Legislation extending the right to a court review to all borrowers falling into home mortgage arrears due to an unforeseeable loss of income has come into effect.
Minister for Justice, Heather Humphreys TD, has signed an Order commencing all the main provisions of the Personal Insolvency (Amendment) Act 2021 with effect from today, June 25th 2021. The Act makes a number of urgent and welcomed changes to the Personal Insolvency Act 2012 to assist people who are struggling to pay their debts to have more effective access to personal insolvency processes and solutions, in light of the Covid-19 pandemic. However, the changes are not limited to the duration of the pandemic, as they are considered valuable beyond that period.
Under the new law, insolvent homeowners have the right to seek review by a court if their mortgage lender or other creditors refuse a reasonable proposal for a personal insolvency arrangement. This was already an option under the Personal Insolvency (Amendment) Act 2015 for home mortgage arrears dating from before 1st January, 2015. However, the new law has removed that cut-off date.
Another provision (section 2) which has been commenced today adjusts the asset ceiling for an insolvent person applying for a debt relief notice, the statutory debt restructure designed for people with debts not exceeding €35,000, and very little income or assets. The ceiling for assets (including savings) has been raised from €400 to €1,500. This will remove an obstacle that could otherwise affect recipients of some social welfare payments that are paid as lump sums, such as fuel allowance.
The provisions being commenced also make a number of other practical changes to ensure that personal insolvency processes work more efficiently, such as:
- Allowing a key advisory meeting between the insolvent person and their financial adviser to take place via remote communications technology, rather than face to face; and
- Allowing a personal insolvency practitioner (PIP) to delegate their functions under the Act to another person employed by the PIP, or working with him/her in the same firm, subject to certain conditions.
Justice Minister Heather Humphreys said the changes were necessary “in light of these changed economic circumstances” arising from the pandemic.
Minister of State for Law Reform, James Browne TD said, “Living with unsustainable debit is a very stressful situation for individuals and families, and that is why this Act is so important. It can happen to anybody, and it can arise for reasons beyond the person’s individual control.”
Read more about the new legislation: Personal Insolvency (Amendment) Act 2021 (irishstatutebook.ie)
Professional advice should always be taken before acting on any of the matters discussed. Please contact a member of our team should you wish to discuss this topic further.
