The Irish Minister for Justice and Equality -Alan Shatter – was asked in the Dail on Feb 7th 2012 if he had any plans to ensure that lenders will have an obligation or incentives to accept the proposals in the Insolvency Bill
The reply from Deputy Alan Shatter was that the reform of personal insolvency law will involve the introduction of three new non-judicial debt settlement systems, subject to relevant conditions in each case. These are as follows:
· A Debt Relief Certificate to allow for the full write-off of qualifying unsecured debt up to €20,000, after a one-year moratorium period for debtors with “no assets – no income”;
· a Debt Settlement Arrangement for the agreed settlement of unsecured debt of €20,001 and over with two or more creditors;
· a Personal Insolvency Arrangement for the agreed settlement of both secured and unsecured debt of €20,001 to €3 million with one or more creditors.
The Personal Insolvency Bill will also continue the reform of the Bankruptcy Act 1988, begun in the Civil Law (Miscellaneous Provisions) Act 2011 will include, critically, the introduction of automatic discharge from bankruptcy, subject to certain conditions, after 3 years in place of the current 12 years.
Mr Satter continued to say that it was not for him to speculate as to the future conduct of any of the participants in an insolvency process.
He asaid hea was of the view that new personal insolvency laws, including the bankruptcy law reform, should provide a significant incentive for financial institutions to develop and implement realistic agreements to manage or settle debt with their customers.
He said that such agreements should in time become the norm as the most sensible and cost-effective arrangements, particularly where the issue is one of dealing with repayment difficulties for a single major debt, secured or otherwise. These agreements could include measures to address mortgage arrears.