The Government has announced the establishment of a new State body, the insolvency service. It is envisaged that the agency will employ between 50 and 70 people. Recruitment has already begun for some positions. The insolvency service will oversee the personal insolvency processes outlined in the Bill, liaising with appointed debt advisers and the courts system. It will be funded by the exchequer
Less than €20,000
Prospective applicants must appoint an authorised debt adviser called an approved intermediary. In practice, this is likely to be Mabs (the Money Advice and Budgetary Service). When an approved intermediary is appointed the debtor must fill in a prescribed financial statement. The intermediary will help the borrower apply to the insolvency service. If satisfied, the insolvency service will issue a certificate and application to the court and the court, if satisfied, will issue a debt relief notice.
Once issued with a debt relief notice, creditors named on the notice cannot take any action to recover their money. The notice lasts for 36 months. At the end of the period, if a person’s circumstances have not changed, they will be freed from the debts specified in the notice. During the period, if the debtor received a gift or payment greater than €500, 50 per cent of it must be surrendered to the insolvency service for distribution.
Creditors can object to the notice being issued on certain grounds, though creditor consent is not required to give effect to a debt relief notice. Only one notice per lifetime is permitted. A debtor who applies for credit of more than €650 during the period must make known his/her status.
This option applies to people with non-mortgage debts, such as credit card, overdraft and unpaid utility and phone bills, of up to €2,000. To be considered in this category, the applicant’s total assets must not exceed €400 (which means property owners are excluded) and disposable weekly income should not exceed €60. Car ownership is permitted but vehicles must be worth no more than €1,200. Applicants must not have incurred 25 per cent or more of his/her qualifying debts within the previous six months. A debtor must be unable to pay their debts as they fall due. They must also have been domiciled in Ireland or at some time in the previous year been living or carrying on business in Ireland.
More than €20,000
People who think they may be eligible for some sort of five-year debt arrangement must appoint a personal insolvency practitioner (PIP). This person will advise and manage the process, and apply to the insolvency service for a certificate. If satisfied, the insolvency service will apply to the court, notifying the PIP to that effect. The court will then issue a protective certificate that will provide for a 70-day standstill period during which creditors may not take action. After contacting the creditors, the PIP will hold a creditors’ meeting and put forward the proposed debt settlement arrangement (DSA). Some 65 per cent of creditors must agree to the scheme. PIP fees will be met by both debtors and creditors, and most likely agreed at the creditors’ meeting.