Irish Household Debt

The issue of indebtedness is becomming significant in Ireland today. We have done a lot of work on the issue on the Oireachtas Committee for Social & Family Affairs. I am currently working on proposals for the Fine Gael Front Bench on the issue. In the meantime I have questioned the Minister for Finance on the Governments response to the problem.

To ask the Minister for Finance the progress that has been made in developing a policy to assist people who are experiencing difficulty in meeting their debt repayments.

– Joe Carey

For ORAL answer on Wednesday, 10th March, 2010.

Ref No: 11570/10

Last November I approved the setting up of an Inter-Departmental Mortgage Arrears Review Group, for the purpose of bringing together all relevant information in Departments and examining options in relation to the matter of support for home owners facing the problems of mortgage arrears and repossessions. This Group met on two occasions and commenced bringing forward options for dealing with the issue of mortgage arrears.

I have since discussed with Cabinet colleagues proposals to revamp this Group under an independent Chair and expand it to bring in additional expertise and to extend its remit to include the issue of personal debt. On 25th February 2010, I informed the Government of my proposal to extend the membership of the Group to be chaired by Mr Hugh Cooney an insolvency accountant, along with details of the other external appointees. The revamped Group met on 5th March 2010 and will focus initially on making recommendations for dealing with the mortgage arrears problem. The personal debt issue will then be addressed.

In my Budget speech in December the Government refocused mortgage interest relief on those who bought their homes at the peak of the market, many of whom find themselves in negative equity. Where a homeowner’s entitlement to mortgage interest relief would expire in 2010 or after, they will now continue to receive it up to the end of 2017. The Deputy will be aware of other supports in place, including the Code of Conduct on Mortgage Arrears, the Mortgage Interest Subsidy Scheme and the services provided by the Money Advice Budgeting Services, all of which I have spoken about extensively in this House over the past number of months.

In addition, in my Budget speech, I said that I would be asking the Financial Regulator to examine extending the 6 month moratorium on legal proceedings to 12 months for all lenders. On 5 February, the Financial Regulator announced that with effect from 17 February, the Statutory Code of Conduct on Mortgage Arrears has been amended to require that a regulated firm must wait at least 12 months from the time arrears first arise before applying to the courts to commence enforcement of any legal action on repossession of a borrower’s primary residence.

As a further support, the Irish Bankers Federation, representing the mainstream lenders, published a Statement of Intent in November 2009 which provides further reassurance to homeowners who find themselves genuinely unable to maintain repayments on their principal private residence. The Statement of Intent has been agreed and supported by all IBF members and is a welcome development.

The Law Reform Commission’s Consultation Paper on Personal Debt Management and Debt Enforcement, published in September 2009, contains an extensive list of provisional recommendations for reform of the law on personal debt that includes provision for a system of non-judicial debt settlement. The Commission is aiming to have its Final Report available by end of August 2010.

The Government has also approved the establishment of an Inter-Departmental Working Group on Personal Debt Management and Enforcement chaired by the Department of Justice, Equality and Law Reform to consider the commitment under “Helping those in Debt” envisaged in the Renewed Programme for Government. The Working Group will agree a plan for implementation, where appropriate, of the recommendations of the Law Reform Commission, assist in the development of a coherent and comprehensive administrative and legislative response to the issues arising, and, determine those measures, administrative and legislative, that can be implemented in a cost efficient manner, for early effective results.

The Enforcement of Court Orders (Amendment) Act 2009, provides that certain safeguards will apply to the provisions under which a court may hear an application or grant an imprisonment order against a debtor who has failed to comply with an instalment order. The Act ensures that the court will not imprison the debtor unless it is satisfied that he has the means to pay and may also postpone the execution of an imprisonment order until such time as it thinks just. In addition, the court will inform a debtor of the risk of imprisonment and of his entitlement to apply for legal aid. The Act gives the court a clear power to vary the terms of an order to pay by instalments or alternatively to refer the parties for mediation.