Revealed: Personal Insolvency Bill allowing bankruptcy to drop to 3 years
THE Government has published legislation that will allow people to get some of their debts written off in new out-of-court processes.
And the legislation reduces the period of bankruptcy to three years from 12.
Under the terms of the EU-IMF bailout, the Government is required to introduce new measures dealing with personal and mortgage debt.
The Minister for Justice heralded the new legislation as a significant reform of the insolvency regime, which allows for more flexible ways of dealing with people with unsustainable debts and mortgages.
Among the measures are a debt relief notice which would allow for the write-off of unsecured debt up to €20,000, a debt settlement arrangement for the agreed settlement of unsecured debt over five years and a personal insolvency arrangement for the agreed settlement of secured debt up to €3m.
Creditors that control 65pc of the debts will have to agree to any write off proposal. This is down from 75pc, which was originally propsed.
But the Minister notes that the Bill does not provide for an automatic writing off of negative equity and he said that where someone is in a position to service their mortgage they must continue to do so.