# Insolvency act is now redundant



## Bronte (2 Sep 2013)

How did everybody miss that fact that there is a clawback provision in the new legislation. All the seminars, all the experts and nobody mentioned the clawback. 

And who would advise anybody to even apply for insolvency under the new legislation. It's more draconian than the bankruptcy rules it was supposed to sort out. 20 years is a lifetime. What kind of messed up society are we that we set out to change something that was considered horrendous to replace it with something that will tie people up in knots for most of their financially productive lives.  Originally we were told that after 3 years people would be able to start again.  And we debated it on here and thought that was reasonable, and more lately it's been stretched to 6 years and now this weekend we hear 20 years.  What on earth is the point of that.  And this is after people have been suffering for the last 5 years at least.  We've had people on here on AAM in despair, we all know about the suicide, another awful one currently in the news and we're on here telling people to wait for the legislation.  And it's a total nonsense.  

The best thing is to go to the UK and get it all done and dusted in about a year and a half.  Steve Thatcher, who has gone on holidays must be laughting himself today at the Irish authorities complete incompetence in drafting legislation.  Those that held off going to the UK must be sick with worry.


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## Jim Stafford (2 Sep 2013)

Bronte

I would mention that Brendan Burgess highlighted the issue months ago on this site. All of the PIPs and people involved are fully aware of it. However, not all of the banks fully understand it, as they have not been trained on it yet.

It is a complex piece of legislation.  The training course that Chartered Accountants Ireland have put on to train PIPs lasts three days! Some bankers have only attended a brief PowerPoint presentation given over breakfast!

Some of the banks have postponed training until all of the legislation and detailed Regulations have been published. They have also been obliged to delay setting their formal policies on the new procedures until the detailed Regulations are published.The Insolvency Service of Ireland are due to publish seven sets of detailed Regulations today. Whilst the iSI have consulted widely on the Regulations, they will have to be studied carefully to see if any significant changes were made from the drafts.

Section 103 (the claw back clause) is, in my view, a formalised Split Mortgage. What will shock some people is that some banks, in certain cases, may seek to extend the claw back period up to 30/40 years. If borrowers do not wish to have such an extension, then the option is bankruptcy.

Each PIA will have to be negotiated. In some cases it may be possible to exclude any claw back.

Jim Stafford


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## Bronte (2 Sep 2013)

Jim Stafford said:


> some banks, in certain cases, may seek to extend the claw back period up to 30/40 years. If borrowers do not wish to have such an extension, then the option is bankruptcy.
> 
> Each PIA will have to be negotiated. In some cases it may be possible to exclude any claw back.


 
I missed BB highlighting that clause.  And now you're saying it could be up to 40 years.  

Plus you've said that bankers are only getting up to speed now.  So when do you think it likely that people will  be actually able to go through the insolvency process.  I presume you're dealing with cases?  Why would a bank agree to exclude a clawback?  Why is there a clawback?  Wouldn't one be better off going the bankruptcy route and no other?


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## DebtCert (2 Sep 2013)

Let's say your mortgage is too large for you to pay it but you want to stay in your home. The bank, as part of a PIA, agrees to reduce the mortgage by writing down some of the debt and leaving you with a mortgage equal to the value of the house. After 6 years, the PIA ends and any unsecured debts are also written off. So far, so good. 

An economic recovery begins. House prices go up. Should you be able to sell your house and pocket a handy windfall profit while the bank, funded by the taxpayer, gets nothing? I think it's only right that if the house is sold at a profit within a certain period then there should be a clawback. The homeowner gratefully accepted a write down of the mortgage on the basis that they wanted to stay in their home. If they do stay then there's no issue. If, on the other hand, they want to sell they shouldn't gain any more than they've already gotten. 

You see similar claw backs for stamp duty exemptions and the affordable home ownership schemes.


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## itsallwrong (2 Sep 2013)

Q -'In some cases it may be possible to exclude any claw back'
Folks we are talking about the banks here.
Are people naïve to think a bank will exclude a claw back for a debt?

Yet another carrot on a stick for the financially doomed..
Someday perhaps someone will get it right.
Why do we over complicate an issue and drag it in the mud before 
ramming it in the publics face in this country?


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## Brendan Burgess (3 Sep 2013)

Hi Bronte

When the Bill was published in January 2012 - 18 months ago, I published the Department of Justice briefing papers 

Personal Insolvency Arrangement - how it works

I raised it again in April 2013 

What are the clawback provisions if a house is sold after a PIA? 

I tried again to understand it in July 

How the clawback in a PIA works

This has been well known and discussed. I am surprised that people are discussing it so much now.


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