Need to learn from others' experience on personal insolvency law

19 April 2012

At a conference launched by Minister for Social Protection Joan Burton TD in Dublin this morning, legal rights organisation FLAC is bringing together Irish and international experts to share expertise and offer practical insights on the imminent reform of Ireland's outdated system of personal insolvency law.

The event is examining what the government must do to finally establish a clear and effective system for hard-pressed debtors, tackling such thorny issues as mortgage arrears and moral hazard. Academics, lawyers and economists are devoting the day to producing a range of international and domestic inputs that FLAC believes will improve the impending personal insolvency Bill, due to be published by the end of April.

Ireland's legal system lacks a comprehensive structure for resolving the chronic indebtedness that has beset so many people arising out of the credit boom and subsequent recession," said Paul Joyce, Senior Policy Advisor with FLAC. "The insolvency scheme presents an opportunity to put this right, but we must learn from the experience of other countries."

"FLAC sees this event as an opportunity to identify trends and developments in international best practice. While the domestic speakers examine the constitutional and economic implications of debt settlement legislation, the international speakers will reveal how other countries have tackled personal debt crises," commented FLAC Director General Noeline Blackwell.

Amongst the issues tackled by US Professor Jason Kilborn in his comprehensive overview of consumer insolvency systems around the world is the topical question of moral hazard. There is also a particular focus on how to fit mortgage debt into a personal insolvency scheme, with the intervention of Norwegian lawyer Egil Rokhaug. Norway suffered a similar housing and personal debt crisis in the early 1990s.Egil drafted Norway's legislation incorporating mortgage debt into out-of-court debt settlement arrangements. In addition consumer rights lawyer Melina Mouzouraki is providing an overview of the new Greek debt adjustment legislation.

"We must urgently correct our failure to legislate in this area - and we must do so in an informed and effective way that redresses the current imbalance of power between creditors and the debtor," concluded Paul Joyce.

Editors' notes:

  1. FLAC (Free Legal Advice Centres) is an independent human rights organisation dedicated to the realisation of equal access to justice for all. It campaigns through advocacy, strategic litigation and authoritative analysis to contribute to the eradication of social and economic exclusion.
  2. FLAC's work on debt is outlined on the campaign page, where you will also find presentations from the speakers at the conference.