The recently published Personal Insolvency Bill proposes to establish an independent body – the Insolvency Service, to oversee a new non-judicial personal insolvency system. There will be three new debt resolution processes. To avail of these, an individual must be insolvent [unable to pay their debts as they fall due] and the proposals will have to be made through a Personal Insolvency Practitioner [PIP] and can only be applied for once in a lifetime for each procedure.

A Debt Relief Notice [DRN] will allow the write off of debt up to €20,000 over a three year supervision period. The terms are strict and the debtor must have a disposable income of €60 per month or less, after the provision of reasonable living expenses. They must hold assets of €400 or less. Qualifying debts include personal loans and credit cards. Debts that cannot be written off are Court fines, Family maintenance payments, Taxes and service charge arrears.

A Debt Settlement Arrangement [DSA] is available against unsecured loans only. A PIP must advise the debtor of their options, assist in the preparation of the prescribed Financial Statement and administer the DSA over its five year duration. When the DSA is registered there will be a standstill period of 70 days during which creditors cannot act against the debtor. The DSA must secure the agreement of 65% of creditors and after 10 days, if there are no objections, the Agreement will be registered with the Insolvency Service and following court approval will come into effect.

A Personal Insolvency Arrangement [PIA] is available against secured debt up to €3 million and all unsecured debt. There must be at least one secured creditor. The debtor must apply for a Protective Certificate which grants a standstill period, as above.  The PIA must be supported by at least 65% of creditors in votes cast and by at least 50% of creditors in term of value. When agreed, the PIA is binding on all creditors and it will be administered by a PIP over a six year period.

Proposed changes to the Bankruptcy Act, 1988 includes automatic discharge after 3 years, previously 12 years.