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Personal Insolvency Bill Announced
25 January 2012
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The Government today announced the Personal Insolvency Bill comprising of proposed measures to reform Ireland’s bankruptcy legislation which has long been recognised as archaic and out of touch with the current commercial environment. This Bill follows a requirement laid down by the EU and IMF as part of the bailout package.
The most significant element of the Bill is the proposal to reduce the time period in which a bankrupt can be automatically discharged from the bankruptcy period. This currently stands at twelve years whilst the Bill suggests automatic discharge after three years. This provision is no doubt to tackle the growing phenomenon of ‘bankruptcy tourism’ whereby those in financial difficulty may be incentivised to travel to jurisdictions with more favourable bankruptcy legislation.
The Bill also proposed non-judicial debt settlement procedures which would allow those in debt to have an alternative to court insolvency. This will consist of informal debt arrangements between the debtor and creditors as an attempt to avoid lengthy and costly judicial proceedings.
The Bill makes reference also to personal insolvency arrangements which home owners may enter into with banks in order to write down mortgage debt. However, such arrangement would be dealt with on a case by case basis.
Mr Alan Shatter, Minister for Justice, said of the Bill; "When enacted this legislation will be one of the key legislative instruments for addressing the financial difficulties of general insolvency; mortgage debt and negative equity,".
The proposed Bill will now go before the Oireachtas where it is to be debated.
By Adele Hall
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