People now able to agree write downs of mortgage debt

People now able to agree write downs of mortgage debt

People will now be in a position to try and write down some of their debt

The Government has confirmed that people will be able to agree deals to write down mortgage debt as part of personal insolvency arrangements.

Such deals, however, will require a majority of creditors such as banks agree to deals on a case-by-case basis. These would be non-judicial settlement arrangements.

People may be able to stay in homes under these personal insolvency arrangements.

Justice Minister Alan Shatter said this morning that the Government had approved the publication of the heads of the Personal Insolvency Bill.

“The Bill will radically reform our insolvency legislation by prescribing new mechanisms for non judicial debt settlement in the public interest, in the interest of both debtors and creditors and, in particular, will assist those in unexpected difficulties as a result of the current fiscal, economic and employment conditions,” the Minister said.

The Minister said that the proposals for the reform of personal insolvency law will involve the introduction of the following new non-judicial debt settlement systems, subject to relevant conditions in each case:

  • A Debt Relief Certificate to allow for the full write-off of qualifying unsecured debt up to €20,000, after a one-year moratorium period;
  • A Debt Settlement Arrangement for the agreed settlement of unsecured debt of €20,001 and over;
  • A Personal Insolvency Arrangement for the agreed settlement of both secured and unsecured debt of €20,001 and over.

The Minister said that he will also continue the reform of the Bankruptcy Act 1988, begun in the Civil Law (miscellaneous Provisions) Act 2011. This will include, critically, the introduction of automatic discharge from bankruptcy, subject to certain conditions, after 3 years in place of the current 12 years.

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