It guaranteed to hit the ground sprinting and the new Irish Government will soon be a hundred days in office. It is fully committed to achieve a lot of adjustments and that being said perhaps now is the occasion to ask various concerns as to precisely what it is providing concerning the ordinary person as distinct from what it is working on in relation to finance companies, builders, NAMA and sovereign interest rates in its admittedly stressful initiatives to meet its committed EU and IMF performance targets.
Can it issue a schedule for the publication of its legislative programme relating to personal financial distress steps? We realize that the EU & IMF have imposed a deadline of March 2012 for fresh Irish personal insolvency laws to be in place. A plan 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 draft legislative recommendations for change of bankruptcy law? Will the LRC need to go through a similar extensive strategy of investigation, evaluation and wide-ranging consultation on bankruptcy prior to producing a final report (combined with draft laws) as it has recently successfully done 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 legislation called ‘Draft Insolvency Bill 2010’ as an appendix to its last report in December 2010? Could this legislation be fast tracked into law? Why will an incoming government have to slugishly and meticulously ‘review’ the marvelous work accomplished by the LRC before deciding to propose and enact laws? What unique know-how is the government likely to bring to bear in this analysis, given that the deliberations of the LRC included considerable expertise from both the public and private sectors?
Exactly what do government ministers on their own and as a group understand as ‘personal debt forgiveness’? How come present government ministers repeat the mantra of the former discredited Fianna Fail / Greens government that government doesn’t have the legal right to ‘forgive’ the debt of individual people? 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, were introduced 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 as well as 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 introduction of personal insolvency legislation? Or is the wooly perception 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 countries around the world, particularly the United kingdom? If it is not thought to be an issue in other places, what 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 unguaranteed personal debt (credit cards, overdrafts, personal loans)? The non court based debt settlement program mooted by the LRC would permit insolvent people to deal with their unguaranteed debts in a way very similar to the thoroughly tested Individual Voluntary Arrangement (IVA) system in the United kingdom. 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 expressed his feeling that people in the Department of Finance do not fully grasp the law (pertaining to insolvency) and that people in the Department of Justice do not understand economics or finance. If this is indeed the case, what hope will there be that appropriate personal debt insolvency legislation will ever see the light of day? Who’s for a Department of Insolvency with experience coming from both departments as well as 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 strong platform for the early setup of the non court based debt settlement plan suggested by the LRC. The LRC study in personal insolvency used and consulted with many professionals from pertinent public and private sectors and yet it appears that the new government may sit on its hands until the coming year before enacting new personal insolvency legislation and reforming bankruptcy law. Maybe that is a little unfair after less than 100 days in office but time will tell.
Why do creditors (banks, finance houses, other creditors) go after borrowers through the courts for judgments in relation to financial obligations which have already been cancelled in their books (and maybe tax writeoffs availed of) and without any reasonable likelihood of being satisfied by borrowers who have no belongings and no meaningful disposable income? Do such creditors assume they have a legal or ethical obligation (to their investors) to pursue these types of debts permanently?
For what reason do creditors look to register (additional) charges (often in respect of unguaranteed debts) on debtors’ property, mainly family homes, since these kinds of assets are usually in negative equity and have no likelihood of being in positive equity in the future?
Can the new government grasp the resource limitations under which the Money Advice and Budgeting Service (MABS) has been operating? Even though it is undoubtedly performing a good job, money and manpower limitations mean that the citizen may need to get in line for a restricted program which primarily amounts to just a starting point in personal debt management. The program is taxpayer funded and can hardly expand or grow much further due to the government’s policy of downsizing the public service. Perhaps now could be an opportune time to bring expertise from the private sector to supply private insolvency solutions to the people similar to the licensed and decidedly flourishing IVA and Debt Management Plan (DMP) services sectors in britain.