Sunday 28 December 2014

Editorial: Deal for debtors at risk of turning sour

Editorial

Published 08/08/2014 | 02:30

Money problems cause a lot of stress
Money problems cause a lot of stress

IS the great white knight for hard-pressed debtors at risk of turning into a great white legislative elephant?

The Personal Insolvency Act is to be amended for a third time in less than a year.

The act, which came into force last year, was intended to give over-indebted borrowers a fresh start.

The law, underpinned by the Insolvency Service of Ireland (ISI), was almost two years in gestation and followed a long consultation process designed to ensure it borrowed from best international practice.

The Government deserves credit for responding quickly to flaws and teething problems as they emerge.

The problem is that they are emerging with a worrying level of frequency. As well as legal changes, the ISI has also had to revise its working protocols.

The latest change, dismissed as a technical amendment, is required to remove any doubt that large creditors - mainly banks - have final approval or veto over debt deals.

It was feared, due to a certain phrase in the mammoth law, that smaller creditors could undermine the veto enjoyed by larger ones.

Fearing a successful court challenge, the Government will now move to clear up the ambiguity.

The change reinforces the veto enjoyed by banks which has attracted criticism in some quarters.

Most insolvency regimes require a vote or veto, but the Government has yet to address the perceived imbalance between creditors and debtors.

The latest change begs the question as to who is receiving most protection.

Irish Independent

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