flacNewsI SSN 0 7 9 1 4 1 4 8 l VO LUME 2 2 l NUMBER 2 l APRIL JUNE 2 0 1 2
F r e e L e g a L a d v i c e c e n t r e s
Personal insolvency conferenceexamines government
debt proposalsOn 19 April FLAC held a full-dayconference around thegovernments plans for a schemedealing with personal debt in Ireland.Entitled Legislating for PersonalInsolvency in Ireland: InternationalDevelopments and Domes tic Issues, theevent provided a first public forum todiscuss the draft scheme of the personalinsolvency bill since its publication on 25January. The conference featuredcontributions from renowned nationaland international experts in theirrespective fields, both economic and legal.The aim of the conference was toexamine the draft scheme in the light ofbest practice in other jurisdictions and toget a better insight into how similarsystems operate elsewhere.
Minister for Social Protection Joan BurtonTD opened the conference and in heraddress referred to the twin evils of debtand unemployment affecting so many inIrish society. FLACs Paul Joyce com -mented on the shortcomings of the draftscheme and the inherent difficulties intrying to introduce this complex piece oflegislation in the midst of an economiccrisis. FLAC was extremely fortunate tobe able to draw on the expertise ofrenowned personal insolvency expert,Professor Jason Kilborn, of Chicagos JohnMarshall Law School, to give a keynoteaddress. Drawing on his extensive com -parative research of personal insol vencyregimes across the EU, Professor Kilbornreached the conclusion that the proposedpersonal insolvency scheme falls signi -ficantly short of the state of the art in thearea that is to say the most progressiveand effective approaches of otherjurisdictions.
Professor Kilborn added that many of its
provisions were counter-productive;furthermore, he singled out France ashaving debt settlement law par excellence.Importantly, Professor Kilborn discussedeffective personal insolvency legislation asbeing conducive to a better economicoutlook. Far from being an exercise inbank-bashing, it was about maximising
individuals potential and productivity andencouraging the kind of healthy risk-takingthat was necessary for economic pro -gress, he said.
[continued on page 8)
As FLAC News went to press, the Personal Insolvency Bill was finally published onJune 29. This long-awaited piece of legislation represents a legal milestone inproviding debtors with out-of-court debt settlement options and updating thelaw on bankruptcy. FLAC is relieved that the Bill has been published but has someconcerns, including the lack of an appeals mechanism for debtors and theretention of the creditor veto in Debt Settlement Arrangements and PersonalInsolvency Arrangements. See our website www.flac.ie for more information thenext issue of FLAC News will also react to the Bill and its provisions
FLAC Director General Noeline Blackwell, Minister for Justice Alan Shatter TD and FLAC ChairpersonPeter Ward SC outside FLAC's offices before the launch of FLAC's annual report for 2011.
Full report: page 4.
FLAC News Summer 2012 v2_FLAC05 vol15no4 17/07/2012 13:43 Page 1
flac News | Vol. 22, No. 2
F L a c n e w s l a P r i L J U n e 2 0 1 22
in this edition...Personal insolvency conferenceexamines government debt proposals 1 & 8
Changes to interest supplement 'unfair' to overburdened mortgageholders 2
Behind the mortgage arrears figures 3
FLAC annual report 2011 launch: the issues behind the statistics 4-5
FLAC helps Zambrano mother receive back-payments of Child Benefit 6
Tri-City project on EU migrantsexperience of accessing social welfare moves to next level 6
On the frontline of human rights:Aryeh Neier visits Dublin 7
Debt queries to FLAC still growing 9
Focus on FLAC:Emer Butler 10Pearse Street FLAC 11
'Experience of a lifetime' openswindows on social justice in US 12-13
Campaigning continues on civil legal aid 13
PILA Updates: 14-15
Judicial appointment for FLAC Council Member 16
UN human rights expert on extremepoverty issues follow-up report afterIreland visit 16
2012 Women's Mini-Marathon Team FLAC 16
FLAC NEWS is published quarterly byFree Legal Advice Centres Ltd., 13 Lower Dorset Street, Dublin 1.
Editors: Noeline Blackwell, EmmaCassidy & Yvonne Woods
Layout and Printing: Printwell Co-operative, Dublin 1
Contributors: Meghan Anthony,Saoirse Brady, Emer Butler, EmmaCassidy, John Deignan, Michael Farrell,Andrew Guy, Paul Joyce, Gillian Kernan,Anita Lenihan, Dearbhail McDonald,Karen McLaughlin, Kim Watts, Yvonne Woods
ISSN 07914148The views of individual contributors donot necessarily represent the views ofFLAC.
Changes to interestsupplement 'unfair' to
FLAC is gravely concerned at theintroduction of a CommencementOrder for changes to MortgageInterest Supplement outlined in s.12 of theSocial Welfare and Pensions Act 2012.The order was laid before the Oireachtaswithout any public announcement and thechanges came into effect on 18 June 2012.The rushed introduction of this measurefails to take into account any of themisgivings expressed by FLAC and theNorthside Community Law Centre(NCLC) in their joint submission on theSocial Welfare and Pensions Bill 2012,which centred on the proposed changesto Mortage Interest Supplement (MIS)flagged in this years budget. FLAC alsosupported the 7 is Too Young campaignled by OPEN (the national network ofone-parent families), Barnardos and theNational Womens Council of Ireland.
In the joint submission which they putforward in April, FLAC and NCLCrecommended that no proposals tofurther limit Mortgage InterestSupplement be enacted, at least until anoverall package of supports is available.This would include changes to the 30-hour rule and also removing theprohibition on putting a house up for salewhile MIS is being paid. Mortgage InterestSupplement should be aimed at peoplewith sustainable mortgages who canpotentially meet their mortgage interestpayments with some assistance and theirindividual circumstances should be takeninto account.
Under the provisions of the SocialWelfare and Pensions Act 2012, a personwill now not be entitled to MortgageInterest Supplement unless they aredeemed to have made reasonableattempts to engage with their lender andare complying with a payment agreementfor a period of at least 12 months. Ineffect, these individuals will be deniedaccess to state support for the first year oftheir involvement with the MortgageArrears Resolution Process (MARP).
During the debate on the Bill, the Ministerfor Social Protection, Joan Burton TD,stated that one of the purposes of theproposed changes was to ensure that MIS
is a short-term measure utilised alongsidethe MARP to resolve a mortgage arrearsproblem as opposed to becoming a long-term payment with no solution in sight.She explained that part of theDepartments motivation for theamendments was to ensure that thelender has to engage with the process.
However, FLAC is concerned that theonus in the legislation places too heavy anobligation on the consumer and too littleon the lender. Legislators are operating onthe assumption that the solution proposedby the banks will be a fair one. It does notallow for a situation where the lender hasbeen unreasonable. In addition to this, theAct lacks any provision whereby the banksare compelled to offer any repaymentoption even under the Code of Conducton Mortgage arrears the possible optionsmust be merely explored.
Under the new law even at the end of a 12month engagement with MARP, access toMIS is not guaranteed. The Department ofSocial Protection must then determinewhether it is reasonable to award asupplement having regard to the amountof any arrears outstanding on the loan.The interpretation of what constitutes areasonable mortgage may present anadditional barrier to MIS.
These issues were raised by oppositionTDs from Sinn Fin, Fianna Fil, the UnitedLeft Alliance and members of the technicalgroup on the foot of the FLAC and NCLCsubmission.
At best, the commencement of thisregula tion is premature. It has the po -tential to make mortgages unmanage ablefor many people who are currentlystruggling. Some will be pushed over thelimit if this provision comes in now in thisway. FLAC is urgently requesting thegovernment to defer the implementationof these MIS changes until they put inplace an adequate protection scheme forthose in mortgage distress. Withoutpractical and fair changes to the MISscheme, FLAC believes that the existingmortgage arrears crisis will deterioratefurther and people with sustainablemortgages may fall deeper into debt.
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