# Will debtors be able to afford the fees for PIAs?



## Brendan Burgess (9 Sep 2013)

I was asked this for a TV interview today, and it's worth teasing out as many people are concerned that people who need them will not be able to afford them. 

I don't think that inability to pay fees will stop people applying for PIAs or DSAs. 

An initial meeting with a PIP will cost around €300.  Some PIPs, such as Grant Thornton, are not currently charging for the initial meeting. 

The PIP will assess the borrower's suitability for a PIA or DSA.  In many  cases, the PIP will advise that they would be better off trying to reach an agreement directly with their lender(s) and that a PIA is unlikely to be approved. 

If the PIP thinks that a PIA is suitable and is likely to be approved, the application will probably cost around €3,000 to €5,000 depending on the number of creditors and the complexity of the case. 

The borrower will just have to withhold payments to creditors during the application so as to have funds to pay the PIP.  

If the creditors approve the PIA, then the fees will be part of the arrangement. 

If the creditors veto the PIA, then the borrower will be down the fees. 

*Debt Settlement Arrangements 
*What about an unemployed person who owes €200k to a variety of creditors? 

This could be a problem area, but I would think that the fees for this would be a lot lower as it would be simpler.  Maybe New Beginning will offer these guys a low fee or an instalment plan?


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## Time (9 Sep 2013)

Does a person have to expend 3 to 5 grand to go bankrupt?


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## commonsense (9 Sep 2013)

It's ridiculous. Instead of these huge fees, the government should have allocated funding to MABS to do the initial assessments. I mean they are a very good organisation who would already be steps ahead in a lot of cases.


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## Brendan Burgess (9 Sep 2013)

Hi commonsense

I wouldn't consider €300 to be huge fees for the initial assessment from a professional. 

A good professional would advise you on your options between - an informal arrangement, a PIA or bankruptcy.  Well worth it in my opinion. 

If you do go for a PIA, there is a lot of work, so €3k to €5k would seem about right. 

Brendan


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## Brendan Burgess (9 Sep 2013)

Time said:


> Does a person have to expend 3 to 5 grand to go bankrupt?



I don't think so.

You can apply yourself, and I have an idea that the fee is €750, but I am not sure. 

Brendan


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## commonsense (9 Sep 2013)

Brendan Burgess said:


> Hi commonsense
> 
> I wouldn't consider €300 to be huge fees for the initial assessment from a professional.
> 
> ...



To a lot of people 300 euro might as well be 3,000. I understand the final total and agree that this can be part of the arrangement. But for an initial assessment  for many, who may not be eligible, or who may not want it if they are, I think it could be an obstacle. Just my opinion. 

I still think that MABS could and will probably do a lot of the groundwork for people.


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## Time (9 Sep 2013)

Brendan Burgess said:


> I don't think so.
> 
> You can apply yourself, and I have an idea that the fee is €750, but I am not sure.
> 
> Brendan



Brendan,

I was under the impression you had to go through the charade of getting vetoed by the banks before you could even apply to become bankrupt.


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## Brendan Burgess (9 Sep 2013)

Time said:


> Brendan,
> 
> I was under the impression you had to go through the charade of getting vetoed by the banks before you could even apply to become bankrupt.



High Time

Good point. I had forgotten that.  So the total cost of bankruptcy should be increased by the cost of the failed PIA. 

Brendan


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## Brendan Burgess (9 Sep 2013)

commonsense said:


> To a lot of people 300 euro might as well be 3,000. I understand the final total and agree that this can be part of the arrangement. But for an initial assessment  for many, who may not be eligible, or who may not want it if they are, I think it could be an obstacle. Just my opinion.
> 
> I still think that MABS could and will probably do a lot of the groundwork for people.



Anyone applying for a PIA will be making payments on a few secured loans, so they will simply reduce their payments to pay the initial €300. 

The DSA is the problem, but you can get a free consultation on that from Grant Thornton.


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## ClaireM (9 Sep 2013)

Brendan Burgess said:


> *Debt Settlement Arrangements
> *What about an unemployed person who owes €200k to a variety of creditors?
> 
> This could be a problem area, but I would think that the fees for this would be a lot lower as it would be simpler.  Maybe New Beginning will offer these guys a low fee or an instalment plan?




Someone like this could perhaps only pay €10 per week. There will not be enough there for even basic fees and nothing left for creditors.


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## Brendan Burgess (9 Sep 2013)

Got a bit of an update since. 

There will be 4 categories of fees 

1) Consultation fee ( from free to around €300) 
2) Registration fee to ISI  of €500 for a PIA and €250 for a DSA 
3) Nominee fee for preparing the application €2,500 - €3,000 for a PIA - a bit less for a DSA
4) Around €5k for the Supervisor Fee over the period of the PIA or DSA. 

The ISI will be charging €500 application fee for a PIA and €250 for a DSA, so if the PIP is going to apply for you, you will have to come up with this up front. 

Some PIPs will want to see the nominee fee of €3,000 paid up front. Others will take the nominee fee from the difference between the applicant's income and RLEs for the 70 day application period. If the PIA is approved, they will take the balance of the nominee fee from the first few months' surplus. If the PIA is rejected, they will write off the uncollected amount.


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## Time (9 Sep 2013)

This leaves people with severe debt and no real income (social welfare) with no real solution.


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## Brendan Burgess (9 Sep 2013)

Hi Time

It's unsatisfactory, but what do you suggest? 

That the creditors should pay the PIP's fees to have their debts written off? 

That the state should pay for the service? 

The unemployed insolvent debtor has two options 

1) They can do nothing.  The creditors can't get blood out of  a stone.  
2) They can attempt to do a deal themselves with their creditors but if they have nothing to pay, it would be a bit difficult to get their debt written off. 

Brendan


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## Time (9 Sep 2013)

There should be a direct access route to the courts to go bankrupt.



> 1) They can do nothing. The creditors can't get blood out of a stone.


Creditors would continue to look for instalment orders etc, there would be no closure for the poor debtor.


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## Cantalia (9 Sep 2013)

The MABS idea so so so right on the money.  In a legal system people have the legal aid board. This is a quasi-legal system. They have centres in every town in the country, even if each MABS manager was licences for the initial report, pre PIP?????


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