In 2007-2008 I spent a lot of time in Dublin, Ireland helping groups try to put forward reasonable solutions for consumer debt. The reality was Ireland had no bankruptcy law so people were getting tossed in jail, a real modern debtors’ prison situation.
I worked on developing the first attempts to help the court understand the value of pro-rata repayment proposals in allowing Irish citizens some way to address their debt and move forward.
The way it stood then was even if a debtor went to the court for temporary protection from their creditors in a bankruptcy, of which there were about 9 a year, as soon as the bankruptcy was over, they still owed the original debt. No help at all.
In those days the economy was racing ahead and so uptake on the idea was lukewarm at best. but now that the Irish economy has tanked it looks like the government is finally moving ahead with implementing solutions to help people in trouble in the Republic of Ireland.
According to the Independent:
People who refuse to pay off their debts will be spared jail under radical new proposals being considered by the Government.
And anyone declared bankrupt will be automatically released from bankruptcy after three years as part of laws proposed by the State’s legal watchdog.
The Law Reform Commission will today propose a comprehensive overhaul of Ireland’s outdated debt laws in its final report on personal debt management and debt enforcement.
Under the new law, debtors would agree to pay a certain amount to their creditors for up to five years, allowing them to “earn” a fresh start without damaging their credit rating.
The 436-page report to be launched by Attorney General Paul Gallagher recommends the introduction of a “holistic” out-of-court regime for modest debtors where 60pc of creditors will agree to a debt settlement arrangement.
This would leave the courts to manage only complex, high value or formerly high value debtors such as ex-Anglo Irish Bank chairman Sean FitzPatrick.
The commission recommends:
- The abolition of jail for all debtors, even those who can — but refuse — to pay.
- All moneylenders to be licensed to ward off unprofessional agencies or those engaged in criminal acts such as harassment.
- A stand-alone regulatory body for debt advice and debt management companies.
- The threshold for bankruptcy to be raised from €1,900 to €50,000.
- A one-off ‘debt relief order’ for ‘no income, no assets’ debtors who are unable repay their debts.
The commission has published a draft personal insolvency bill which will now be considered by the Government.
It also plans to set up a national Debt Enforcement Office that will provide “an efficient and cost-effective solution to personal insolvency” that takes account of the rights of both creditors and debtors”.
Commission director of research Raymond Byrne admitted many of the proposals — including reform of our bankruptcy regime — appear radical.
But he added: “In reality, however, we are just catching up with corporate insolvencies, which are settled out of court all of the time.
“The present personal insolvency system is Dickensian and based on treating debtors and bankrupts as bad people who need to be punished.”
Ireland has one of the harshest and costliest bankruptcy regimes in Europe at present. – Source
All I can say is I’m proud to have been part of that in the early days, and, it’s about damn time.