Q. My ex-wife and I got divorced last year and as part of the divorce settlement I have to pay family maintenance payments to support our children. My employer was forced to close down as a result of the Covid-19 crisis, so I'm now out of work. My employer may never reopen. I'm struggling to get by financially and can't afford the maintenance payments. What can I do here? Danny, Co Louth
A. Firstly, you need to communicate the new circumstances to your ex-wife so she is aware of the situation. You then need to assess if your lay-off is going to be permanent. If it is, assess if you will be entitled to a lump sum redundancy payment. Such a lump sum may enable you to continue paying maintenance until you obtain new employment.
Some divorces can be very bitter and your ex may believe you have orchestrated your lay-off. In such circumstances, clear and transparent communication is essential, in order to avoid your ex going off to court to seek an attachment of earnings.
Secondly, if you think your employer is not going to reopen, consider what your own employment prospects will be. You may need to consider options such as retraining or moving to a different region to find work.
PIA payment break
Q. My wife and I managed to negotiate a personal insolvency arrangement (PIA) last year after running into problems repaying the mortgage on our family home as well as with other debts. Thankfully, we managed to hold onto our home. However, my wife and I lost our jobs very shortly after the coronavirus crisis kicked off here. We're now struggling to pay for anything apart from the basics - groceries, utility bills and so on - and simply can't afford to meet the repayments on our PIA for the foreseeable future. Could we now lose our home? Could our PIA repayments be frozen until the Covid-19 crisis passes here? Declan, Co Dublin
A. Payment breaks were not specified in the personal insolvency legislation but are a product of a 'protocol document' approved by the banks and personal insolvency practitioners (PIPs) in July 2016 and is binding on all parties.
There are two forms of payment break envisaged. The first is a payment break from the debtors' obligations to payments to the PIP for unsecured dividend purposes. This would include money owed on unsecured borrowings such as bank overdrafts. Such a payment break can be granted by the PIP at his or her discretion.
The second is a payment break from secured debt payment obligations. In respect of mortgage obligations for a principal private residence, such a payment break can only be granted with the express written consent of the first priority secured creditor, generally the lender who offered the first mortgage on the family home.
The standard PIA usually stipulates that a payment break may be no fewer than two months and no more than four months on each occasion - with an overall maximum of 12 months during the term of the PIA. You should consult with your PIP to confirm that your PIA allows such a payment break.
Following the banks' recent announcement of a three-month moratorium on mortgage payments - which was recently extended by a further three months - it was agreed between the PIPs and the banks that debtors within a PIA would be required to utilise the payment break mechanism provided for in the agreed protocol document.
Any payment break on mortgage debt will result in the Covid-19 shortfall on the mortgage account balance (resulting from the payment break period) being recapitalised at the end of the PIA - with an adjustment on the remaining monthly repayments to repay the full mortgage within the normal term, where possible.
Some secured creditors will apply an extension to the loan term, owing to the set-up of secured creditors' systems and this will be worked out on a bilateral basis, as is usual practice, with the relevant creditor. This will not impact the term of the PIA.
Your PIP should forward a request to the secured creditor for a secured debt payment break with the necessary information. It has been agreed with banks that they will not unreasonably refuse a payment break.
If the payment breaks provided in your PIA are not sufficient for your needs, then you will need to instruct your PIP to seek a variation to the PIA. Any proposed variation would involve a re-drafting of your PIA and must be voted in by your creditors at a creditors' meeting.
Bankruptcy and Covid
Q. I was declared bankrupt last year. Until recently, I was well able to honour my bankruptcy order payments. However, I had to take a huge pay cut as result of the Covid-19 crisis and I'm now struggling to meet my bankruptcy order payments. What kind of repercussions could I face if I miss those payments now? Could I take out a loan - if I could get one - to cover the cost of those bankruptcy order payments? I was hoping to be discharged from bankruptcy later this year. Tom, Co Meath
A. As you know, your bankruptcy is overseen by the Official Assignee (OA). You should immediately notify the OA of your pay cut, and he will carry out a reasonable assessment to determine if you are able to continue complying with the payment order. If you are financially unable to keep up the payments, he will accept the position. It will not be necessary for you to borrow any money to keep up the payments.
If your pay is reinstated before the end of your one-year bankruptcy period, the OA will oblige you to continue making the payments up to a maximum period of three years.
Provided you fully co-operate with the OA, he should have no reason to delay your discharge from bankruptcy.
Vat payment worries
Q. I'm self-employed and pay my Vat every four months. I've run into cash-flow difficulties as a result of the Covid-19 crisis and will struggle to pay Vat for the first four months of 2020. Will I face penalties if I'm late paying Vat? Sarah, Co Galway
A. The Revenue Commissioners has adopted a very reasonable approach to assist businesses to deal with the Covid-19 crisis.
As part of a range of measures it has introduced, it has agreed not to charge interest on late payment of Vat for the period January to April 2020. Any non-payment of Vat for that period will not affect your current tax clearance status. While you do not have to pay the Vat liabilities for the time being, you should file your Vat return on time.
Jim Stafford is a PIP with Friel Stafford ( www.frielstafford.ie)
Email your questions to firstname.lastname@example.org or write to 'Your Questions, Sunday Independent Business, 27-32 Talbot Street, Dublin 1'.
While we will endeavour to place your questions with the most appropriate expert for your query, this column is not intended to replace professional advice.