CHANGES IN the bankruptcy laws to help people in difficulty with their mortgages will be published as soon as possible, the Department of Justice said last night.
A spokeswoman for the department said interim measures to reform the law on bankruptcy were being drafted with a view to publication this year.
“The Bankruptcy Act 1988, as it stands, does not meet the needs of modern social and economic conditions,” said the spokeswoman. The reform measures will be contained in the Civil Law (Miscellaneous Provisions) Bill, due to be published as soon as possible this year, she added.
A personal insolvency Bill to provide for a new framework for settlement and enforcement of debt and for personal insolvency is also being drafted in the department but will take longer to complete.
The measure is a commitment under the EU-IMF programme for publication before the end of March next year but the department spokeswoman said the objective of Minister for Justice Alan Shatter was to publish it ahead of the deadline.
She said that in developing the Bill, account was being taken of the recommendations of the Law Reform Commission in its recent Report on Personal Debt Management and Debt Enforcementwhich provided an in-depth review of the personal debt regime.
Earlier in the Dáil, Tánaiste Eamon Gilmore also gave a commitment legislation would be enacted to deal with the problems facing people in mortgage arrears. “The Government regards the issue of distressed mortgage holders as a matter of great urgency. We are very concerned about the difficulties in which mortgage holders find themselves when these matters are brought before the courts,” said Mr Gilmore.
He was responding in the Dáil to questions raised following the intervention of Master of the High Court Edmund Honohan, who called for the introduction of a debt forgiveness regime for people in difficulty with their mortgages.
Mr Honohan said the country could not afford to wait 18 months for new laws to be introduced. He said the banks should immediately “translate” debt that has been written down into debt forgiveness.
Minister for Enterprise Richard Bruton also intervened in the controversy, saying the Government was taking a fresh look at banking policy and bankruptcy laws and that he felt there was momentum for change.
However, he said no government could announce debt forgiveness on a wide scale and banks and their customers ultimately had to take decisions and work through any difficulties themselves. “There is a genuine issue about moral hazard. You can’t be writing off one person’s debt and expecting another person to pay.”
The Irish Banking Federation accused Mr Honohan of using inflammatory language when suggesting that people were being driven to suicide by banks chasing debts.
The federation’s chief executive, Pat Farrell, said he rejected the comments on suicide completely. Mr Honohan had claimed two years ago that the State was facing an avalanche of repossessions but that this had not transpired, he added.
“That event has not happened and the reason it has not happened is because my members, the mainstream banks, have engaged in extraordinary measures and forbearance across mortgage debt and personal debt to ensure that every effort is made to enable people manage their debts.”
Mr Farrell said the number of repossessions had been very small and a good portion of them were voluntary. People would find banks easy to deal with if approached early when they felt they were getting into difficulty with payments.
The controversy began on Wednesday when Mr Honohan said Irish laws should be updated to protect people unable to pay their debts and to introduce a level of debt forgiveness. There was no reason why the 1850 Judgment Mortgage Act should not be changed to “put a brake” on the spiralling number of judgments which, he said, would be a way of introducing debt forgiveness.
