That the Minister for Justice and Equality comes into the House to explain why an upfront fee of €500 is payable for a Protective Certificate to commence a Personal Insolvency Arrangement
- Senator Jimmy Harte
Opening Statement
I thank Senator Harte for raising this issue.
The Personal Insolvency Act 2012, as amended, introduced three new debt relief solutions.
The first arrangement is called a Debt Relief Notice and it will allow for the write of qualifying debt up to a value of €20,000, subject to a three year supervision period.
The second arrangement introduced by the new Act is the Debt Settlement Arrangement which provides for the agreed settlement of unsecured debt with no limits involved over a period normally expected to be 5 years.
The third and final arrangement, the Personal Insolvency Arrangement will facilitate the restructuring or settlement of secured debt of up to €3m, a cap that can be increased with the consent of all secured creditors, and the settlement of unsecured debts without limit, over a period normally expected to be 6 years.
The application fees prescribed by the Insolvency Service of Ireland (ISI) for the three new debt solutions are set out in the Personal Insolvency Act 2012 (Prescribed Fees) Regulations 2013 (S.I. No. 329 of 2013) and are as follows:
· Application for a Debt Relief Notice, €100
· Application for a Protective Certificate (Debt Settlement Arrangement), €250
· Applications for a Protective Certificate (Personal Insolvency Arrangement), €500.
The fee is to be paid at the point when an application is being made on a debtor’s behalf by a Personal Insolvency Practitioner (or by an Approved Intermediary in the case of a Debt Relief Notice). The fee is paid by the debtor as part of the application process.
I am advised that the fees being applied by the Insolvency Service of Ireland are a contribution towards the cost of providing an insolvency service, are considered fair and reasonable and are in line or below the comparable fees applied by insolvency services in other jurisdictions.
Part of the prescribed fee will be paid to the Courts Service as a contribution towards the legal costs relating to each insolvency application. The remainder of the prescribed fee will make a contribution towards the running and administrative costs of the Insolvency Service of Ireland.
It should be noted that the fee in each instance represents only a small fraction of the debt that may be written off for each successful applicant. For example, up to €20,000 of qualifying debt could be written off for someone applying for a Debt Relief Notice where the application fee is €100, assuming that they fulfil all of the relevant eligibility criteria.
It might also be noted that Approved Intermediaries will not charge a fee in respect of assisting an applicant in applying for a Debt Relief Notice.
Payments to Personal Insolvency Practitioners
I would also like to briefly refer to the matter of fees payable to Personal Insolvency Practitioners which has been the subject of some media commentary. Personal Insolvency Practitioner (PIP) fees associated with the development of Debt Settlement Arrangements and Personal Insolvency Arrangements will likely be negotiated with an insolvent debtor by the PIP in advance of a case proceeding. Payments to PIPs ultimately are likely to be a charge on creditors as they will reduce the amount available for repayment. Thus, the arrangement put forward to creditors for agreement at the creditors meeting would normally be expected to include details of the PIP’s fees. It will then be a matter for creditors to decide whether these are acceptable or not and they may seek to negotiate to reduce them.
Any other fee arrangements that might arise are matters to be agreed between the individual debtor and their PIP.
I understand that a number of practitioners and prospective practitioners have indicate that they will not charge an upfront fee for an initial consultation.
As I have already indicated, it is not within the remit of the Insolvency Service of Ireland to set the fees of Personal Insolvency Practitioners. This is a matter for both parties to agree.