Pat Rabbitte TD & Eamonn Maloney TD
A GUIDE TO THE PERSONAL INSOLVENCY BILL I have put together a brief guide to the Personal Insolvency Act, an initiative being introduced by government to assist those in mortgage and debt distress and to allow for greater breathing space for both debtors and creditors. The legislation will enhance the non-judicial methods of resolving debt difficulties.
WHAT IS THE PERSONAL INSOLVENCY ACT? In the Programme for Government and in the deal with the EU/IMF, the government committed to introducing legislation that would address the debt crisis affecting so many of our citizens. The Personal Insolvency Act will provide new and more flexible approaches to assisting those in financial difficulty.
WHAT ARE THE MAIN DETAILS OF THE PERSONAL INSOLVENCY ACT? Minister Shatter has stated that reform of personal insolvency law contained in the Act will involve: ■ A Debt Relief Notice to allow for the write-off of qualifying debt up to €20,000 ■ A Debt Settlement Arrangement for the agreed settlement of unsecured debt over 5 years; ■ A Personal Insolvency Arrangement for the agreed settlement of secured debt up to €3 million (though this cap can be increased with the consent of all secured creditors) and unsecured debt over 6 years. ■ The Act will reduce the time taken to emerge from bankruptcy from 12 years to 3 years. ■ The establishment of an Insolvency Service of Ireland to facilitate the non-judicial aspect of debt resolution.
DEBT RELIEF NOTICES (DRN)
DEBT SETTLEMENT ARRANGEMENT
Debt Relief Notices will be introduced. Debts qualifying for a Debt ■ Provides for the agreed Relief Notice are most likely to be unsecured debts. Examples settlement of unsecured include personal loans, credit cards etc A DRN will be issued debts over 5 years. subject to the following conditions: ■ An application for a ■ The qualifying debts are €20,000 or less; DSA must be made through a personal ■ The qualifying debts incurred in the previous 6 months must insolvency practitioner not exceed 25% of the qualifying total. (PIP) appointed by the ■ Debtors will have a net monthly disposable income of €60 or debtor. less after provision for "reasonable" living expenses and ■ The debtor must payments in respect of excluded debts (if any); normally be resident in the ■ Debtors would hold assets (separately or jointly) to the value State or have a close of €400 or less. There is an exemption from the asset test for connection. essential household appliances, tools, etc. required for ■ Only one application for a DSA in a lifetime is permitted. employment or business and one motor vehicle up to value of €1,200. ■ Debts excluded from a DRN include: taxes, court fines, family maintenance payments and service charges arrears. ■ A DRN will last for 3 years from the date of issue. At that time (and subject to no other action) the DRN terminates and the qualifying debts are discharged and the debtor will be removed from the Register of Debt Relief Notices.
PERSONAL INSOLVENCY ARRANGEMENTS The Act provides for a system of Personal Insolvency Arrangements (PIA) between a debtor and one or more creditors to repay an amount of both secured and unsecured debt over a period of 6 years (with possible agreed extension to 7 years):
■ The application for a PIA must be made through a Personal Insolvency Practitioner (PIP) appointed by the debtor. A debtor may only propose a PIA if he or she is unable to pay his or her debts in full as they fall due and there is no likelihood within a period of 5 years that the debtor will become solvent. ■ if the qualifying criteria are met, the debtor may apply to the Insolvency Service for a Protective Certificate in respect of the preparation of a PIA. A joint application is permitted in certain circumstances. If a Protective Certificate is issued, creditors may not initiate or prosecute legal proceedings or seek to recover payment for a debt or recover goods, enforce security or contact the debtor.
■ Certain debts are excluded from the PIA, including taxes, local authority charges and court fines in respect of a criminal offence, unless the relevant creditor agrees otherwise.
■ A PIA proposal does not require the debtor to dispose of or cease to occupy their principal private residence where appropriate.
■ If the PIA proposal is accepted it is binding on all creditors. It is hoped that the Insolvency Service of Ireland will be up and running by the summer. The hope is that this Act will be one of the major steps in helping people in debt trouble. If you have any queries, feel free to contact my office.
Eamonn Maloney TD Dáil Eireann, Dublin 2 Ph: 6184833 E: eamonn.maloney@oir.ie
CONTACT LABOUR & ADVICE CENTRES TALLAGHT VILLAGE Saturday 2pm - 3pm T.W.S. - Trustus, 1 Main Street, Tallaght Village (Except August and Bank Holidays)
Pat Rabbitte TD
Working with
ADVICE CENTRES (excluding Bank Holidays & August) OLDBAWN Monday 6.00pm to 7.00pm Dominic’s Community Centre (Eamonn Maloney)
FETTERCAIRN Monday 7.00pm to 8.00pm Fettercairn Community Centre GREENHILLS Thursday 7.00pm to 8.00pm Greenhills Community Centre
Cllr Paddy Cosgrave 25 Orchardstown Drive Rathfarnham, Dublin 14 Ph: 085 1742709 E: cosgravepaddy@eircom.net
Cllr Marie Corr 35 Sundale Park Jobstown, Dublin 24 Ph: 085 7359200 E: mcorr@sdublincoco.ie
Cllr Pamela Kearns 203 Orwell Park Heights Templeogue, Dublin 6W Ph: 087 7756718 E: pkearns@sdublincoco.ie
Cllr Chris Bond 42 Allenton Drive Tallaght, Dublin 24 Ph: 086 1917159 E: cbond@sdublincoco.ie
Cllr Mick Duff PC 26 St Aongus Crescent Tallaght, Dublin 24 Ph: 087 2865570 E: mduff@sdublincoco.ie
Cllr Dermot Looney 1 Temple Manor Close Greenhills, Dublin 12 Ph: 085 7089955 E: dlooney@sdublincoco.ie
0612
Minister for Communications, Energy & Natural Resources Dail Eireann, Dublin 2 Ph: 6183772 / 6782011 E: pat.rabbitte@oir.ie