Mary Wilson (reading a listener email): What happens to my home if I enter into a PIA?
Jim Stafford: Well, under the legislation the PIP is to try and keep the family in their family home if at all possible. The PIP will have to assess the existing mortgage on the family home, if it's a modest house, if it's a trophy house.
In practice, the PIP will also have to assess the type of house that might be needed for a professional person such as a solicitor, accountant or a hospital consultant as opposed to a house that's needed by someone who is in the PAYE sector for example, so that, as a PIP, I would be making a very strong case, for example, that a solicitor should have a bigger house that accords with his professional status in society so that his neighbours and clients can see that, yes, this person is a good solicitor who's is living in a good house etc. etc.
MW: Really?
JS: Absolutely. The same as for hospital consultants, people like that
MW: Despite the fact that he's insolvent?
JS: Despite the fact that he's insolvent, because remember, if we want the solicitor to continue to earn money or the accountant or the hospital consultant it's important that he has his tools of trade for example
MW: Well, he may need an office, but he hardly needs a palatial house in South County Dublin
JS: Believe me, the clients who we have on our books are insisting they continue to stay in their palatial houses, now, it's possible that some of them might have to down trade, but that all goes into the pot and at the end of the day the banks, the creditors have to agree to that process.
.the PIP will also have to assess the type of house that might be needed for a professional person such as a solicitor, accountant or a hospital consultant as opposed to a house that's needed by someone who is in the PAYE sector for example, so that, as a PIP, I would be making a very strong case, for example, that a solicitor should have a bigger house that accords with his professional status in society so that his neighbours and clients can see that, yes, this person is a good solicitor who's is living in a good house etc. etc
I got the impression from the now famous interview that a PAYE person shouldn't be a neighbour to the accountant in the first place.while his "superior" accountant (or similar) neighbour should be allowed to keep his
As a Personal Insolvency Practitioner, I would just like to say that Jim Stafford's views on trophy houses for professionals is not the same as mine or of other PIPs that I am in contact with.
I would very much welcome Jim Stafford's clarification on this issue. I can only assume that it was a slip up from someone not so familiar with live radio.
Jim has been a member of the Chartered Accountants Ireland Ethics Committee for the past ten years, being the sole representative of Insolvency Practitioners.
I am an accountant and I live in a duplex apartment.
Personal Insolvency Practitioners are obliged to comply with the Personal Insolvency Act 2012. Section 104 of the Act states that a PIP shall "insofar as reasonably practicable" formulate a proposal that does not require the debtor to vacate his family home. In formulating such a proposal, the PIP shall consider factors such as the cost of the house, the debtors income etc.
104.— (1) In formulating a proposal for a Personal Insolvency Arrangement a personal insolvency practitioner shall, insofar as reasonably practicable, and having regard to the matters referred to in subsection (2), formulate the proposal on terms that will not require the debtor to—
(a) dispose of an interest in, or
(b) cease to occupy,
all or a part of his or her principal private residence and the personal insolvency practitioner shall consider any appropriate alternatives.
(2) The matters referred to in subsection (1) are—
(a) the costs likely to be incurred by the debtor by remaining in occupation of his or her principal private residence (including rent, mortgage loan repayments, insurance payments, owners’ management company service charges and contributions, taxes or other charges relating to ownership or occupation of the property imposed by or under statute, and necessary maintenance in respect of the principal private residence),
(b) the debtor’s income and other financial circumstances as disclosed in the Prescribed Financial Statement,
(c) the ability of other persons residing with the debtor in the principal private residence to contribute to the costs referred to in subsection (2), and
(d) the reasonable living accommodation needs of the debtor and his or her dependants and having regard to those needs the cost of alternative accommodation (including the costs which would necessarily be incurred in obtaining such accommodation).
(3) Where—
(a) the debtor confirms in writing to the personal insolvency practitioner that the debtor does not wish to remain in occupation of his or her principal private residence, or
(b) the personal insolvency practitioner, has, having discussed the issue with the debtor, formed the opinion that, taking account of the matters referred to in subsection (2), the costs of continuing to reside in the debtor’s principal private residence are disproportionately large,
the personal insolvency practitioner shall not be required to formulate the proposal for a Personal Insolvency Arrangement on terms that will not require the debtor to cease to occupy his or her principal private residence.
(4) A Personal Insolvency Arrangement shall not contain terms providing for a disposal of the debtor’s interest in the principal private residence unless—
(a) the debtor has obtained independent legal advice in relation to such disposal or, having been advised by the personal insolvency practitioner to obtain such legal advice, has declined to do so, and
(b) to the extent that the provisions of the Family Home Protection Act 1976 or the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 apply to the property, all relevant provisions of those Acts are complied with.
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