There are strong arguments for giving debt-stricken householders a "proportionate" mortgage writedown, the head of the Insolvency Service of Ireland (ISI) has said.
However, the ISI has given the thumbs down to Labour's proposal to cut the current bankruptcy term from three years to one year.
ISI chief executive Lorcan O'Connor was giving evidence to the Oireachtas Justice Committee at Leinster House yesterday where he outlined the service's work since it began operations in 2012.
He told TDs and senators that he did not accept arguments in principle against mortgage debt writedowns.
"Sometimes that will be the correct thing to do, not only in order to keep a family in its home, but also because it makes financial sense to the creditor," Mr O'Connor said.
The ISI boss rejected arguments that proportionate mortgage debt forgiveness would lead to everyone else - including those paying their mortgages - demanding similar treatment.
He said the ISI's experience and research showed that people simply wanted to pay their debts if they could do so.
"Those who can pay them will pay them. There are a number of safeguards built into our legislation to ensure this is the case," said Mr O'Connor.
Addressing the issue of reducing the bankruptcy term from three years to one, Chris Lehane of ISI said there were a number of arguments in favour of the change.
These included contributing to the economic recovery, reducing the number of Irish people seeking overseas bankruptcy and encouraging banks and other debtors to make workable debt arrangements.
But Mr Lehane said there were also very strong arguments against the measure. He said the UK, USA and Canada were international exceptions in operating a one-year term, while three years was the international average. He said a three-year term was also recently backed by the Law Reform Commission and the EU Commission.
"There is no basis for asserting that a reduction in the bankruptcy term will improve the prospects of a bankrupt person retaining his family home," Mr Lehane said. He added that a one-year bankruptcy risked attracting more people to come to Ireland to avail of it, putting additional stress on the ISI's limited resources.
Mr O'Connor said the ISI had to date helped 2,000 people find more manageable ways of dealing with their debts. He hoped that recent changes to procedures would increase the number of people they could help.