Shatter will beef up insolvency laws 'if necessary'
Justice Minister Alan Shatter has suggested he may strengthen insolvency laws to improve the chances of banks writing down mortgage debt of struggling customers.
Mr Shatter said he will "introduce whatever amendments prove necessary" to ensure the success of the Government's personal insolvency scheme.
The Insolvency Service of Ireland (ISI) has come in for criticism after it emerged that just four mortgage write-downs were secured in its first seven months in operation.
Earlier this month, Bank of Ireland chief executive Richie Boucher caused controversy when he said his bank would veto all requests to write down mortgage debt made to it.
On foot of Mr Boucher's comments, Mr Shatter was asked by Fianna Fail's finance spokesman, Michael McGrath, if he would change the law to force banks to write down debt.
In response, Mr Shatter said: "I have stated that the personal insolvency legislation is not set in stone and that I will introduce whatever amendments prove to be necessary".
Despite the minister's comments, it is known that Finance Minister Michael Noonan is hostile to any suggestion of forcing the banks to write down mortgage debt. Mr Noonan's reluctance is driven by the fact that by making the banks write down debt, it would increase the need for the taxpayer to capitalise the banks further. The cost of bailing out the Irish banks has so far topped €64bn.
A spokeswoman for Mr Shatter last night said that he wants to give the ISI "more time" before considering if a change in law is necessary.
Of 320 applications made to the ISI since it opened last September just four personal insolvency arrangements have been approved by the courts. In those cases, the average write-down of the mortgage debt was 19pc but the other debts owed by the people involved were on average 93pc written off, which improved their prospects of paying the reduced mortgage.
A total of 82 applications were for debt-relief notices – used to write off non-mortgage debts of up to €20,000 – and they were the most successful with 36 of them approved so far.
Another 121 applications were for debt settlement arrangements – for larger non-mortgage debts – and seven of those have been approved to date with an average write-off of 77pc.
The ISI's report shows there were 66 bankruptcies in the first three months of this year, compared to 58 in total in 2013.