The Irish Approach If You Are Unable To Pay Or Won’t Pay
The Law Reform Commission of Ireland has just published a remarkable consultation paper on personal debt and makes many recommendations for urgent changes to insolvency law in Ireland to bring it into line with most other EU countries. The European Commission is also putting pressure on the Irish Government to deal with the issue.
The paper looks closely at the key issue of ability to pay and recommends that the treatment of those who can’t pay should be in stark contrast to the treatment of those who can pay but won’t. Those who can’t pay personal debts should not go to prison but the Commission states that such legal sanctions should be retained for those who can pay but refuse to do so.
Among the key recommendations made are the following:
1- Bankruptcy Act 1988 should be significantly amended to provide an adequate and effective system. The Commission however states that making detailed recommendations for a new bankruptcy law is beyond the scope of the consultation paper.
2- New Irish Laws should be enacted to provide for a non-judicial Debt Settlement System, which would be favoured over court-based personal insolvency proceedings. Such a Debt Settlement Scheme would be binding in law on all creditors, if accepted by a majority of creditors.
3- Only insolvent debtors would be permitted to participate in the scheme. Insolvency would be defined as inability to meet debts as they fall due and this condition would have to be likely to continue over a significant period of time i.e. not a ‘snapshot’ condition.
4- Insolvent debtors should not be excluded from the scheme due to excessive costs.
5- The scheme would not exclude those with no income and no assets and it should be possible for a debtor making ‘zero payments’ to be accommodated.
6- Repayment plans under the scheme should allow debtors to retain sufficient income to provide a reasonable standard of living for themselves and their families.
7- The repayment timeframe should be between three and five years after which the debtor would be ‘debt-free’.
The Commission examines the whole area of Debt Management Plans (DMPs) and Individual Voluntary Arrangements (ivas) and their proposed ‘Debt Settlement System’ is remarkably similar in many respects to how IVAs are currently administered in the UK. The commission invites submissions across the whole range of its provisional recommendations in all areas of personal insolvency.
National Debt Relief belong to a firm of leading chartered accountants who are one of the largest insolvency practices in the UK. We offer a complete portfolio of personal insolvency services in relation to IVA, DMP and Bankruptcy. All our debt advice is free, confidential and with no obligation. And it does not entitle any upfront charges for any advice.
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