BANKS SHOULD not have a veto on debt forgiveness for homeowners with unsustainable mortgages, a cross-party Oireachtas committee has said in a report.
It recommends that an appeals mechanism should be contained within a Personal Insolvency Bill to be published before the end of next month.
The Committee on Justice, Defence and Equality’s report, published yesterday, also said families should be facilitated “as far as possible” to remain in their homes in any insolvency arrangement.
It was reporting on the heads of the Bill, nearly five weeks after receiving draft legislation from Minister for Justice Alan Shatter.
The draft Bill proposes reducing the bankruptcy period from 12 years to three, and non-judicial steps people can take to free themselves of unsustainable personal debt including mortgages. The proposed Bill also allows for the establishment of an insolvency service by the State.
There were 10 written submissions received by the committee, which held a public hearing on February 15th to discuss modifications. Many of the proposals contained in the draft Bill require the agreement of the financial institutions involved. The report said an appeals mechanism should be put in place where creditors refuse to accept arrangements worked out with debtors and personal insolvency trustees. It suggested binding consequences could be imposed on creditors who act in “an unreasonable manner” dealing with debtors.
The committee said there was insufficient detail on how personal insolvency trustees would be regulated and paid, and asked what expertise or qualifications would be required.
It called on the Money Advice and Budgeting Service to be resourced for this role.