How a PIA Works
Because of its legal nature, a PIA is slightly more complicated and takes longer for the professionals and legal system to arrange than some other debt management solutions. However, once in place it is legally binding and no creditor can touch you.
This is how the process of applying for a PIA works.
You know you’re in financial trouble, but you don’t realise just how much until one day you simply cannot make repayments on your debts when they fall due. Getting to this point could take many years, or a matter of a few months, however whenever it happens you are considered to be insolvent. You may even struggle on for a while in arrears until your creditors force the issue of payment by trying to take legal action.
From here on in you need professional help if you are to stop your creditors taking action against you (if they haven’t already). If you think you are a candidate for a PIA, you will need a Personal Insolvency Practitioner (or sometimes a representative or the Money and Budgeting Service (MABS)) to look into your current situation and decide whether you are a match. A PIA can only be taken out once in your life under the current rules so it must be absolutely right for your current circumstances.
You will be asked by the PIP to complete a financial questionnaire, usually at home although you will have to provide them with the supporting documentation during a face-to-face meeting to prove your financial situation. At this point you PIP will tell you if you are a candidate for a PIA or whether another debt management solution would be better, such as a Debt Settlement Agreement (DSA).
There’s a lot of paperwork involved in applying for a PIA. Most of it is completed by your PIP, while some of it completed by you with assistance from them. These include various forms of consent to confirm the accuracy and honesty of the information you have provided and allow your PIP to disclose your information to the Insolvency Service of Ireland (ISI). One form, a statutory declaration, will have to be signed in the presence of an authorised person, such as a solicitor.
Once all the paperwork has been completed and witnessed as appropriate everything is then sent off to the ISI.
The ISI will take all the paperwork sent to them by your PIP, make the necessary checks of the data, and then approve the application to go forward by issuing a Protective Certificate. At this point the ISI may ask for more information. Once it is satisfied with all the information provided, your application plus the Protective Certificate is then sent to the Circuit Court for assessment and, if approved, issuing. You are then entered onto a register.
Once the Circuit Court has approved and issued your Protective Certificate, your PIP has 70 days to draft up your PIA proposal. In doing this they will contact your mortgage or other loans provider if you have secured debt on your property to find out how they would like the debt dealt with. In the case of the mortgage provider they will also ask them to provide a market valuation.
Your PIP will contact all your creditors and put forward your PIA proposal, including all the supporting documentation. A vote will take place based on a majority vote on three aspects of the debts owed; a) the outstanding debt (65% vote) b) secured debts (50% vote) and c) unsecured debt (50% vote). All three thresholds have to met for the PIA to go forward.
Your creditors are happy with the amounts being proposed to pay them throughout the duration of the PIA and a majority vote is reached on all three aspects of your debt. All the paperwork is sent to the ISI and then onto the Circuit Court for its final approval and it is entered onto the Personal Insolvency Arrangements Register.
Your PIP helps you set up the necessary payment schedule through your bank to ensure a payment goes across to them every month. They then distribute the payment to your creditors according to the terms of your PIA.
For the six years that follow you make one monthly payment to your PIP and they do the rest. Once a year you will have an annual review of your finances to take account of any variations in income or additional money that you received over and above your normal income.
For six years, through thick and thin, you’ve paid your PIP the amount laid down in your agreement and have fulfilled all of your duties and obligations. Your completed PIA is recorded on the Personal Insolvency Arrangement Register by the ISI and you are discharged from your unsecured debts. If you have any secured debts, you are discharged only from those stipulated in the agreement and to the extent agreed by your creditors.
Now go out and celebrate – you’re debt-free!
For more information on how a PIA could be used to work under your financial circumstances, call one of our experienced PIA advisors now on 0800 193 1024