As the first solicitor registered as a Personal Insolvency Practitioner (PIP), I am running an Insolvency Information Week from Monday, 16th September to Friday, 20th September. This will include a free Personal Insolvency and Bankruptcy seminar in Raheen House Hotel, Clonmel, on 19th September at 7.30pm-9pm. Those who register for the seminar will receive a free first consultation in my office from 16th to the 20th September.
This is a once in a lifetime chance for people to recover from the Celtic Tiger hangover. People who want to look at their options can now come to me as a Personal Insolvency Practitioner (PIP) and I will outline the legal and financial position. My mission is to take an insolvent person through the process and help them become solvent. I act as a go- between for the debtor, the creditors, the Insolvency Service and the Courts in order to find a reasonable and transparent solution.
The Insolvency Service of Ireland (ISI) will begin accepting applications from Personal Insolvency Practitioners (PIPs) on Monday, 9th September and I am currently working on debt arrangements for clients. The ISI has advised people to engage PIPs at the earliest opportunity to see if they qualify for an Arrangement.
Under this new statutory regime the debt options are a Debt Settlement Arrangement (DSA) and a Personal Insolvency Arrangement (PIA).
The PIA will apply specifically to mortgage holders and those with secured debt from €20,000 to €3 million and to unlimited unsecured debts. In my role as a Personal Insolvency Practitioner I will make the application after a financial statement has been completed and 65% of the lenders must be in agreement for part of the debt to be written down.
All secured debts (except family homes) are treated the same. The four main banks are expected to engage in the process and are due before the Finance Committee. Lorcan O’Connor, Director of the Insolvency Service of Ireland, recently indicated that the average write down on unsecured debts for those entering personal insolvency arrangements is expected to be two thirds of what is owed.
There has been much speculation about Banks’ rights under the legislation to clawback mortgages that have been written off for up to 20 years. This has been part of the Act from the outset and has to be looked at in the context of the non-sale of a secured asset. If the asset is sold that is the end of it. If the asset is not sold as part of the Insolvency Arrangement but instead sold within the twenty year period for more than the value the property was given at the time of the arrangement, the corrected value (i.e. sale price) is adjusted. This is a reasonable provision.
The clawback only comes into effect if someone makes a profit on the sale of their home. It is not a charter for the Banks to keep someone insolvent.
The Personal Insolvency legislation also introduced a Debt Settlement Arrangement (DSA) which covers unsecured debt of €20,000 or more. The borrower will have to pay off a certain amount for up to 5 years and the balance may possibly then be written off.
All applicants must provide a written statement of their financial affairs to a Personal Insolvency Practitioner and, as a PIP, I will manage any proposals to creditors.
Bankruptcy is the fourth and last stop debt option under the Act and under the new regime in Ireland the Bankruptcy period has been reduced to 3 years in most cases.
For anyone who is insolvent – those that can no longer meet their payments as they fall due – the old adage of first in – first out applies and with that in mind the sooner these options are explored and used the sooner those who avail of them will be released from their debt and will find themselves able to prosper again.