# Big change in Personal Insolvency legislation is coming. Anyone who has gone into mortgage arrears will now be able to seek a court review.



## Jim Stafford (5 Oct 2020)

The Government will shortly introduce legislation that will  make it possible for people who have gone into mortgage arrears because of Covid-19 to seek a court review of their proposed Personal Insolvency Arrangement  if creditors vote against it. (i.e. the existing  restriction that debtors had to be in mortgage arrears as at 1 February 2015 will be lifted.)

It is disappointing that the Government are not taking the opportunity to lift the €3 million cap on PIAs. 

Jim Stafford


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## NoRegretsCoyote (5 Oct 2020)

Where can I find details of this?


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## Brendan Burgess (5 Oct 2020)

Hi Jim

That is shocking. 

Presumably anyone who was in arrears before January this year who cannot claim that Covid was the cause of their arrears, will not be able to avail of it? 

Brendan


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## demoivre (5 Oct 2020)

My understanding is that the current requirement for a court appeal of a refused PIA, that the borrower must be in arrears on 1/1/2015, will be removed.


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## Jim Stafford (5 Oct 2020)

Brendan

We will have to wait until the see what changes, if any, are made to the proposed legislation as it winds its way through the Oireachtas.

The Bill itself is not yet up on https://www.oireachtas.ie/en/bills/

Jim Stafford


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## Live Well (5 Oct 2020)

There are two bills, one which will make some small changes (bill 1) and a more comprehensive bill which is nearly complete (bill 2). See here.

[broken link removed]


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## Jim Stafford (6 Oct 2020)

The Relevant proposed amendment is below: 

Provide that: Section 115A of the Personal Insolvency Acts is amended by the substitution of the following for subsection (18):

 “(18) _In this section, ‘relevant debt’ means a debt: (a) the payment for which is secured by security in or over the debtor’s principal private residence, and (b) in respect of which the debtor— (i) is in arrears with his or her payments, or (ii) having been in arrears with his or her payments, has entered into an alternative repayment arrangement with the secured creditor concerned. _

* Explanatory Note* Section 115A (see also Explanatory Note to Head 8) is a key protection for borrowers under the Personal Insolvency Acts, introduced by the Personal Insolvency (Amendment) Act 2015. It allows an insolvent debtor, whose proposal to resolve their debts by way of a Personal Insolvency Arrangement (‘PIA’) has been rejected by their creditor(s), to apply to the Court for review of the proposal and the refusal. If the Court is satisfied that the proposal meets all the required statutory conditions, and that the additional requirements of section 115A are met, it has a discretion to impose the proposal on the creditors – if satisfied that this causes no unfair prejudice to interested parties. The proposal then becomes legally binding on debtor and the creditors. The court review under section 115A is available only where debts included in the debtor’s Personal Insolvency Arrangement proposal to the creditors, include a ‘relevant debt’. 

As it currently stands, section 115A(18) defines a ‘relevant debt’ as meaning: - mortgage arrears (or arrears of similarly secured payments) on the debtor’s home (‘principal private residence’), - where, on a ‘cut-off’ date of 1 January 2015, the borrower: o either was already in home mortgage arrears, o or had already entered an alternative repayment arrangement with their secured creditor to resolve home mortgage arrears that previously existed. Accordingly, a person whose home mortgage arrears only arose after 1 January 2015 is excluded, under the current wording of subsection 18(b), from availing of the section 115A court review. However, this would mean that following the unexpected and serious economic impact of COVID-19 on some small businesses, sectors and workers, any person who, for 21 example, has fallen into arrears on their home mortgage due to loss of employment, business or income arising from the pandemic, would be shut out from availing of the court review under section 115A, despite its importance as a protection for borrowers. ‘The COVID-19 pandemic has resulted in an unprecedented shock to Ireland’s economy and has left thousands of households and businesses across the country on reduced incomes.’ 

 Most of the economy shut down during peak public health restrictions, mid-March to mid-May, and ability to re-open and resume business activity has varied. Some sectors and sub-sectors remain, in general, very severely affected 3 .Over 1.2 million people were still receiving State supports at the end of June (either the Pandemic Unemployment Payment or the Temporary Wage Support Scheme.) 76% of those receiving the TWSS worked for SMEs4 . Many self-employed individuals, employees (particularly with more precarious contracts) and businesses have thus had to deal with prolonged closures, pay cuts, loss of income/contracts, reduced working hours, and job cuts. These have led to financial difficulties for some previously viable businesses and individuals, despite the safety net provided by extensive government supports and subsidies. *It is proposed, therefore, to delete both references in paragraph (b) to a cut-off date of 1 January 2015, so that homeowners who have fallen into arrears after that date will also be able to avail of the review*. Creditors will continue to be protected by the very extensive range of protective conditions and balances contained in the Acts. 


Jim Stafford


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