THE GOVERNMENT is considering the reduction of the 12-year period required for the discharge of bankruptcy to six years or even less, according to the Minister for Justice.
Dermot Ahern was speaking at the launch of the Law Reform Commission's interim report on Personal Debt Management and Debt Enforcementyesterday.
He said a comprehensive overhaul of the legislation was required, and the Government was awaiting detailed proposals from the LRC in its forthcoming final report, but in the meantime there could be some swift amendment to the law to reduce the discharge period.
He had also asked his officials to study how so-called “legacy bankruptcies”, which had existed for many years with effectively no hope of ever being resolved, might be fully discharged as a further interim measure.
This would be without prejudice to the final recommendations of the commission.
In its interim report, the LRC outlined a number of measures already being taken by different bodies, including the Courts Service, the Money Advice and Budgeting Service (Mabs), the Irish Banking Federation and Government departments to approach the issue of personal debt in a holistic way. They had all participated in a working group set up following the publication of the commission’s consultation paper on the subject of debt.
The group’s proposals included the development of a standard financial statement, which would outline a debtor’s total debts and income and enable creditors assess what they could pay.
Mr Ahern also welcomed the proposal to develop a “pre-action protocol”, whereby debtors would receive a warning letter from creditors before any legal action was taken, advising them to seek the assistance of Mabs or a legal adviser. This would facilitate the creation of a standard statement.
He said if the courts’ rules committees required any statutory backing to the development of such a protocol he would consider what needed to be done.
He stressed that the Government was concerned about the difficulties people had with personal debt. It had established in February the Mortgage Arrears and Personal Debt Review Group, which had begun by looking at mortgage arrears problems.
However, asked about a debt-forgiveness scheme, Mr Ahern said: “I don’t accept people will never be able to pay their debts.”
The Government had increased the support it gave to Mabs; had reformed the law on debt enforcement to ensure that the only people who went to prison for non-payment were those who could pay and refused to do so; and, when he was minister for social and family affairs, he moved to ensure that public utilities were not cut off if people did not pay their bills.