Before the Personal Insolvency Act of 2012, if you were unable to meet your financial obligations there weren’t very many options for Irish debt help. Before this act was passed, bankruptcy was the only formal option that offered both protection from creditors and debt relief agreements to pay off your debts. For many reasons, most people want to avoid bankruptcy at all costs. Applying for a Personal Insolvency Agreement, or PIA, is now an option for those with moderate debt.
PIAs are the new debt resolution plan designed for people with both secured and unsecured debts. They are meant for use by those who can pay back a portion of their debts each month, but cannot meet their full payments on their mortgage, credit cards and personal loans. These agreements can help Irish citizens struggling in tough economic times.
Do I Qualify For A PIA?
There are very specific eligibility criteria that must be met before applying for a Personal Insolvency Arrangement in Ireland. First, the debt must include both secured and unsecured debts, and the total secured debts must fall between €20,000 and €3 million. It is important to note, however, that this cap may be raised if all secured creditors agree.
It is necessary to be insolvent based on cash-flow, meaning that applicants cannot pay their debts in full as they come due. This should be a permanent financial issue, with no foreseeable change in the next five years. Applicants also have to be able to show that they can pay back their debts, at least in part. This requires a steady income that can cover both the cost of living and the payments required in the agreement. Finally, if the applicant is eligible for a Debt Settlement Arrangement, they will most likely not be eligible for a PIA.
The PIA Process
To apply for a PIA, you must first visit with a Personal Insolvency Practitioner. This is a trustee who will help to determine the best way to handle your personal financial crisis and guide you through the application process. The new law establishes these trustees, and the process they must follow.
Personal Insolvency Agreements are administered by the newly established Insolvency Service of Ireland (ISI). After your application is submitted, the ISI issues a protective certificate. This certificate prevents creditors from taking any action against you or forcing you into bankruptcy during the agreement process. Protective certificates cover applicants for 40 days. If needed, this can be extended to 60 days. If an agreement still hasn’t been reached, an additional 10-day certificate may be requested.
The trustee (PIP) will review your financial statements and propose a settlement for each of your debts. These totals will then be restructured so that you pay toward them over the agreement term. Most PIAs run six years, although some run five while others are extended to seven. It is important to note that your debt is not written off during a PIA. You will be required to make repayments to your creditors during the agreement term, once the term has ended any remaining debt is then written off.
Once the trustee has written a PIA based on your financial situation, it must be approved by both you and your creditors. In order to put the arrangement into effect, the creditors who represent at least 65 percent of your debt will have to approve it. Moreover, at least 50 percent of the secured creditors and 50 percent of the the unsecured creditors will have to approve. Only then can you begin to repay the debts at the restructured rates, and work your way back to financial solvency.
After the agreement term is over, your unsecured debts will be paid off if you have made all of the required payments. Some of your secured debts may also be paid discharged or reduced, depending on your agreement. This means that within a few years, you have gained solvency and no longer need debt help Ireland.