The Personal Insolvency Act 2012 represents an overhaul of bankruptcy law in Ireland.
The automatic discharge period for a bankruptcy will, once Part 4 of the Act is commenced (expected in November 2013) be reduced from 12 to 3 years, subject to earlier termination on payment of debts or discharge by creditors. To avail of the bankruptcy procedure, a debtor's debts, (secured or unsecured) will need to exceed assets by at least 20,000. Creditors owed over 20,000 will also be able to start the process. Reasonable efforts must have been made to enter into a PIA or DSA (see below) without success.
Three Types of Voluntary Arrangements
Three different types of Arrangement are now available between a debtor and his/ her creditors overseen by the Insolvency Service, namely Personal Insolvency Arrangements (PIA), Debt Settlement Arrangements (DSA) and Debt Relief Notices (DRN). The Insolvency Service officially opened for business, and began accepting applications on, 9 September 2013.
Effect: The effect of these Arrangements is that the debtor will receive protection from initiation or continuation of proceedings from creditors specified in the Arrangement for a period between 3-7 years depending on the type of Arrangement, provided that the debtor complies with the Act's requirements and the terms of the relevant Arrangement. Ongoing: During the Arrangement the debtor may not obtain credit in an amount of obligations more than 650 without informing the creditor of the relevant Arrangement. Certain breaches of the Act or Arrangement are criminal offences. Termination: On termination the debtor will be discharged from unsecured debts in their entirety and from secured debts to the extent specified by the relevant Arrangement. On early termination, caused by breach or by six months' continuous default of payment, the debtor will be liable for the full amount of the debt covered by the Arrangement and cease to have protection from creditors. Key Themes
Procedures Applicable to PIA and DSA
The first step in applying for an Arrangement is the debtor instructing a personal insolvency practitioner (PIP) to make an application to the Insolvency Service (IS) on the debtor's behalf. The IS may request further information. The application is then referred to the relevant Court by the IS. The relevant Court will grant a protective certificate if it is satisfied that debtor has provided all the relevant information. The protective certificate...