The government has a approved a draft Bill for new legislation for dealing with insolvency. The proposed legislation is deemed to be a significant advance towards addressing the problems of indebted households. The finalised Bill should be published in full by the end of April.
The proposals for the reform of personal insolvency law will involve the introduction of the following new non-judicial debt settlement systems, subject to relevant conditions in each case:
- Debt Relief Certificate (DRC) – which will allow for the full write-off of smaller qualifying unsecured debts of up to €20,000, after a one-year period. Applicants will need to be unable to pay the debts because their disposable income is less than €60 a month and their assets and savings are less then €400. Applicants will have to go through an approved intermediary and pay a processing fee of €90.
- Debt Settlement Arrangement (DSA) which caters for the agreed settlement of larger unsecured debt of €20,001 or more. It will involve agreeing the repayment of some or all of the debts. At the satisfactory conclusion of the DSA after 5 years, all the debts covered by it would be discharged in full. A DSA will have to be prepared by a personal insolvency trustee.
- Personal Insolvency Arrangement (PIA) which is for the agreed settlement of both secured and unsecured debt of €20,001 and over. It allows for unsecured loans to be completely settled over a six year period.
The Minister Alan Shatter said that he will also continue the reform of the Bankruptcy Act 1988, begun in the Civil Law (miscellaneous Provisions) Act 2011. This will include, critically, the introduction of automatic discharge from bankruptcy, subject to certain conditions, after 3 years in place of the current 12 years.
