What types of debts are covered by The Personal Insolvency Act 2012 : Excluded Debts and Excludable Debts

Insolvency

The Personal Insolvency Act 2012 has introduced three new insolvency procedures to enable individuals to resolve their debt issues. These procedures are Debt Relief Notices, Debt Settlement Arrangements and Personal Insolvency Arrangements.

Different eligibility criteria apply to each of the procedures and each one covers differing amounts and types of debt. In addition certain types of debt are “excluded” from the procedures and other debts are “excludable”. In determining whether or not one of these procedures is suitable for you, it is important to understand what debts may be included in these procedures and what debts are “excluded” or “excludable”.

Debt Relief Notices deal with debts that amount to €20,000 or less. The types of debts which may be included are

- credit card debt;

- an overdraft or an unsecured loan from a bank or other entity regulated by the Central Bank of Ireland;

- rent, utilities or telephone;

- debts incurred as surety for another person, such as a guarantee that has been called up;

Debt Relief Notices may also include a secured debt.

Debt Settlement Arrangements deal with unsecured debts. There is no cap on the maximum amount of unsecured debt that may be dealt with in a Debt Settlement Arrangement.

Personal Insolvency Arrangements deal with both secured and unsecured debt where the secured debt is greater than €20,001 to an upper limit of €3,000,000. However the upper limit of €3,000,000 can be waived where the secured creditors agree.

However when considering if one of the procedures is suitable you should be aware that certain debts are “excluded” from the procedures and other debts are “excludable”. An “Excluded Debt” is a debt that cannot be included in any of the procedures. An “Excluded Debt” means any of the following

(a) any liability arising out of a domestic support order such as maintenance;

(b) any liability arising out of damages awarded by a court in respect of personal injuries or wrongful death arising from the tort of the debtor;

(c) any debt or liability arising from a loan obtained through fraud, misappropriation, embezzlement or fraudulent breach of trust;

(d) any debt or liability arising by virtue of a court order made under the Proceeds of Crime Acts 1996 and 2005 or by virtue of a fine ordered to be paid by a court in respect of a criminal offence;

The position with “excluded debts” is that you will remain liable for these debts and they will not be written down as part of the insolvency procedure.

“Excludable” debts can only be included in the insolvency procedure where the person to whom the debt is owed either consents to its inclusion or is deemed to have consented. “Excludable Debt” means any of the following:

(a) any liability arising out of any tax, duty, levy or other charge of a similar nature owed or payable to the State;

(b) any amount under the Local Government (Charges) Act 2009;

(c) any amount under the Local Government (Household Charge) Act 2011;

(d) any liability arising out of any rates due to the local authority (within the meaning of the Local Government Act 2001);

(e) any debt or liability in respect of moneys advanced by the Health Service Executive under the Nursing Homes Support Scheme Act 2009;

(f) any debt due to any owners’ management company pursuant to the Multi-Unit Developments Act 2011;

(g) any debt or liability arising under the Social Welfare Consolidation Act 2005;

An “excludable debt” may be included in the insolvency procedure where the creditor either consents to its inclusion or where the creditor is deemed to have consented to its inclusion. A creditor is deemed to have consented where the creditor has been written to in relation to the inclusion of the excludable debt and the creditor has not responded. Where a creditor has consented or is deemed to have consented to the inclusion of the “excludable debt”, the debt becomes a “permitted debt”.

The position with “excludable debts” where the creditor has not consented to their inclusion is that you will remain liable for these debts and they will not be written down as part of the insolvency procedure.

Norma Lane is a solicitor practising in the Commercial Department of FitzGerald Solicitors. Norma is a qualified Personal Insolvency Practicioner.

FacebookEmailLinkedInGoogle+Twitter

Leave a reply