The Personal Insolvency Act 2012 became law in 26 December 2012, but Statutory Instruments are needed to bring the various sections into effect. It reforms Ireland’s insolvency laws, providing a modern system addressing the situation of insolvent debtors. At present personal insolvency is governed by outdated bankruptcy laws. A significant change being introduced is the introduction of three out-of-court debt relief processes.
The 2012 act allows for the following three forms of non-judicial debt settlement arrangement that allow the write-down or restructuring of debt owed by individuals:
- Debt relief notices (DRNs),
- Debt settlement arrangements (DSAs)
- Personal insolvency arrangements (PIAs) (the only arrangement applicable to secured debt), and, existing Bankruptcy laws amended.
These new mechanisms are not yet available as the Act also introduced a State-run insolvency Service to operate these new non-judicial insolvency arrangements. The Insolvency Service of Ireland will inform the public when it is ready to accept applications. Each of the new debt resolution mechanisms has its own rules and procedures, but there are a few common rules to avail of this relief, which include giving consent to the accessing of certain personal data held by banks and other financial institutions (to verify financial information). Government Departments and agencies will have the power to release certain information about you. If you use any of these new mechanisms, your name and details will be published on a register that will be accessible to the public. The success or failure of the process will also be record. You can be involved in only one of the new mechanisms (DRN, DSA or PIA) or in the bankruptcy process at any one time.
You may use each of the new mechanisms only once in your lifetime. (There is no such limit on bankruptcy.) You must not stop paying (or underpay) your creditors while these procedures are being set up as this may cause your application to be ineligible. You will have to provide full and honest information about your financial circumstances and sign a Statutory Declaration to this effect. You must act in good faith and co-operate fully with the process and there is provision for penalties.