends that a report be prepared by the Minister on the operation of the Bill and submitted to the Committee every three years.

The Committee was invited to consider the Heads of the Personal Insolvency Bill and to respond to the Minister by March 1 2012.

Ten written submissions were received. A public hearing was held on February 15 2012 to discuss issues of concern with some of those who made submissions.

More information:

In the latest edition of the PAI Journal, Marguerite Dooley and Fergus Doorly, William Fry, explain the Heads of the Personal Insolvency Bill. To view this article in the February issue of the PAI, click here.