Urgent new legislation planned to help people in arrears
AN URGENT bill is expected to be brought forward to ensure thousands of homeowners who fall into arrears due to the Covid-19 crisis are not shut out of applying for debt deals.
Current legislation governing personal insolvency arrangements (PIAs) requires debtors to have been in arrears on January 1, 2015.
The mechanism has been used by a growing number of homeowners in recent years to get a write down of their debts while holding on to the family home.
It has allowed them to ask a court to review their PIA proposals when it has been resisted by creditors.
But the legislation was designed to deal with the fall-out from the last financial crisis a decade ago and cannot currently be used by people affected by Covid-19.
There are fears a spike in possession proceedings will be seen when the banks eventually stop providing coronavirus-related payment breaks.
In response to a parliamentary question from Social Democrats TD Cian O’Callaghan, Justice Minister Charlie Flanagan said, subject to government formation, he intended to bring forward a short urgent bill for Government approval in order to make any necessary amendments as soon as possible.
While he did not spell out the amendments in his response, sources said it was intended to address the PIA issue.
A major statutory review of the Personal Insolvency Acts is also under way, with a report due to be completed by September. This is expected to deal with a range of other potential reforms.
Mr Flanagan said it would take full account of the significant economic effects of the Covid-19 outbreak.
Mr O’Callaghan said it was crucial mistakes from the last crisis were not repeated and that a range of measures to deal with mortgage arrears would be needed.