Fine Gael Kildare South Martin Heydon TD has today (Wednesday) said that he has this week made a submission to Minister for Justice Frances Fitzgerald suggesting that Bankruptcy period could be reduced to one year where other insolvency schemes have been tried but failed. The submission was made as her Department continue their review of the laws and guidelines surrounding Bankruptcy and related insolvency schemes.
“I have spoken to a number of practioners who are working in the area to get their views on how the current rules have been operating in practice and used those views to form my submission. There is a perception that the Bankruptcy option is being used by some as the only option available rather than as a last resort as it was originally intended.
“I have suggested to the Minister that the Bankruptcy period could be reduced to 1 year in cases where other insolvency schemes have been tried but failed. This would encourage debtors and PIPs to engage with the Banks first rather than going straight to Bankruptcy. It would allow those who have done everything possible to avoid bankruptcy to be rewarded with a shorter work through period while helping to move cases through the system.
“There is a fear that a straight reduction of the bankruptcy period to one year might lead to an increase in the number of home repossessions so I think this proposal might be a way to manage that risk.
“The issue of mortgage difficulties is one that I see everyday as many people struggle to manage debts and mortgages that are no longer manageable. There has been a relatively low take up of the insolvency schemes that were introduced in 2013 and I am hopeful that the outcomes of this review will help to change that. If we can help to alleviate the pressures faced by those struggling with mortgages through this review and a change to variable mortgage interest, I believe it would be a great way to improve the economy and help to get people spending again.“