The Personal Insolvency Act 2012 has modernised the regime for personal insolvency and brought Ireland in line with international best practice by providing for a range of debt resolution options within a statutory framework which balances the rights of creditors and debtors. The Personal Insolvency Arrangement, in particular, is an innovative solution that seeks to restructure or settle secured debt. Other important elements of this framework include the statutory protections regarding the debtor's reasonable living expenses and their home.
Since its establishment in 2013, the Insolvency Service of Ireland (ISI) has returned over 6,000 debtors to solvency with over 2,000 of those cases being Personal Insolvency Arrangements (PIAs) which deal with mortgage debt. In over 90% of these PIA cases, debtors have been able to stay in their homes. This is a significant achievement given that many cases involved arrears exceeding 720 days.
In addition, the solutions introduced in the Personal Insolvency Act 2012 have served as a catalyst for over 120,000 informal agreements between debtors and creditors, as reported by the Central Bank of Ireland. Debtors now have realistic alternative options available to them through the ISI if negotiations break down.
The Government has introduced a number of amendments and supports, since 2012, to ensure the success of the solutions provided by the personal insolvency legislation. These include the section 115A court review process and the Abhaile Mortgage Arrears Resolution Service.
The section 115A court review process permits a debtor to ask the Court to review and assess the reasonableness of a rejected PIA and, where satisfied as to its reasonableness, make an order confirming the PIA proposal. This removes the so-called “Bank Veto”.
Another important enhancement is Abhaile, the Government’s national Mortgage Arrears Resolution Service. This was introduced in 2016 to ensure that people who are in danger of losing their home have access to free professional advice, including advice from a personal insolvency practitioner. In addition to detailed financial advice, Abhaile offers legal advice to homeowners in mortgage arrears with the aim of allowing them to find a solution to their arrears and to stay in their homes where possible.
Since 2016, the Abhaile Scheme has engaged with over 10,000 people in mortgage arrears, most of them in the chronic arrears category over 360 or 720 days in arrears. Up to 19 February 2018, Abhaile has provided:
- financial advice and negotiation help – through Dedicated Mortgage Advisers working with MABS – to over 4,900 borrower households in home mortgage arrears;
- vouchers for professional financial advice and help on home mortgage arrears from a Personal Insolvency Practitioner, to 8,292 borrowers;
- vouchers for legal advice on home mortgage arrears from a Legal Aid Board solicitor, to 2,285 borrowers;
- help from a duty solicitor for unrepresented borrowers before a County Registrar’s court on home repossession, to over 3,340 borrowers.
My Department is also finalising a review of the operation of the Personal Insolvency Acts. The review is taking place under section 141 of the Personal Insolvency Act 2012, which requires the Minister for Justice and Equality (in consultation with the Minister for Finance) to review the operation of Part 3 of the 2012 Act, and responds to a commitment in the Programme for a Partnership Government.
Submissions made by stakeholders via a public consultation on the operation of Part Three of the Personal Insolvency Act 2012 contain a range of recommendations to enhance the process and to support increased engagement with the personal insolvency system. These submissions are being analysed and considered by my Department as part of the review along with recent developments in personal insolvency, including recent High Court judgments related to the process. I look forward to bringing proposals to Government in the coming months to address the conclusions of the review.