Analysis: The DJ Carey court case highlights how personal insolvency laws and debt write-offs don't operate in the same way for all debtors
Former Kilkenny hurler DJ Carey was recently jailed for five and a half years for defrauding people by falsely claiming he had cancer and needed money for treatment. Speaking while sentencing Carey, Judge Martin Nolan said "what he did was grossly wrong" and added that he could not imagine "a more reprehensible fraud".
Carey's name previously came under scrutiny in 2023 when it came to light that he had secured a settlement with AIB in April 2017 through which a debt of over €9.5 million was written down to €60,000. This meant that Carey had to pay just 0.63% of the original amount owed to the majority State-owned bank and 99% of the debt was written off. AIB's Head of Retail Banking, Jim O’Keefe, said that the bank had "a robust governance process for debt resolution, and this process was followed" and that "all appropriate avenues for payment of debt...had been exhausted".
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From RTÉ Radio 1's Morning Ireland in 2023, AIB defends DJ Carey 99% debt write down
This recent court case shines a light on the issue of debt write-offs and personal insolvency law in Ireland, and whether there is a level playing field for all debtors in financial difficulty. It raises questions regarding how banks are dealing with debtors who are in financial difficulty - both prominent individuals and ordinary individuals from other walks of life - how the legislation is really operating in practice.
Since 2013, Ireland has expanded its national policy framework for households facing problem debt. The Personal Insolvency 2012 Act has brought a shift from a debtor-blame culture to a regime based on a more debtor-centred culture, where debtors now have the opportunity of an earned discharge with a fresh start.
This legislation was introduced to provide solutions to those trapped by unsustainable debt and offer alternatives to bankruptcy which was only an option of last resort until then. Previously under the Bankruptcy Act 1988, debtors faced a term of 12 years before they could be automatically discharged from the debt. For the individuals who are not eligible to apply under the provisions of the Personal Insolvency Act 2012, the Bankruptcy (Amendment) Act 2015 provides several changes to the rules on bankruptcy, bringing us in line with bankruptcy law in Northern Ireland, England and Wales.
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From RTÉ Radio 1's Morning Ireland in 2022, Michelle O'Hara from MABS on calls for reform to debt relief notices element of personal insolvency arrangements
The principal focus of the Personal Insolvency 2012 Act has been the attempt to simultaneously resolve both the family home mortgage arrears and non-mortgage debt of insolvent borrowers through the personal insolvency arrangement. While it was hoped that this would be a panacea to many people’s over-indebtedness problems, it faced many problems from the very beginning.
The act was described by bankruptcy experts as "skewed unduly toward creditor interest". This was remedied by the enactment of the Personal Insolvency (Amendment) Act 2015, which provided for several amendments to the 2012 Act, including a key legislative change providing for a courts-based review system of unreasonably rejected personal insolvency arrangements in certain circumstances, provided the court considers using a range of criteria set out therein.
The 2012 Act is still in urgent need of more legislative changes suggested by recent High Court case law and jurisprudence, and by the various stakeholder recommendations made in submissions in the Section 141 Review. After the introduction of the Personal Insolvency (Amendment) Act 2021, it is now critical that the further recommendations are implemented as soon as possible.
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From RTÉ Radio 1's Drivetime in 2019, personal insolvency practitioner Gary Digman discusses personal insolvency agreements for farmers
For example, many of those who struggle to pay modest debts look on in astonishment as huge loans are written down in the courts. There are fears that our personal insolvency regime is a two-tier system, which fails ordinary debtors but works for high-profile debtors. Under the current framework, access to the process is limited to those who can afford it thus favouring those with means.
A further concern regarding the new regime, particularly for bankruptcy, is that the process is far too lax for those with very large-scale debts. The attractive option for bankruptcy has become the main option for individuals with extremely high assets and debts, and not the general population.
It's difficult to understand how some individuals who declare themselves bankrupt can then become engaged again in multimillion euro property deals while still residing in their trophy homes. We continue to see many wealthy and prominent individuals availing of personal insolvency arrangements, and then becoming very wealthy again within a period of five years or less.
Bankruptcy has become the main option for individuals with extremely high assets and debts, and not the general population
Banks continue to offer large debt write-downs to selected individuals, which is causing major concern. This problem appears to be a common thread historically, with custodial sentences in debtors’ prisons for those who defaulted on debt payments. Should those who played property speculation during the boom times by borrowing large sums of money and who have now lost their fortunes, be protected or rewarded by the legislation?
A solution to this problem needs to be urgently addressed. The State must focus on those individuals most in need who struggled through the years of austerity to ensure repayments were up to date. The outstanding legislative changes mentioned above need to be urgently dealt with, as they are essential to improving the overall process and ensuring the legislative framework will be more accessible to all who need it.
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The views expressed here are those of the author and do not represent or reflect the views of RTÉ
