A Government backbencher has claimed there is a failure to deal with “unresolved legacy debt”.
Labour TD Willie Penrose said the bucket of debt "has been kicked down the road while banks have strengthened their balance sheets with public moneys and Government support".
People had been deceived by bankers into believing that unresolved legacy debt was being addressed, he said.
But “through the fog of public relations and spin it seems that little has been resolved”.
Mr Penrose was speaking during a Dáil debate on the Bankruptcy Bill, which reduces the period of bankruptcy from three years to one and the duration of debt payment from five to three years.
The Bill, introduced by Minister for Justice Frances Fitzgerald, developed from Mr Penrose's Private Member's Bill to cut bankruptcy duration.
During debate on the Government Bill, the Longford-Westmeath TD claimed the banks were now “selling the bucket” of unresolved debt.
“The debt has gone nowhere . . . All that has changed is the owner of the bucket. The debt has not been closed off and people have not been able to get back on their feet.”
Instead they had to start again and deal with the “new owner of this toxic bucket except this time the owner is foreign, alien, unregulated, mercenary and merciless”.
Invading hedge funds
Mr Penrose said he had heard “too many stories of people ending up in casualty wards with chest pains. I have heard too many stories of suicide and attempted suicide, often for extraordinarily small sums.”
Irish people were now under the yoke of “invading hedge funds and unregulated entities”.
He welcomed the Bill and said the Dáil, in passing it, should deliver “the aspirations of the heroes of 1916 and ensure the people of Ireland are free from the tyranny of foreign people holding Irish debt”.
Ms Fitzgerald said that along with a reduction in the duration of bankruptcy, in line with the term in Northern Ireland, England and Wales, it also cut the length of time a bankrupt person must make payments to their creditors, from five years to three.
The Minister said the changes would ease the impact on most bankruptcy cases where people did not seek to go bankrupt, and who “have co-operated in an open manner with the bankruptcy process”.
Significant sanctions
Ms Fitzgerald stressed that there were significant sanctions for any bankrupt person who tried to conceal income or assets. She said it would abolish the requirement for a court sitting in all bankruptcy cases.
People already in bankruptcy could avail of the changes, “subject at maximum to a six- month transitional period”.
Fianna Fáil justice spokesman Niall Collins supported the Bill but said that while Irish bankruptcy laws would be in line with the UK's, they would be out of line with most other jurisdictions.
Mr Collins noted that earlier this year the Minister for Finance poured cold water on a proposal to cut bankruptcy to one year, citing a lack of analysis on its effects and warning that if Ireland acted in haste the best outcome might not be achieved. But he then introduced the legislation.
Sinn Féin justice spokesman Pádraig Mac Lochlainn said those most likely to benefit were people with larger, varied debts, rather than people with a mortgage debt.
