DEBTORS COULD emerge from bankruptcy in less than five years under new legislation to be outlined by the Government within a fortnight.
The Cabinet has discussed whether the issue of mortgages should be incorporated into the Personal Insolvency Bill, which will significantly reduce the bankruptcy term from its current minimum of 12 years.
The insolvency period in the North and Britain is one year.
Minister for Justice Alan Shatter told The Irish Times yesterday: “I hope and expect that the heads of the Bill will be published if not next week certainly the following week,” Mr Shatter said.
Asked if the issue of mortgages could, or should, be included in the Bill, Mr Shatter said the proposed legislation provided for “non-judicial mechanisms” to deal with debt, as well as for the “classical judicial mechanism” applying to insolvency or bankruptcy.
The final detail had yet to be agreed at Cabinet. “We’re all obviously conscious of the difficulties in the mortgage area and in the negative equity area, and all of this is part of the discussion that’s been taking place.”
Mr Shatter strongly denied there had been any dispute about the Bill between himself and Minister for Finance Michael Noonan.
He said there had been “full interaction and co-operation” between them. “Michael and I have had no row about anything.” He said they had been “teasing through” very complex issues with financial implications which they had to ensure met the needs of a modern bankruptcy system, “whilst ensuring that we don’t lay the foundation for any unexpected problems that might add to the difficulties in the banking sector”.
Mr Shatter said it was important people were not incentivised to engage in “forum shopping” by seeking to affect insolvency outside the jurisdiction.
He cautioned against assuming the new bankruptcy term would definitely be five years, as stipulated in an interim amendment under the Civil Law (Miscellaneous Provisions) Bill 2011, but confirmed it would not be more than five. He wanted Cabinet colleagues “to be comfortable in agreeing the content of the measure”.
The Attorney General’s office has also been involved in assisting the preparations of the heads of the Bill. Mr Shatter said his objective was to ensure the final version of the Bill is published in the late spring and enacted before the end of the year.
While publication of the Bill is a condition imposed by the EU and the IMF as part of the bailout package, Mr Shatter said he would nevertheless have tried to introduce it “in different economic circumstances”.
He said many of those who complained of being rendered insolvent “voluntarily placed themselves in positions . . . in which they raised money from banks and money that may have been very unwise to raise.
“Some individuals who now are trying to wash their hands of personal responsibility for borrowings at levels that were verging on the insane, deserve little sympathy”.
