Change to debt relief regime raises ceiling to €35,000

People on low incomes are to have the amount of debt they can get written-off under insolvency rules increased to €35,000.

Justice Minister Frances Fitzgerald is to bring in changes increasing the ceiling on debt relief notices from €20,000.

The notices cover outstanding amounts owed on personal loans, credit, debit and store cards, credit union loans and bank overdrafts, and once approved by courts mean that people awarded them can no longer be contacted by creditors demanding that monies are repaid.

Change to debt relief regime raises ceiling to €35,000

The moves will also boost Insolvency Service powers, and increase regulation of practitioners. People who already have a restructured mortgage will also be able to apply for a personal insolvency arrangement.

Ms Fitzgerald said the changes were needed to improve the debt relief regime.

“Increasing the ceiling for a debt relief notice from €20,000 to €35,000 will help people to return to solvency who are on very low incomes, don’t own a property or any significant assets, and are weighed down by debts they have no prospect of being able to pay.

“I would encourage people in this situation to contact the Money Advice and Budgeting Services or the Insolvency Service,” she said.

“The intention is to bring the remaining provisions of the 2015 Act into effect as rapidly as possible, including in particular, the new court review where creditors reject a proposed personal insolvency arrangement which includes a mortgage holder’s home. Work is well advanced with the courts on putting in place the necessary changes to court rules, so that this can be done. Intensive work is also continuing across government departments and agencies on putting in place a full range of measures to strengthen supports for people in mortgage arrears on their home,” Ms Fitzgerald explained.

Director of the Insolvency Service of Ireland Lorcan O’Connor welcomed the changes.

Change to debt relief regime raises ceiling to €35,000

“The debt relief notice is intended for people with very limited means who are in genuine financial distress and we know from the hundreds of people who have availed of this debt solution already that it is life changing.

“I fully expect that the increase in the maximum debt limit to €35,000 will enable ISI to help many more people get back on track financially through our court backed solutions,” he said.

Opposition parties have branded the Government’s debt relief measures a flop.

Fianna Fáil and Sinn Féin have called for a radical overhaul of the insolvency regime as they say current arrangements leave the whip hand with lenders.

Fianna Fáil finance spokesperson Michael McGrath said the Insolvency Service was still far too limited to be effective.

“This will open up as situation where direct relief notices are secured by many more borrowers, but a much more fundamental shake-up of the service is needed.

“Many more people need to be able to avail of an insolvency practitioner. The system needs to be much more efficient and cost-effective if it is to be broadened out to reach the number of people in distress originally envisaged.

“Fianna Fáil is in favour of reducing the bankruptcy period to one year as that is the reality in the UK.

“Obviously, the system needs to be stringently checked, but bankruptcy is not an easy option,” he said.


Lifestyle

Some readers have been in touch about the movement of frogs, which is timely as these fascinating creatures now emerge from hibernation.Donal Hickey: Time for frog-spotting

A very short drive from Kinsale lies an island that is the international focal point for a tough breed of people.Islands of Ireland: In the swim of things at Sandy Cove Island

'Myrtle, your hair is on fire,' an alarmed guest exclaimed as Myrtle’s fringe went up in flames while she was enthusiastically flambéing crêpes beside their table.Darina Allen: The best recipes to get you ready for Pancake Tuesday

Paul McLauchlan meets Nicholas HoultThe kid from About A Boy is now the face of Armani

More From The Irish Examiner