- Bill makes practical changes to ensure that borrowers have effective access to personal insolvency legislation, despite the COVID-19 pandemic
- Measures will help borrowers at risk of losing their homes
- Bill removes a barrier to borrowers applying for court review, if creditors refuse a personal insolvency proposal that includes their home mortgage arrears
- Bill removes obstacle for people on very low incomes, seeking to resolve debts via a Debt Relief Notice
The Minister of State for Law Reform, Youth Justice and Immigration, James Browne TD, has welcomed the passing by both the Dáil and Seanad of the Personal Insolvency (Amendment) Bill 2020. The Bill will be sent shortly to the President for his signature.
The Bill, initiated in September 2020 by Minister McEntee, makes a number of urgent changes to the Personal Insolvency Act 2012, to help people who are struggling to pay their debts to have more effective access to personal insolvency processes and solutions, in light of the COVID-19 pandemic.
Minister Browne said,
“I welcome the passage of this valuable Bill by the Oireachtas, and I look forward to it being signed into law by the President. We are working to ensure that the Act can then come into operation as quickly as possible.
“Perhaps the most important change made by the Bill relates to insolvent homeowners who are struggling to pay their home mortgage arrears. The Personal Insolvency (Amendment) Act 2015 introduced a key protection for these borrowers. It allowed them a right to seek review by a court, if their mortgage lender, or other creditors, refuse a reasonable proposal for a personal insolvency arrangement.
“However, this protection currently only applies to home mortgage arrears dating from before 1 January 2015. So a person at risk of losing their home, whose financial difficulties first arose from the COVID-19 pandemic, would be unable to apply for the court review. The Bill removes the condition that the borrower’s home mortgage arrears must pre-date 1 January 2015, in light of these changed economic circumstances.”
The Bill also adjusts the asset ceiling for an insolvent person applying for a Debt Relief Notice – the statutory debt restructure designed for people with debts not exceeding €35,000, and very little income or assets. The ceiling for assets (including savings) is raised from €400 to €1,500. This will remove an obstacle that could otherwise affect recipients of some social welfare payments that are paid as lump sums, such as Fuel Allowance or Carer’s Support Grant.
The Minister continued,
“I’m glad to say that the Bill will also help people on very low incomes, who don’t own a property or have any significant assets, and are currently burdened with debts they have no prospect of being able to pay. The Bill removes a potential obstacle to people in this situation availing of a Debt Relief Notice, to help them return to solvency.”
The Bill makes a number of other practical changes to ensure that personal insolvency processes work better for those affected by the pandemic:
- allowing a key advisory meeting between the insolvent person and their financial adviser to take place via remote communications technology, rather than face to face;
- allowing a short extra extension of some key procedural deadlines; and
- allowing the insolvent person to make a written Confirmation of Truth, which does not have to be formally sworn or witnessed, as an alternative to a statutory declaration (while retaining strict penalties for making any such statement that the person does not believe to be true.)
The Minister concluded,
“Living with unsustainable debt is a very stressful situation for individuals and families, and that is why this Bill is so important. It can happen to anybody, and it can arise for reasons beyond the person’s individual control.
“Entering the insolvency process is not an easy way out, as is sometimes suggested. It requires continued engagement from the insolvent person. But it provides a vital pathway for people to get back to solvency, and to re-engage with our economy.’
“This Bill will ensure more effective and more practical access to personal insolvency solutions for families who want to stay in their homes and who are willing to work their way through their debt problems. The Government continues to make free, expert financial, legal advice and help available through the Abhaile scheme, for those in home mortgage arrears who are at risk of losing their homes.
“I would strongly encourage anyone who is worried about home mortgage arrears, or other problem debts, to contact MABS or the Insolvency Service for advice and help.’