This answer to a priority question in the Dail may be of interest.
40. Deputy Stephen Donnelly asked the
Minister for Justice and Equality with regard to the forthcoming legislation revising the system of bankruptcy, his views on the statement in the Keane Report that the automatic bankruptcy discharge period under the judicial process could be set as low as three years; the time period that he intends to set for discharge from bankruptcy or personal insolvency; his views on the total quantum or percentage of debt that will be discharged under the new bankruptcy or personal insolvency process; and if he will make a statement on the matter.
[31293/11]
Deputy Alan Shatter: In line with a commitment in the programme for Government the personal insolvency Bill is in the course of being developed in my Department to provide for a new framework for settlement and enforcement of debt and for personal insolvency. The commitment under the EU-IMF Programme of Financial Support for Ireland is to publish the Bill in the first quarter of 2012. It is my objective to publish the measure ahead of the EU-IMF deadline, if possible. Moreover, it is intended that the heads of the Bill, which are expected to be finalised in the near future, will be forwarded to the Committee on Justice, Defence and Equality for its consideration.
The Deputy will be aware that in developing the Bill, account is being taken of the recommendations of the Law Reform Commission in its recent Report on Personal Debt Management and Debt Enforcement.That report provided an in-depth review of the personal debt regime. The economic and financial effects of certain of the new arrangements that are in contemplation are being carefully assessed to ensure that all relevant issues are addressed and their impact is fully anticipated and understood.
The Deputy will also be aware that, following the publication of recommendations in an interim report of the Law Reform Commission, I provided in the Civil Law (Miscellaneous Provisions) Act 2011 for the reduction of the period to apply to the court for discharge from bankruptcy from 12 years to five years, subject to the same conditions that currently exist and, for the first time in Irish law, for the automatic discharge of bankruptcies on the 12th anniversary of the bankruptcy adjudication order. Those provisions were commenced with effect from 10 October 2011. A number of other mainly technical improvements to bankruptcy law contained in the Act of 2011 are already in force since 2 August 2011.
The question of a further reduction in the period for automatic discharge of a bankrupt and the period for application to the court for discharge from bankruptcy are being considered in the context of finalisation of my proposals on the personal insolvency Bill. The decision will be made having regard to the Keane report as well as the very focused discussion that continues between my Department and key stakeholders to identify the optimum new structures, at minimal cost, to bring about the reform. This necessary consultation, particularly in the context of the totally exceptional developing economic situation, is greatly assisting the development of detailed legislative proposals.
Additional information not given on the floor of the House
As I have said in the House previously, reform of our personal insolvency regime is not a simple task. It is a very complex area of the law and one where the consequences and implications of new policies need to be very carefully assessed. There is a delicate balance to be struck between the various legal rights of the parties involved. We must design a system which is fair to both creditors and debtors alike. Not to do so would make worse a situation that is already difficult for the parties concerned.
The reform of bankruptcy law will invariably focus on the length of the discharge period that will apply to the person adjudicated bankrupt. We debated this point in the House during the passage of the Civil Law (Miscellaneous Provisions) Act 2011 in July. Opinions varied as to the appropriate period. There was consensus that the one-year period that applies in the UK and Northern Ireland is too short, but anything beyond five years is too long, particularly if the bankrupt person has been fully compliant and not behaved fraudulently in any way. No final decision has been taken by the Government in this regard.
The quantum of debt that might be discharged in any new bankruptcy or personal insolvency arrangements has also yet to be decided. In bankruptcy, the debtor’s assets are fully realised for the benefit of creditors and that responsibility falls to the official assignee or a private trustee in bankruptcy. It is not, in my view, realistic to, at this stage, attempt to set down the quantum of debt that might be agreed to be discharged in the context of a non-judicial debt settlement. That would be a matter for the parties concerned. We must be mindful that in any debt arrangement, the debtor or bankrupt must be left with sufficient income to meet reasonable living expenses. Given the complexity of the personal over-indebtedness issue generally and the economic and financial implications of any changes to the personal insolvency system, these are matters which will require careful consideration by the Government.
