New Personal Insolvency Bill Reforms Bankruptcy Laws
Many of Ireland’s insolvency laws have been in effect for over 100 years, but all that is now coming to a close.
Alan Shatter, Minister for Justice, published the Personal Insolvency Bill last week. The new Bill shakes up many of the country’s laws on bankruptcy and brings in new, flexible methods of dealing with financial hardship and insolvency.
“This Bill is designed to provide a modern insolvency process in Ireland,” said Shatter when introducing the new Bill. “[It] addresses the obligations of debtors and the rights of creditors in a proportionate and balanced way.”
Mr Shatter believes the Bill better reflects the “financial reality of an individual’s true circumstances” than the current laws on insolvency. He went on to say, “I am convinced that new personal insolvency laws will provide a significant incentive for financial institutions to develop and implement realistic agreements to resolve debt issues with their customers.”
According to Mr Shatter, the new Bill upholds the commitments agreed to in the EU-IMF Programme of Financial Support for Ireland and the Programme for Government.
The Personal Insolvency Bill will provide several new methods of resolving problems with personal debt that do not require court intervention. These innovations include debt relief notices that allow up to €20,000 to be written off; subject to a three-year “supervision period”.
New debt settlement arrangements allow borrowers to come to an agreement with their lenders to settle unsecured loans over a period of five years. Similarly, up to €3 million in secured debt can be settled over six years under new personal insolvency arrangements. This €3 million cap may be increased.
Currently, bankruptcy terms last for 12 years before being discharged automatically. Under the new Bill, this will be reduced to only three years, subject to certain new conditions.
Dara Calleary, justice spokesman for Fianna Fáil also welcomed the new legislation, saying “We welcome the decision to reduce the bankruptcy discharge period to bringing it into line with the European norm.” However he was not without criticism for the timing of the Bill, adding “it has taken six months for the Government to progress this vital issue while the scale of the personal debt crisis facing thousands of people has worsened.”
The Bill is expected to become law in November.
You can find more information on the Personal Insolvency Bill in this guide.
Article by Loans Ireland.