The Personal Insolvency Bill 2012 has been passed in the Dail and Seanad since the 19th of December 2012 and is now being presented to President Higgins for signing into law.
A body known as The Insolvency Service of Ireland has been established to oversee the implementation of the legislation and Minister Shatter hopes to that the service will be in a position to accept applications in the second quarter of 2013.
The Bill deals with both unsecured debt (where is no property backing the loan) and secured debt (e.g. a mortgage whereby a house is given as security for a loan).
The Bill reduces the period for automatic discharge from bankruptcy from twelve to three years and also provides for the introduction of three new debt resolution processes namely:
(a) The Debt Relief Notice (DRN) which will allow for the write-off of qualifying unsecured debt up to €20,000, subject to a three year supervision period. Applications for Debt Relief Notices will be processed through approved intermediaries such as the Money Advice and Budgeting Service ( MABS) . This process will apply to persons with essentially no income or assets and who do not have any way of repaying their debt within 3 years.
(b) The Debt Settlement Arrangement (DSA) provides for the agreed settlement of unsecured debt, with no limit involved, normally over five years. This process assists persons who have income and assets and whose debts fall outside the criteria for a Debt Relief Notice. It allows them make repayments to their creditors in return for a discount of their debts so that they can have a reasonable standard of living. This arrangement is facilitated by a Personal Insolvency Practitioner (PIP). A regulatory system is to be introduced for such practitioners and full details about this are awaited although it is expected that Personal Insolvency Practitioners will have legal/accountancy/financial expertise.
(c) The Personal Insolvency Arrangement (PIA) aims to assist persons who have difficulty in the repayment of both secured debt and unsecured debt. However the secured liabilities cannot exceed €3m unless all secured creditors consent. The process allows persons make repayments in return for a discount normally over six years. This process gives an alternative to bankruptcy. This arrangement is facilitated by a Personal Insolvency Practitioner (PIP). The Bill represents a major reform of our insolvency and bankruptcy law was also required by the terms of the EU-IMF-ECB Programme of Financial Support for Ireland