It guaranteed to hit the ground sprinting and the new Irish Government will before you know it be a hundred days in office. It is fully committed to bring about numerous changes and for that reason perhaps now is the occasion to ask various concerns as to exactly what it is providing concerning the ordinary person as distinct from what it is accomplishing in relation to finance companies, builders, NAMA and sovereign interest rates in its admittedly demanding efforts to meet its committed EU and IMF performance targets.
Can it put up a schedule for the publication of its legislative programme relating to personal insolvency steps? We realize that the EU & IMF have made a deadline of March 2012 for brand new Irish personal insolvency laws to be in place. A blueprint of a month by month process for fast tracking the reform of bankruptcy laws and enacting new personal insolvency legislation would certainly offer clarity for individuals.
How many years will it take the Law Reform Commission (LRC) to produce legislative recommendations for change of bankruptcy law? Will the LRC need to go through the same prolonged strategy of investigation, evaluation in addition to wide-ranging consultation on bankruptcy prior to producing a final report (complete with draft laws) as it has recently achieved in regard to unsecured personal debt – ‘Personal Debt Management and Debt Enforcement’, published in December 2010?
Is the government aware that the LRC provided draft laws called ‘Draft Insolvency Bill 2010’ as an appendix to its final document in December 2010? Could this legislation be fast tracked into law? Just why will an incoming government have to carefully and painstakingly ‘review’ the superior business carried out by the LRC before deciding to propose and enact laws? Just what distinct experience is the government going to bring to bear in this overview, given that the deliberations of the LRC included substantial expertise from both the public and private sectors?
Exactly what do government ministers on their own and mutually understand as ‘personal debt forgiveness’? So why do current government ministers reiterate the mantra of the former discredited Fianna Fail / Greens government that government does not have the authority to ‘forgive’ the debt of individual citizens? Compare recent utterances from the new Minister for Jobs, Enterprise and Innovation Richard Bruton with those of former justice minister Dermot Ahern in this regard. Do Irish government ministers really think that laws and regulations in other jurisdictions, for example the UK Insolvency Act 1986, have been passed unlawfully and unconstitutionally and that the provisions included therein in regard to Individual Voluntary Arrangements were not essentially grounded on the principle of debt forgiveness? Why should Irish law vary from our European neighbours?
Precisely what do government ministers and indeed politicians of all ranks and parties appreciate as the risk of ‘moral hazard’, in relation to personal debt forgiveness? Why is the concern with ‘moral hazard’ a barrier to the launching of personal insolvency legislation? Or is the wooly comprehension of the very idea of ‘moral hazard’ just an reason for inaction? Has the ‘moral hazard’ danger in Ireland been benchmarked with the risks in other states, particularly the United kingdom? If it is not viewed as a difficulty in other places, what exactly is it about Ireland that makes ‘moral hazard’ such a high profile dilemma for government here?
Why is the attention in Ireland is on issues related to secured personal debt (e.g. mortgages and car HP) and is significantly less concentrated on unsecured personal debt (credit cards, overdrafts, personal loans)? The non court based debt settlement program mooted by the LRC would allow insolvent citizens to deal with their unguaranteed debts in a manner very similar to the proven Individual Voluntary Arrangement (IVA) structure in the Uk. Why not bring in this legislation now? Why the delay until March 2012, the timeline fixed by the EU and the IMF?
The master of the High Court, Edmund Honahan has stated his belief that people in the Department of Finance do not understand the law (relating to insolvency) and that people in the Department of Justice do not understand economics or finance. If this is indeed the case, what hope can there be that appropriate personal debt insolvency legislation will ever see the light of day? Who’s for a Department of Insolvency with experience from both departments and from the private sector? Although there is not as yet a licensed professional insolvency qualification in Ireland chances are that the legal and accountancy disciplines have ample professional know-how to supply a robust platform for the early execution of the non court based debt settlement plan proposed by the LRC. The LRC study in personal insolvency used and consulted with many specialists from pertinent public and private sectors and yet it seems that the new government may sit on its hands until the coming year before enacting new personal insolvency legislation and changing bankruptcy law. Perhaps that is a little unfair after less than 100 days in office but time will tell.
Why do lenders (banks, finance houses, other creditors) pursue borrowers through the courts for judgments relating to debts which have already been written off in their books (and perhaps tax writeoffs availed of) and without any practical prospect of being satisfied by borrowers who have no belongings and no meaningful disposable income? Do such creditors imagine they have a legal or ethical obligation (to their shareholders) to pursue these kinds of bad debts permanently?
For what reason do creditors seek to register (additional) charges (commonly in respect of unguaranteed debts) on debtors’ property, mainly family homes, since such assets are usually in negative equity while having no possibility of being in positive equity in the foreseeable future?
Can the new government understand the resource limitations under which the Money Advice and Budgeting Service (MABS) has been functioning? Even though it is undoubtedly performing a good job, fiscal and manpower restrictions mean that the citizen may need to get in line for a restricted service which in essence comes down to just a initial step in personal debt management. The program is taxpayer funded and can hardly expand or grow much further because of the government’s policy of downsizing the public service. Perhaps now could be an opportune time to invite expertise from the private sector to provide private insolvency solutions to the consumer such as the licensed and extraordinarily effective IVA and Debt Management Plan (DMP) services sectors in the united kingdom.