The personal insolvency arrangement provided for in the Personal Insolvency Act 2012 is specifically geared towards avoiding repossession, where possible. Furthermore, the Land and Conveyancing Law Reform Act 2013 prescribes that in any repossession proceedings concerning a borrower's principal residence, the Court may adjourn the proceedings so that a personal insolvency arrangement may be explored as an alternative to repossession. This protective measure is of great importance to mortgage holders struggling under the burden of unsustainable debt. Lending institutions will not be allowed to proceed directly to the repossession stage without first engaging in good faith in the alternative measures provided for in the Personal Insolvency Act 2012.
I understand that this is also reflected in the Central Bank's Code of Conduct on Mortgage Arrears which came into effect from 1 July 2013 and sets out requirements for mortgage lenders dealing with borrowers who are facing or are already in mortgage arrears. Cooperating borrowers must now be given at least eight months, from the date arrears first arise, before legal action can commence and at the end of the Mortgage Arrears Resolution Process lenders will be required to provide a newly introduced three-month notice period to allow borrowers to consider their options, such as voluntary surrender or an arrangement under the Personal Insolvency Act, before legal action can commence.
With regard to costs of the various debt solution processes, the application fees prescribed by the Insolvency Service of Ireland are as follows:
- application for a Debt Relief Notice: €100;
- application for a Debt Settlement Arrangement: €250;
- application for a Personal Insolvency Arrangement: €500;
- application fee for bankruptcy: €650.
Insofar as practitioner fees associated with the development of debt settlement arrangements and personal insolvency arrangements are concerned, these fees will be negotiated with an individual debtor by the Personal Insolvency Practitioner in advance of a case proceeding and will be deducted from the amount of money an individual debtor is calculated as having available to pay their creditors during the term of the arrangement.