Personal Insolvency Arrangement (PIA)
|Level / Type of Debt||Income||Assets||Required Intermediary|
|PIA||Secured* and unsecured||No Max||No Max||Personal Insolvency Practitioner|
*Subject to a cap of 3 million, unless creditors consent to a higher level.
The Act makes provision for a new insolvency procedure called a Personal Insolvency Arrangement (PIA). A PIA can be entered into between a debtor and one or more of his/her creditors.
A PIA can include secured and unsecured debts, but certain debts cannot be included in a PIA and certain other debts require the consent of the creditor prior to being included.
A limit of €3m applies to the amount of secured debt that can be included in a PIA, unless all secured creditors consent to the inclusion of a higher amount.
The PIA differs from a Debt Settlement Arrangement (DSA) as it includes secured debt. Secured debt is a debt backed or secured by an asset (e.g. a housing loan where a house is mortgaged to secure the loan debt).
A PIA must be agreed by the debtor and approved at a creditors’ meeting by a qualified majority of creditors. In addition it must be processed by the ISI and approved by the Court.
Under a PIA, a debtor’s unsecured debts will be settled over a period of up to 6 years (extendable to 7 years in certain circumstances) and the debtor will be released from those unsecured debts at the end of that period.
Secured debts can be restructured under a PIA (e.g. to provide for payments for a certain period or a write-down of a portion of negative equity). Depending on the terms of the PIA, the debtor may be released from a secured debt at the end of PIA period or the secured debt can continue to be payable by the debtor (although perhaps on restructured terms).
A comprehensive guide is available for download here