- Act makes practical changes to ensure that borrowers have effective access to personal insolvency legislation
- Measures will help borrowers at risk of losing their homes
- Act removes a barrier to borrowers applying for court review, if creditors refuse a personal insolvency proposal that includes their home mortgage arrears
- Act removes obstacle for people on very low incomes, seeking to resolve debts via a Debt Relief Notice
The Minister for Justice, Heather Humphreys TD, has signed an Order commencing all the main provisions of the Personal Insolvency (Amendment) Act 2021 with effect from 25 June. The Act was recently brought through the Houses of the Oireachtas by the Minister of State for Law Reform, Youth Justice and Immigration, James Browne TD.
The Act 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. However, the changes are not limited to the duration of the pandemic, as they are considered valuable beyond that period.
Minister Humphreys said,
“I am pleased to be able to commence all the main provisions of the Personal Insolvency (Amendment) Act 2021 with effect from 25 June.
“Perhaps the most important provision being commenced 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 Act removes the condition that the borrower’s home mortgage arrears must pre-date 1 January 2015, in light of these changed economic circumstances.”
Welcoming the signing of the Commencement Order, Minister Browne said,
“Living with unsustainable debt is a very stressful situation for individuals and families, and that is why this Act 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 Act 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 strongly encourage anyone who is worried about home mortgage arrears, or other problem debts, to contact MABS or the Insolvency Service of Ireland for advice and help.”
Another important provision being commenced is section 2, which 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.
Minister Humphreys continued,
“I’m glad to say that the provisions of the Act being commenced 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 Act removes a potential obstacle to people in this situation availing of a Debt Relief Notice, to help them return to solvency. This provision is also being commenced with effect from 25 June.”
The provisions being commenced also make a number of other practical changes to ensure that personal insolvency processes work better, such as:
- 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 new power for the court to extend an insolvent debtor’s ‘protective certificate’ (a court order, protecting them against creditor enforcement for a limited period while their personal insolvency practitioner puts together a personal insolvency proposal) for up to 40 days, if the Court is satisfied that this would be just due to exceptional circumstances, or to other factors outside the control of the debtor or their personal insolvency practitioner; and
- allowing a personal insolvency practitioner (PIP) to delegate their functions under the Act to another person employed by the PIP, or working with him/her in the same firm, subject to certain conditions.
Minister Humphreys hopes to be in a position to commence the remaining provisions of the Act, which provide for a Confirmation of Truth as an alternative to a statutory declaration, as soon as possible.
