Insolvency legislation useless without creditors’ goodwill
The legislation represents a very significant reform and modernisation of Irish personal insolvency law by putting in place a significant legal framework to deal with over-indebtedness. It was designed primarily to alleviate the enormous financial burden affecting large numbers of Irish people who became significantly over-indebted in the boom years. The legislation aims at providing a rebalancing of interest between lenders and borrowers. The Personal Insolvency Act is closely aligned to similar insolvency legislation which has been operating successfully in jurisdictions such as Britain and Canada.
However, in this jurisdiction, the over-indebtedness problem is related almost exclusively to property debt, which is not the case in other jurisdictions. Both personal insolvency arrangements (PIA) and debt settlement arrangements (DSA) offer financially distressed debtors options, other than bankruptcy, to tackle their debt problems while also ensuring that creditors, both secured and unsecured, are closely involved in the process and are achieving a better result than they would get in a bankruptcy scenario.
