# Inheritance while in PIA



## arbitron (6 Apr 2016)

If someone is early in a PIA which gives the creditors say 80% of any inheritance, it seems that the creditors will not only take this 80% but the debtor may find the PIA reviewed and their payments increased.

Has this happened anyone yet and if so how did it play out?  Is there any evidence to suggest a deal could be struck that the 80% (which would be more than the total PIA) would be acceptable as final payoff, or would the creditors seek the final 20% of the inheritance?

Can the debtor go to court (or ISI?) to ask for a ruling that the payment satisfies the PIA?  I appreciate that there may be nothing to go on here and that it may be wishful thinking.  This was an unexpected inheritance and we are trying to figure out the best way to approach it before we discuss with PIP, etc.


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## Gordon Gekko (7 Apr 2016)

If the amount involved is meaningful, the  parents(?) should look at trusts and/or other ways to bypass the insolvent individual.


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## Jim Stafford (7 Apr 2016)

PIA's have standard clauses that have been agreed between the PIPs and the Banks.  The standard clause dealing with inheritances is as follows:

_*Where the Debtor receives an inheritance, the Debtor will make available to the Creditors an amount equivalent to a percentage of its net value. This percentage will be specified in Part IV of the Arrangement. *

* 
11.5 Any amount payable by the Debtor under this clause will not exceed the total debt owed by the Debtor to Creditors as at the date of the protective certificate or, if less, the Effective Date and the associated costs of the Arrangement. *

* 
11.6 The Debtor will inform the Personal Insolvency Practitioner about any Windfall Asset to which this clause applies within 14 days of becoming aware of its existence. The Personal Insolvency Practitioner will inform the Creditors within 14 days of being so informed by the Debtor. *_

The normal "specified percentage" is 75%.

You will note that the debtor has 14 days to notify the PIP of its existence.

The creditors will expect the debtor to hand over 75% of the inheritance and continue with the rest of the PIA. The ISI would have no role in the matter.  If you applied to Court the Court would just rule that the inheritance clause was binding etc.

If the debtor does not disclose the inheritance there would be very severe repercussions.

The debtor should obtain professional advice on the precise interpretation of the PIA, as it is possible that "errors" might have been made in knitting together the various clauses etc.

One possible solution could be to "abandon" the PIA and try and negotiate an informal settlement using the inheritance.  However, if you are dealing with multiple creditors it could get very messy, and very expensive in terms of professional fees.  In any event, the creditors would insist on at least 75% of the inheritance being handed over. If you "abandon" the PIA you would not be entitled to do another one (unless you received court approval which would be very unlikely.)

Jim Stafford


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## arbitron (7 Apr 2016)

Thanks Jim


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## surfinky (17 Nov 2019)

Sorry to raise this old thread, but I have a related query.

Section 103 of the Personal Insolvency Act 2012 incorporates a claw back provision in all PIAs. Provided the PIA does not specify otherwise, the claw back is the lesser of 20 years or the mortgage term itself.

The claw back affects the debt secured on the property and therefor, under an arrangement where the mortgage has been reduced (write down), any inheritance may be subject to claim by the lender. According to the Act this term applies for a duration which is the lesser of 20 years or the mortgage term itself.

If you are at any time concerned about inheritance (particularly if it is substantial), you are better off avoiding a PIA?


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## Jim Stafford (18 Nov 2019)

surfinky said:


> If you are at any time concerned about inheritance (particularly if it is substantial), you are better off avoiding a PIA?


If you have a substantial inheritance  coming down the line, you should be more motivated to do an "accelerated" PIA, as you could possibly lose all of the inheritance if creditors obtain judgment against you in the future.  Alternatively, you could adopt different strategies such as using trusts etc

Jim Stafford


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## surfinky (25 Nov 2019)

Thank you Jim. I believe your reply contains the answer to my question. But to clarify, are you saying that once the PIA has been successfully completed (whatever the duration), and where the PIA involves a write down, that the lender will not be able to make a claim against any future inheritance?

My take is that if you sell the PPR for a "profit" after completion of the PIA, the lender can "claw back" the surplus, to the value of the amount owed prior to the write down under the PIA.

If you inherit property, the lender can "claw back" the value of the amount owed prior to write down under the PIA.

This remains the case for 20 years, or the duration of the mortgage, whichever the lesser. No?


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## Jim Stafford (27 Nov 2019)

surfinky said:


> Thank you Jim. I believe your reply contains the answer to my question. But to clarify, are you saying that once the PIA has been successfully completed (whatever the duration), and where the PIA involves a write down, that the lender will not be able to make a claim against any future inheritance?


Correct


surfinky said:


> My take is that if you sell the PPR for a "profit" after completion of the PIA, the lender can "claw back" the surplus, to the value of the amount owed prior to the write down under the PIA.


Correct, with a time limit of 20 years.


surfinky said:


> If you inherit property, the lender can "claw back" the value of the amount owed prior to write down under the PIA.



]Only if you inherit property during the PIA


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## elbo (17 Jan 2020)

Hi, We are in the process of a PIA and my parents are elderly, I would be due ineritence, hopefully not within the PIA term, but if this does happen. Can i set up a trust in my kids name with any inheritance recieved? It has been a long road here and alot of Debt i would hate to lose my parents life earnings over our debt issues. There home would also be part of inheritance. Would really appreciate help here. TIA


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## Steven Barrett (17 Jan 2020)

elbo said:


> Hi, We are in the process of a PIA and my parents are elderly, I would be due ineritence, hopefully not within the PIA term, but if this does happen. *Can i set up a trust in my kids name *with any inheritance recieved? It has been a long road here and alot of Debt i would hate to lose my parents life earnings over our debt issues. There home would also be part of inheritance. Would really appreciate help here. TIA



I am open to correction on this but if you inherit the money, you will have to comply with the PIA as the inheritance will be your asset that you then transfer to a trust. A court will unwind the trust. Your parents can change their will, passing the inheritance to your kids under trust. Obviously the CAT thresholds are lower but your credits won't get it as it was never your money. 

Steven
www.bluewaterfp.ie


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