Court review of rejected personal insolvency proposals introduced

The remaining provisions of the Personal Insolvency (Amendment) Act 2015 come into force in Ireland today, including the new court review where a mortgage lender rejects the borrower’s personal insolvency proposal.

Justice Minister Frances Fitzgerald yesterday signed the commencement order for the remainder of the law.

Under the new law, a borrower can apply for review by the courts if creditors such as the mortgage lender refuse the borrower’s proposal for a Personal Insolvency Arrangement to deal with unsustainable debts which include the mortgage on their home.

The court can examine the proposal refused by the creditors, subject to certain conditions, and if it considers the proposal fair and sustainable, using the tests set down in the legislation, will have power to impose the proposal on the creditors who voted against it.

Ms Fitzgerald said: “The Courts’ new power to review a Personal Insolvency proposal rejected by creditors is a very significant milestone in the development of Ireland’s insolvency regime. It’s an important reform to protect mortgage holders in distress, and is a key element of the Government’s Action Framework to strengthen support for those in mortgage arrears, which we announced on 13 May.”

She added: “From this Friday, for the first time, a borrower who is trying to engage with resolving their debts will not have reached the end of the road if creditors vote against their insolvency proposal.

“The new Court review introduces an independent oversight mechanism to ensure that the right balance is struck between the interests of mortgage lenders and other creditors, and the interests of borrowers who want to work their way out of debt sustainably with a view to keeping their homes. It will make sure that this balance is fair, and is seen to be fair.”

The Government is hoping to see a substantial increase in the overall number of Personal Insolvency Arrangements (PIAs) reached under the personal insolvency legislation.