The Personal Insolvency Act 2012 is a very complicated piece of legislation, akin to a fine Swiss watch: a small grain of sand can bring it to a stop. What we really needed was a robust piece of legislation akin to an AK47, one that was robust and easy to work with.
The UK system of Individual Voluntary Arrangements is a robust system and easy to work with (the UK IVA is their equivalent to the PIA). One of the reasons why the UK system of Individual Voluntary Arrangements work so well- over 50,000 IVA's a year, is that the UK creditors recognise that under a UK bankruptcy the maximum income payment they may get from debtors is just 3 years, compared with 5 years in Ireland.
Learning from the UK experience, it is clear that if the Income Payments Order in the Irish bankruptcy regime was changed from 5 years to 3 years, that banks would be much more receptive to a 5 year payment plan under a PIA. At the moment, Irish banks are not too fussed if someone self adjudicates for bankruptcy, particularly if they have a well paid job, as the Official Assignee will make an Income Payments Order for 5 years, and pay over the proceeds to the banks.
If the Government really wants to implement debt resolution, then they should amend the legislation to reduce the Income Payments Order in a bankruptcy to 3 years, instead of the current 5 years.
Having said the above, has the Personal Insolvency act 2012 been successful? The establishment of the Reasonable Living Expenses guidelines have been a great success. The days of arguing with banks whether debtors were allowed sports packages on their TV subscriptions are over etc. Whilst the formal take up of the arrangements have been low, the fact of the matter is that the legislation has encouraged most of the banks to agree informal arrangements and participate in debt forgiveness. Some PIPs are now doing up to 95% of their cases as informal cases, as they are more flexible etc.
Jim Stafford