The government has today published it’s long awaited reforms for bankruptcy and insolvency today. The main points contained within the bill appear to be:
- The period in a person may find themselves bankrupt will now be changed from 12 to 3 years.
- A person who finds themselves with debts of between €20,000 and €3 million can enter a ‘Personal Insolvency Arrangement’ (PIA) if they are insolvent. A person in a PIA would then have their debts taken over by a trustee who will propose a deal with creditors.
- Borrowers who owe less than €20,000 will be able to apply for a ‘debt relief certificate’ which will see those debts wiped off if they remain unpaid after a three-year ‘freezing period’.
- If the debtors do not agree to the arrangements, the borrower can then seek to declare themselves bankrupt.
But problems could arise as banks are expected to hold a veto over any arrangement struggling borrowers may want to enter.
The Minister said the Bill will provide a modern insolvency process in Ireland which addresses the obligations of debtors and the rights of creditors in a “proportionate and balanced way”.
“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,” Mr Shatter added.
The Bill was approved by the Cabinet at its meeting last Tuesday.