In September 2013, the Insolvency Service of Ireland came into being along with Personal Insolvency Arrangements (PIAs) and Personal Insolvency Practitioners (PIPs) Since then while the flow of resolved debts has not been as plentiful or lucrative as first thought from the banks and the PIPs point of view, at least the mechanism is now in place to restore dignity and hope into a lot of lives brought crashing down to Earth primarily from the property collapse.

Until recent years, declaring bankruptcy in Ireland was not only regarded as a slight on your character but you were also banned for 12 years from running a business or borrowing, at least in your own name. In the UK, there are 50,000 bankruptcies every year while in the US, it is over one million annually !

Very simply, when you do not have income to service your debt and you have no assets to sell and repay that debt, then that creditor can bring you to court and have a “judgment” served against you. This effectively means

It stays there against your credit record on Irish Credit Bureau ( www.icb.ie – for € 6 you can order your own credit report on yourself ).
If you repay what is owed, a satisfaction is registered
But the judgment is recorded and remains there on your credit history for life.
Borrowing again from a financial institution or creditor with a judgment against you is extremely unlikely.
The final procedure is bankruptcy when you cannot or are unwilling to repay.

In the UK, the Insolvency Act 1986 brought into effect a real workable alternative to bankruptcy proceedings known as the Individual Voluntary Arrangement (IVAs). This process – in which Court involvement is limited – has been greatly simplified and ensures a cheaper, more expeditious distribution of the debtor’s assets to his creditors than under bankruptcy. It also provides greater flexibility to both debtor and creditor alike, and offers a possibility of reviving a previously unsuccessful business. It offers the debtor an opportunity to come to some arrangement with his creditors and to continue in business, which is not possible in the event of bankruptcy. The arrangement must be implemented by a supervisor, who is usually a licensed Insolvency Practitioner, accountant or solicitor and who is usually empowered to realise the debtor’s assets and distribute the proceeds amongst the creditors in the priority set down by law. Bankrupts are discharged after 12 months in the UK from all debts worldwide.

Bankruptcy is defined as a law for the benefit and relief of creditors and their debtors in cases where the latter are unable or unwilling to pay their debts. Essentially it is a procedure whereby the assets of an individual debtor are distributed equitably among his creditors. The procedure is instigated either by the debtor himself filing for his own bankruptcy or, by an aggrieved creditor petitioning the Courts.

One of the new Irish legislative changes saw the reduction of the period for automatic discharge from bankruptcy down from 12 years to 3 years through the Personal Insolvency Bill published in June 2012. Minister for Justice Mr Alan Shatter stated though on the launch “This Bill does not relieve solvent debtors of their responsibility to meet their contractual obligations.”

The reform of Ireland’s bankruptcy laws was a condition of the EU/IMF bailout agreement and the three year discharge period is in line with recommendations made by the Law Reform Commission (LRC) in 2010.

The last 6 savage years have changed all government thinking on debt. First of all the lenders and the Central Bank recognised the need to help borrowers especially with their home loans. As Taoiseach Enda Kenny stated “It’s not your fault” – house prices dropped by up to 70% while unemployment rose to 14.8%. Even if properties could be sold, householders were staring at massive deficits they were unable to repay plus they still had to live somewhere.

SO WHAT ARE THE FIRST STEPS IN THE PROCESS ?

The first initiative was the MORTGAGE ARREARS RESOLUTION PROCESS (MARP), a system for helping mortgage holders with their arrears, introduced in December 2010. This was updated on 1^st July 2013 giving the lenders greater power to deal with struggling borrowers. Changes include the abolition of the limit of three successful unsolicited communications per month – it is now limitless within reason – but more alarmingly, the ability of the lender to remove customers’ valuable tracker rates and apply standard variable rates.

The Central Bank’s Code of Conduct on Mortgage Arrears (CCMA) sets out the framework that lenders MUST use when dealing with borrowers in mortgage arrears or in pre-arrears. It requires lenders to handle all such cases sympathetically and positively, with the objective at all times of helping people to meet their mortgage obligations.

Under the CCMA, lenders must operate a Mortgage Arrears Resolution Process (MARP) when dealing with arrears and pre-arrears customers.

The 5 steps of the MARP are summarised below. They are

communication
financial information

assessment

resolution
appeals

This is the main code of relevance to people whose mortgage is in arrears or in danger of slipping into arrears. It requires lenders to wait 8 months before taking legal action about mortgages in arrears. However, this requirement does not apply if a borrower is deliberately not co-operating with the lender.

Regardless of how long it takes your lender to assess your case, and provided that you are co-operating, you must be given 3 months’ notice before they can commence legal proceedings where either:

Your lender does not offer you an alternative repayment arrangement

You do not accept an alternative repayment arrangement offered to you

This will give you time to consider other options, such as voluntary surrender, voluntary sale or a Personal Insolvency Arrangement.

If you are classified as not co-operating, your lender may commence legal proceedings immediately. Before you can be classified as not co-operating, your lender must first write to you and warn you that this might happen and tell you what steps you need to take to avoid being classified as not co-operating.

The CCMA requires mortgage lenders to adopt specific procedures which must be aimed at helping you as far as possible in your own particular circumstances.

i. Communication

A mortgage arrears problem arises as soon as you fail to make a full mortgage repayment or only make a partial mortgage repayment on the date it is due.

If the arrears remain outstanding 31 days from this date, the lender must inform you in writing of the status of the mortgage account. This letter must include full details of the payment(s) missed and the total amount now in arrears. It must also explain that your arrears are now being dealt with under the MARP; the importance of cooperating with the lender; the consequences of non-cooperation; and the impact of missed repayments/repossession on your credit rating. You should also receive an information booklet on MARP and contact details for MABS.

For as long as you are in arrears, the lender must give you a written update of the status of your account every 3 months.

If no alternative payment scheme is arranged and your arrears continues to a 3^rd consecutive month you should be warned of the possibility of legal action which could lead to repossession and the likely costs involved.

ii. Financial information

Lenders must provide a standard financial statement (SFS) to obtain financial information from a borrower in arrears or in pre-arrears, so that they can assess your financial position and identify the best course of action. The Central Bank has developed a standard format for this and since 1 July 2011, all lenders must use this SFS, together with a guide to its completion. When providing the financial statement, the lender must ensure that you understand the MARP process. They must tell you about the availability of independent advice (from MABS, for example) to help in completing the SFS.

The lender must pass the completed SFS to its Arrears Support Unit (ASU) for assessment.

You may be required to provide supporting documentation to verify the information in the SFS.

Assessment

The lender’s ASU must assess the completed SFS and examine your case on its individual merits. The ASU must base its assessment of your case on your full circumstances. These include your personal circumstances; overall indebtedness; information provided in the standard financial statement; current repayment capacity; and previous payment history.

iv. Resolution

The lender must explore all options for alternative repayment arrangements. These options must include:

An interest-only arrangement for a specified period
An arrangement to pay interest and part of the normal capital element for a specified period
Deferring payment of all or part of the usual repayment for a period
Extending the term of the mortgage
Changing the type of the mortgage, except in the case of tracker mortgages
Capitalising the arrears and interest, and
Any voluntary scheme to which the lender has signed up, e.g. Deferred Interest Scheme.

. Lenders must not:

Require a borrower to change from an existing tracker mortgage to another mortgage type, as part of an alternative arrangement offered to the borrower in arrears or pre-arrears unless none of the options that would allow the borrower to retain the tracker interest rate are appropriate and sustainable for the borrower’s individual circumstances.

If this is the case, the lender may offer the borrower an alternative repayment arrangement which requires the borrower to change from an existing tracker mortgage to another mortgage type provided that:

an alternative repayment arrangement is affordable for the borrower, and
it is a long-term sustainable solution which is consistent with Central Bank of Ireland policy on sustainability

When the lender is offering an alternative repayment arrangement, they must give you a clear written explanation of the arrangement. As well as the basic details of the new repayment amount and the term of the arrangement, the lender must explain its impact on the mortgage term, the balance outstanding and the existing arrears, if any.

The lender must give details of: how interest will be applied to your mortgage loan account as a result of the arrangement; how the arrangement will be reported to the Irish Credit Bureau and the impact of this on your credit rating; and information on your right to appeal the lender’s decision, including how to submit an appeal.

The lender must also advise you to take appropriate independent legal and/or financial advice. The lender must monitor the arrangement on an ongoing basis and formally review its appropriateness for you at least every 6 months. This review must include checking with you whether your circumstances have changed since the start of the arrangement or since the last review.

If an alternative arrangement is not agreed

It may not be possible for you and your lender to agree on an alternative repayment. If the lender is not willing to offer you an alternative repayment arrangement, they must give the reasons in writing. If they do offer an arrangement, you may choose not to accept it. In both of these cases, the lender must inform you in writing about other options, including voluntary surrender, trading down or voluntary sale, and the implications for you of each option. They must also inform you of your right to make an appeal to their Appeals Board about the ASU’s decision, the lender’s treatment of your case under the MARP, or their compliance with the requirements of the CCMA.

If you breach an alternative arrangement

If you cease to adhere to the terms of an alternative repayment arrangement, the lender’s Arrears Support Unit must formally review your case, including the standard financial statement, immediately.

v. Appeals

The lender’s Appeals Board will consider any appeals that you submit and will independently review the ASU’s decision, the lender’s treatment of your case under the MARP and the lender’s compliance with the requirements of the CCMA.

The lender must allow you a reasonable period to consider submitting an appeal. This must be at least 20 business days from the date you receive notification of the ASU’s decision.

The Appeals Board will be made up of three of the lender’s senior personnel who have not yet been involved in your case. At least one member of the Appeals Board must be independent of the management team and must not be involved in lending matters.

There must be a written procedure for handling appeals, to include points of contact, timescale etc.

Repossession proceedings

The lender must not apply to the courts to commence legal action for repossession of your property until every reasonable effort has been made to agree an alternative arrangement. If you are cooperating with the lender, they must wait at least 8 months from the date your arrears were classified as a MARP case (31 days after the first missed repayment) before applying to the courts.

When a lender is calculating the 8-month period, it must exclude any period during which you are complying with the terms of an alternative repayment arrangement, appealing to the Appeals Board or complaining to the Financial Services Ombudsman under the CCMA. It must also exclude the period during which you can consider making an appeal.

For pre-arrears cases, the 8-month period must exclude the period between your first contact about the pre-arrears situation and the setting up of an alternative repayment arrangement.

The 8-month period does not apply if you do not cooperate with the lender; or if you perpetrate a fraud on the lender; or if there is a breach of contract by you other than the existence of arrears.

Regardless of how long it takes your lender to assess your case, and provided that you are co-operating, you must be given three months’ notice before they can commence legal proceedings where your lender does not offer you an alternative repayment arrangement or you do not accept an alternative repayment arrangement offered to you.

This will give you time to consider other options, such as voluntary surrender, voluntary sale or a Personal Insolvency Arrangement.

The lender or its legal advisers must notify you in writing before it applies to the Courts to start any legal action on repossession.

Your property may be repossessed either by voluntary agreement or by court order. Even if court proceedings are started, the lender must still try to maintain contact with you to seek an agreement on repayments, and must put legal proceedings on hold if agreement is reached.

The lender must explain to you that, if the property is sold and the sale price does not cover the amount you owe, you are still liable for the rest of the amount you owe.

If your property is repossessed and sold, the lender must write to you promptly with the following information:

Balance outstanding on your mortgage loan account
Details and amount of any costs arising from the disposal which have been added to the account
Interest rate to be charged on the remaining balance

Having gone through the above process, and perhaps through no fault of your own, you may be one of the many who simply have not the wherewithal to maintain your commitments. The old saying you can’t get blood from a stone now rings true for many who would be happy to divest themselves of any assets that could repay their debts. Unfortunately, these assets, even if sold, may not repay these debts.

PERSONAL INSOLVENCY BILL 2012

In January 2012, the government announced plans to launch the Personal Insolvency Bill later in the year to address the outdated bankruptcy laws and to allow dignity back into debtors’ lives by creating closure on debts they are unable to repay via a non-judicial process.

Under the proposals unveiled by Justice Minister Alan Shatter and published on Friday 29^th June 2012, the new Personal Insolvency Service was established to process three separate types of non-judicial arrangement. But how do they work in practice ?

1) Debt Relief Notice (DRN)

This provides for the forgiveness of unsecured debt (such as an overdraft or credit card debt) under €35,000 for debtors with little or no capacity to pay off debts – no assets, no income. The debtor applies to the Insolvency Service who will then examine the income and outgoings of the applicant and decide whether a DRN is appropriate. If granted, a 3 year moratorium period will apply during which creditors cannot pursue action against the debtor for the debts covered by the DRN. At the end of the 3 year moratorium period the applicant is discharged from the debts. Applications for a DRN must be submitted on behalf of the debtor by an authorised Approved Intermediary (AI) body (e.g. the Money Advice and Budgeting Service – MABS)

This Approved Intermediary would:

Advise the debtor as to their options and the qualifying requirements
Assist in the preparation of the necessary Prescribed or Standard Financial Statement – SFS – which must be verified by means of a statutory declaration – plus include any other required documentation
Transmit the debtor’s application to the Insolvency Service to have a DRN approved if the qualifying criteria are met.

General conditions for application for a DRN

Debtors would have qualifying debts of €35,000 or less
Debtors would not be eligible where 25 per cent or more of the qualifying debts were incurred in the 6 months preceding the application
Debts qualifying for inclusion in a DRN are most likely to be unsecured debts: e.g. credit card, personal loan, catalogue payments, etc
Debtors will have a net monthly disposable income of €60 or less after provision for “reasonable” living expenses and payments in respect of excluded debts (if any)
Debtors would hold assets (separately or jointly) to the value of €400 or less. There is an exemption from the asset test for essential household appliances, tools, etc required for employment or business and one motor vehicle up to value of €1,200
Debtors must act in good faith and co-operate fully
Debts excluded from a DRN include: taxes, court fines, family maintenance payments and service charges arrears.

After the Insolvency Service has received the application, and is satisfied with same, they shall issue a certificate to that effect and furnish the certificate and supporting documentation to the court. The court then will consider the application and if satisfied, issue the DRN and notify the Insolvency Service who then will notify the approved intermediary and the creditors of the issue of the DRN and register it in the Register of Debt Relief Notices.

During the DRN period, creditors may not initiate or prosecute legal proceedings or seek to recover payment for a debt or recover goods or contact the debtor.

The DRN will last 3 years from date of issue. At the end of the DRN period, (and subject to no other action) the DRN terminates and the qualifying debts are discharged and the debtor will be removed from the Register of Debt Relief Notices.

Only one DRN per lifetime is permitted and not within 5 years completion of a Debt Settlement Arrangement (DSA) or Personal Insolvency Arrangement (PIA). There is a restriction on the debtor from applying for credit over €650 during the DRN supervision period without informing the creditor of his/her status.

The debtor must inform the authorised intermediary and the Insolvency Service of any material change in financial circumstances. So as not to reduce the incentive to seek and obtain employment following approval of a DRN, there is provision for the debtor to repay a portion of the debts in circumstances where his/her financial situation improves. These circumstances include receipt of gifts or windfalls over €500 – e.g. the lotto – or where the debtor’s income has increased by over €250 per month. The debtor will transmit funds to the Insolvency Service to be paid on an equal basis to the listed creditors.

Should a debtor make repayments totalling 50 per cent of the original debt, the debtor will be deemed to have satisfied the debts in full, the DRN will cease to have effect and the debtor will be removed from the Register and all of the debts will be discharged.

2) Debt Settlement Arrangement (DSA)

This provision also covers unsecured debt but is concerned with debts above €35,000. In this case the Insolvency Service would design a plan where the debtor would pay a specified amount to creditors over a five-year period – with a possible agreed extension to 6 years – after which the debts would be discharged. The creditors would be required to approve the DSA agreement.

The application for a DSA must be made through a personal insolvency practitioner (PIP) appointed by the debtor. The PIP must :

Advise the debtor as to their options in regard to insolvency processes
Assist in the preparation of the necessary Prescribed or Standard Financial Statement – SFS – which must be verified by means of a statutory declaration – plus any other required documentation
Apply to the Insolvency Service for a Protective Certificate in respect of the preparation of a DSA if the qualifying criteria are met. A joint application is permitted where the particular circumstances might warrant such approach. The debtor must normally be resident in the State or have a close connection. Only one application for a DSA in a lifetime is permitted.

Certain debts are excluded from the DSA, including Court fines in respect of a criminal offence. In addition, certain other debts are also excluded, such as family maintenance payments, taxes, local authority charges and service charges, unless the relevant creditor agrees otherwise. In addition, any debt that would have a preferential status in bankruptcy will also have a preferential status in a DSA.

The Insolvency Service, if satisfied as to the application, shall issue a certificate to that effect and furnish the certificate and supporting documentation to the court. The court will consider the application and, subject to the creditors right to appeal, if satisfied, issue the Protective Certificate and notify the Insolvency Service. Once such an approval is granted, the Protective Certificate is registered in the Register of Protective Certificates and a “stand-still” period of 70 days applies to permit the PIP to propose a DSA to the listed creditors. That period may, on application to the court, be extended for no more than a further 40 days. The PIP will inform the creditors of the issue of the Protective Certificate.

The effect of the issue of the Protective Certificate is that the creditors may not initiate or prosecute legal proceedings or seek to recover payment for a debt or recover goods or contact the debtor. The rights of secured creditors are unaffected.

A DSA proposal does not require the debtor to dispose of or cease to occupy their principal private residence – their home – where appropriate. If the DSA proposal is accepted (by 65% in value of the creditors present and voting) it is binding on all creditors. The PIP shall inform the Insolvency Service who shall then transmit the agreement to the relevant court for approval. If satisfied and if no objection is received by it within 10 days, the court shall approve the DSA and notify the Insolvency Service which will register it in the Register of Debt Settlement Agreements whereupon it comes into effect. The PIP will then administer the DSA for its duration.

The Insolvency Service has no role in the negotiation and agreement of a DSA.

While there is provision for a wide range of repayment options, the default position unless otherwise agreed, is that creditors be paid on an equal or proportionate basis. Conditions attach to the conduct of the debtor during the DSA. There is provision for an annual review of the financial circumstances of the debtor and the agreement could if necessary be varied or terminated. On the termination or failure of the DSA, a debtor could risk an application for adjudication in bankruptcy.

At the satisfactory conclusion of the DSA, all debts covered by it are discharged.
3) Personal Insolvency Arrangement (PIA)

This arrangement is designed to cover both secured and unsecured debt and will be appropriate if the Insolvency Service conclude that a five-year DSA would not be sufficient to make the debtor solvent. Under this provision a portion of the unsecured debt would be written off and the remainder repaid over a 6-year period, and possibly extended to 7 years. The secured debt, a mortgage for example, would also be written down and its repayment period extended, reducing the repayments further. The creditors would also be required to approve the PIA and should the debtors’ financial circumstances improve over the course of the PIA they are obliged to notify the Insolvency Service, now under the tutelage of Lorcan O’Connor.

The application for a PIA or a DSA must be made through a personal insolvency practitioner (PIP) appointed by the debtor. The PIP must :

Advise the debtor as to their options in regard to insolvency processes. A debtor may only propose a PIA if he or she is cash flow insolvent (i.e. unable to pay his or her debts in full as they fall due) and there is no likelihood within a period of 5 years that the debtor will become solvent.
Assist in the preparation of the necessary Prescribed or Standard Financial Statement – SFS – which must be verified by means of a statutory declaration – and any other required documentation
May apply to the Insolvency Service for a Protective Certificate in respect of the preparation of a PIA, if the qualifying criteria are met, (which includes cooperation with the secured creditor in respect of the debtor’s principal private residence, under a mortgage arrears process approved or required by the Central Bank) A joint application or an interlocking PIA is permitted where the particular circumstances might warrant such approach. The debtor must normally be resident in the State or have a close connection. Only one application for a PIA in a lifetime is permitted.

Certain debts are excluded from the PIA, including Court fines in respect of a criminal offence. In addition, certain other debts are also excluded, such as family maintenance payments, taxes, local authority charges and service charges, unless the relevant creditor agrees otherwise. In addition, any debt that would have a preferential status in bankruptcy will also have a preferential status in a PIA as with the DSA.

The Insolvency Service, being satisfied as to the application, shall issue a certificate to that effect and furnish the certificate and supporting documentation to the court. The court will consider the application and, subject to the creditors right to appeal, if satisfied issue the Protective Certificate and notify the Insolvency Service.

Once such approval is granted, the Protective Certificate is registered in the Register of Protective Certificates and a “stand-still” period of 70 days applies to permit the PIP to propose a PIA to the listed creditors. That period may, on application to the court, be extended for no more than a further 40 days. The PIP will inform the creditors of the issue of the Protective Certificate.

A PIA proposal does not require the debtor to dispose of or cease to occupy their principal private residence where appropriate. There are certain specific protections for secured creditors, including a “claw back” in the event of a subsequent sale of a mortgaged property where the mortgage has been written down.

If the PIA proposal is accepted, it is binding on all creditors. A PIA must be supported by at least 65% (it was 75% originally) of all creditors voting at the creditors meeting – based on the value of the total of both secured and unsecured debt owed to those voting creditors – and more than 50% of secured creditors voting (based on the lesser of value of the security underpinning the secured debt or the amount of that debt) and 50% of unsecured creditors (based on the amount of the debt).

The PIP shall inform the Insolvency Service of the agreement and the Service will then transmit the agreement to the relevant court for approval. If satisfied and if no objection is received by it within 10 days, the court shall approve the PIA and notify the Insolvency Service will register it in the Register of Personal Insolvency Arrangements and it comes into effect. The PIP will then administer the PIA for its duration.

Conditions attach to the conduct of the debtor during the PIA. There is provision for an annual review of the financial circumstances of the debtor and the agreement could if necessary be varied or terminated. On the termination or failure of the PIA, a debtor could risk an application for adjudication in bankruptcy.

The Insolvency Service has no role in the negotiation and agreement of a PIA.

At the satisfactory conclusion of the PIA all unsecured debts covered by it are discharged. Secured debts are only discharged at the conclusion of the PIA, if and to the extent, specified in the PIA. To the extent that they are not provided for in the PIA, all other debt obligations will remain

Bankruptcy

The Bill also provided for a number of amendments to the Bankruptcy Act 1988 to provide for a more enlightened, less punitive and costly approach to bankruptcy. These amendments will continue the reform of bankruptcy law begun in the Civil Law (Miscellaneous Provisions) Act 2011. The main new provisions are as follows:

A creditor bankruptcy summons:
1. the new minimum amount for a creditor or combined non-partner creditors petition for bankruptcy is €20,000. (The current limits are €1,900 for a creditor and €1,300 for combined non-partner creditors).
2. Fourteen days’ notice must be provided to ensure that a bankruptcy summons is not brought prematurely by a creditor, so as to allow the debtor to consider other options such as a Debt Settlement Arrangement (DSA) or a Personal Insolvency Arrangement (PIA).
Presenting a petition for bankruptcy: the creditor must prove for a debt of more than €35,000 (the current limit is €1,900). Where a debtor presents a petition, they must
1. Swear an affidavit that they have made reasonable efforts to make use of alternatives to bankruptcy, such as a Debt Settlement Arrangement or Personal Insolvency Arrangement
2. Present a statement of affairs, which must disclose that their debts exceed their assets by more than €20,000.
Adjudication of a creditor’s petition for bankruptcy: the court will be required to consider the assets and liabilities of the debtor and assess whether it may be appropriate to adjourn proceedings to allow the debtor to attempt to enter into a Debt Settlement Arrangement or Personal Insolvency Arrangement.
Excepted articles: the maximum value of household furniture or tools or equipment required by a bankrupt for a trade or occupation is increased from the current level of €3,100 to €6,000.
Avoidance of fraudulent preferences and certain transactions made before adjudication in bankruptcy: the current time period of 1 year is extended to 3 years.
Avoidance of certain settlements: the time periods in regard to certain voluntary settlements of property made before adjudication in bankruptcy is extended from 2 years to 3 years.
Discharge from bankruptcy: the following new provisions will apply:
1. The automatic discharge from bankruptcy after 1 year from the date of adjudication (reduced from the current 12 years).
2. Bankruptcies existing for 1 year or more at the time of commencement of the Act will be automatically discharged after a further six months have elapsed, this latter time to allow for any creditor objection.

The bankrupt’s unrealised property will remain vested in the Official Assignee in Bankruptcy after discharge from bankruptcy and the discharged bankrupt will be under a duty to co-operate with the Official Assignee in the realisation and distribution of such of his or her property as is vested in the Official Assignee.

The Official Assignee or a creditor may apply to the court to object to the discharge of a person from bankruptcy. The grounds for such an objection are that the debtor has failed to co-operate with the Official Assignee or has hidden or failed to disclose income or assets. The court may suspend the discharge pending further investigation or extend the period before discharge of the bankrupt up to a maximum of 8 years from the date of adjudication.
The court may order a bankrupt to make payments from his or her income or other assets to the Official Assignee for the benefit of his or her creditors. In making such an order, the court must have regard to the reasonable living expenses of the bankrupt and his or her family. The court may vary a bankruptcy payment order where there has been a material change in the circumstances of the discharged bankrupt. Such an order must be applied for before the discharge from bankruptcy and may operate for no more than 5 years.

There are no prohibitions contained in the Bankruptcy Act 1988 with regard to restrictions on the nature of employment or profession of a person adjudicated bankrupt. Such prohibitions, where they exist, are contained in sectoral legislation, e.g. in the Electoral Acts in regard to membership of Dáil Eireann or in contracts of employment, e.g. in the legal profession.

With effect from 3^rd December 2013, the Official Assignee in Bankruptcy is now based within the Insolvency Service of Ireland

Limits on usage within the Personal Insolvency Act 2012

You can be involved in only one of the 3 mechanisms (DRN, DSA or PIA) or in the bankruptcy process at any one time. If you use one of these 4 processes, you will generally have to wait some years before applying to use another.

You may use each of the 3 mechanisms only once in your lifetime. (There is no such limit on bankruptcy but it would be rare for anyone to go bankrupt twice.)

Running up debts

You must not deliberately stop paying (or underpay) your creditors while these procedures are being set up as this may cause your application to be ineligible.

Provision of information

You will have to complete a Prescribed Financial Statement, giving full and honest information about your financial circumstances. The required information is specified in the regulations. You will have to sign a Statutory Declaration to this effect. You must act in good faith and co-operate fully with the process.

You will have to give your written consent to the accessing of certain personal data held by banks and other financial institutions so that your financial situation can be verified. Government departments and agencies will have the power to release certain information about you.

Public registers

If you use any of these 3 mechanisms, your name and details will be published on a register that will be accessible to the public. The success or failure of the process will also be recorded.

Regulation of Personal Insolvency Practitioners (PIPs)

The Personal Insolvency Practitioners (PIPs) are authorised and supervised by the Insolvency Service of Ireland (I S I)

An individual may make an application to carry on practice as a Personal Insolvency Practitioner if that individual:

is a solicitor in respect of whom a practicing certificate (within the meaning of the Solicitors Acts 1954 to 2011) is in force; or
is a barrister at law called to the Bar of Ireland;
is a qualified accountant and a member of a prescribed accountancy body (within the meaning of section 4 of the Companies (Auditing and Accounting) Act 2003; or
is a qualified financial advisor who holds a current qualification from the Life Insurance Association of Ireland (LIA), the Insurance Institute or the Institute of Bankers School of Professional Finance; or
holds a qualification in law, business, finance or other appropriate similar qualification to the satisfaction of the Insolvency Service recognised to at least level 7 of the National Qualifications Framework by Quality and Qualifications Ireland (or equivalent)

and

can demonstrate to the satisfaction of the Insolvency Service that he or she has relevant knowledge and experience of and has completed a course of study and passed an examination on the law and practice generally as it applies in the State relating to the insolvency of individuals; and the Act.

In addition other stringent conditions are imposed, such as provision of a high level of Professional Indemnity Insurance, operating systems capable of handling the book-keeping elements of the transactions, proving tax compliance etc.

I am happy to announce that in May 2014, I was appointed a PIP by the Insolvency Service of Ireland. You can see my name and all the other PIP appointees through this link – http://www.isi.gov.ie/en/ISI/Pages/PIPs

Here’s what to do :

For a Debt Relief Notice (DRN), your application must be made through an Approved Intermediary (AI). You can choose an AI from the Register of Approved Intermediaries published by the ISI. Several Money Advice and Budgeting Services offices (MABS) have been authorised as AIs. MABS operates a screening process to check if you satisfy the eligibility criteria for a DRN.

Before contacting MABS to be screened, you will need to assemble all the relevant information about your debts, assets, income and circumstances. Access this link – https://www.mabs.ie/personal-insolvency/thinking-of-applying-for-a-debt-relief-notice/ – to help with this.

For a Debt Settlement Arrangement (DSA) or a Personal Insolvency Arrangement (PIA), you must apply through a Personal Insolvency Practitioner (PIP). See the link above for PIPs.

Further information is available from the ISI’s helpline 0761 06 4200 begin_of_the_skype_highlightingend_of_the_skype_highlighting (Monday to Friday, 9 am to 6 pm) and from its website – www.isi.gov.ie

John Lowe is authorised by the Insolvency Service of Ireland to carry on practice as a personal insolvency practitioner.

MARP, PERSONAL INSOLVENCY & BANKRUPTCY – 2014 / 2015

i. Communication

ii. Financial information

iv. Resolution

v. Appeals

Repossession proceedings

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