[custom_frame_left][/custom_frame_left] Bankruptcy and Personal Insolvency Arrangements are here to stay and can keep our recovery going.
The Insolvency Service of Ireland (ISI) started accepting applications from Personal Insolvency Practitioners (PIPs) on Monday, 9th September 2013
As the first solicitor Personal Insolvency Practitioner registered in Ireland I aim to put in place new arrangements for borrowers with creditors that will bring people out of the current debt crisis and back to solvency.
The object of the exercise is to look to a brighter future which will help improve the economic outlook for all concerned.
So what can I do for You?
- Debt Settlement Arrangements (DSAs);
- Personal Insolvency Arrangements (PIAs);
- Bankruptcy.
Debt Settlement Arrangements (DSAs)
A Debt Settlement Arrangement (DSA) covers loans of €20,000 or more.
There is no limit to what you can owe that can be covered by a DSA. You will have to pay an amount over and above your reasonable living expenses for up to 5 years and the balance will then be written off if this makes you solvent.
A DSA allows for settlement of unsecured debt; secured debt is unaffected.
It is a once in a lifetime option and the sooner you start, the sooner you finish.
The debtor must be insolvent and meet eligibility criteria, such as residency, date of the debt or interaction with the Lender.
The debtor must provide a written statement of financial affairs, called a “Prescribed Financial Statement” to the PIP which is the cornerstone of the process and which must be true and accurate.
The first step is for the PIP to freeze any actions by the creditors which means that the PIP will apply to the Court for a protective certificate. This stops enforcement for 70 days or more while the PIP contacts creditors, and invites submissions as to how the debts might be dealt with.
Creditors who hold more than 65% in value of the debts due must approve the DSA.
If the DSA is approved by the court it takes effect once registered by the ISI in the Register of Debt Settlement Arrangements. It lasts for 5 years (with a possibility of an extra year) with the debtor solvent after this time.
Personal Insolvency Arrangements (PIAs)
The PIA applies to mortgage holders or secured debts up to €3 million and unsecured debts of €20,000 or more.
The PIP will make the application after the financial statement has been completed and 65% of the lenders must be in agreement for some of the debt to be written down. A protective certificate also issues here if all is in order and the PIP must notify the relevant creditors, seek creditor submissions and provide them with certain documents.
Those who avail of a Personal Insolvency Arrangement can only do so once.
A minimum amount is payable to secured creditors and any write-down cannot reduce the amount to be paid to the secured creditor on the sale of the property below the realised value of the security or the amount of the debt secured whichever is greater.
The family home has a special status in that it cannot be sold by force unless it is over and above the needs of the Debtor.
Bankruptcy – Last Resort
Bankruptcy is the least favoured debt option under the Act. People will first deal with the Personal Insolvency code and the last option will be bankruptcy.
Under the new regime in Ireland the Bankruptcy period has been reduced to 3 years (or in some cases 8).
The Court have been given a role in preventing forced Bankruptcies by allowing cases to be returned to the Insolvency system to action either Arrangements – DSA or PIA – in preference to a Bankruptcy.
It is hoped the new measures will allow people to wipe the slate clean and make a fresh start.
It is time – we, as a country, can learn to fly again and take our place in the Sun!
