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.