The (Draft) Personal Insolvency Bill

The Draft Personal Insolvency Bill was published in late January and its purpose was:

 

To address the serious and continuous disruption to society and the Economy as a result of widespread insolvency amongst debtors with both secured and unsecured debt and to provide a realistic alternative to bankruptcy to those debtors in appropriate circumstances.

 

In order to achieve those objectives there would be a radical overhaul of personal insolvency law and this would be achieved by:

 

i)              changes to the Bankruptcy Act

 

ii)             Introduction of a new structure to allow for relief of debt under 3 new arrangements depending on the type of debt and quantum.

 

 

Changes to the Bankruptcy Act

The major changes are that the Bankruptcy Act allows for Bankruptcy to be automatically discharged after 3 years.

 

 

New Structures

The 3 new structures by which debt can be tackled are:

 

1)    The Personal Insolvency Arrangement (PIA)

 

2)    The Debt Settlement Arrangement (DSA)

 

3)    The Debt Release Certificate (DRC)

 

A new agency will be established called the Insolvency Service to register arrangements and to check the eligibility of individuals. There is also a new role for a Personal Insolvency Trustee who will be regulated and licensed by the Minister.

 

There are also intermediaries which will apply only in the area of DRC (<€20,000) and these will generally be The Money Advice Budgeting Service (MABS).  

 

The following table outlines the arrangement to be entered at the appropriate debt level arrangement

 

 

Â	Â	Â	Types		Â
Â	Debts	Duration	Secured	Unsecured	Mix Unsecuresecured	Usage
Personal Insolvency Arrangements (PIA)	Greater than €20,001 and less than €3m	6 years (with 12 month extension	 Yes	 YesÂ	 Yes	 Only 1 permitted in lifetime
Debt Settlement Arrangements (DSA)	Greater than €20,001	5 year (with 12 month extension	  No	  Yes	  No	In limited circumstances 1 every 10 years
Debt Relief Certificates (DRC)	Less than €20,000	1 year	 No	 Yes	 No	 N/A

 

Legislation was due to be published at the end of April but this has been delayed by a minimum of 2 months.

 

 

Call Jim Murphy on 01 6619142 for more details.