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Personal Insolvency and Bankruptcy 3 Years On - The Outlook for 2016 - By Mark Ryan, Cork APIP Member (PIP)

Date added: 21 Jan 2016

As someone who has been active in the personal insolvency sector since its inception in 2013, I can only describe the last few years as challenging. With any new piece of legislation the hard work really only starts once the legislation has been approved by the government.  

The only way to look at the personal insolvency sector is as a new business start up.  As an accountant who has prepared many a business plan over the years, I would always look at the first 3 years of any new business as the development phase and, in most cases, there is a considerable investment of time and money during this phase.  In effect, 2016 for personal insolvency will be year 3 of this plan and, after some initial challenges and recent changes to the legislation by government, we would be reasonably optimistic that 2016 will see an increase in activity as those in debt finally make the decision to come forward to find a permanent solution to their financial difficulties.

Although the number of arrangements that have been approved would be considered low, the main positive is that 80% of the applications being made are being approved by creditors.  The write-down of debts in the arrangements is averaging at 20% for secured debts and 90% for unsecured debts.  This write-down of debt would include all forms of creditors including all the major banks, credit unions, revenue, overdrafts, personal loan, credit cards etc.

The advantage of a personal insolvency arrangement (PIA) is that it has a defined life cycle as the maximum terms for a PIA is 6 years and a DSA is 5 years.  Both arrangements can be extended by a further 12 months to deal with any unforeseen circumstances during the arrangement.

The two main changes that were made by the government recently included the introduction of an appeals process for arrangements that have not been approved by creditors.  This is what most people would refer to as removing the creditors’ ‘veto’.  The other major change was the reduction in the bankruptcy term to 12 months from 3 years.  This brings us in line with the bankruptcy terms in the North of Ireland and the UK.  The message coming from the government is that there will be no further changes to the legislation and, in effect, they have done all they can to resolve the personal debt crisis.  It is now down to the legislators, creditors, debtors and practitioners to use the legislation to return those in debt to solvency.

I also think that, finally, the stigma around insolvency and bankruptcy has been removed and that debtors are now only looking at this as a way out of the mire of debt that they have been living under for the last 7/8 years since the beginning of the economic collapse.

Finally, I would strongly recommend that anyone who is in debt should speak with a PIP who has front line experience of the insolvency process and who has brought some cases successfully through the system.  You only have one shot at this so you need to make sure to give yourself the best possible chance of succeeding.

To find out more, visit the Association of Personal Insolvency Practitioners’ (APIP) website at: www.apip.ie or the Insolvency Service of Ireland’s (ISI) website: www.backontrack.ie.

Contact Mark Ryan, Cork APIP Member (PIP), Director at Quintas

Mark Ryan is authorised by the Insolvency Service of Ireland to carry on practice as a personal insolvency practitioner (PIP).

Quintas are currently running open information evenings on debt resolution. If you would like to avail of a FREE 1:1 appointment with Mark Ryan, the Quintas personal insolvency practitioner (PIP) contact us on 021 4641400 or email info@quintas.ie.