John Browne (Wexford, Fianna Fail)
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161. To ask the Minister for Justice and Equality regarding the Personal Insolvency Act 2012 and the Land and Conveyancing Law Reform Act 2013, her views on a situation where the owner of a principal private residence formulates a proposal to the lender without the help of a personal insolvency practitioner, PIP, if the lender is prohibited from requiring the debtor to dispose of an interest in, or cease to occupy, a principal private residence, as currently applies when the proposal is officially dealt with by a PIP; and if she will make a statement on the matter. [35240/15]

Frances Fitzgerald (Dublin Mid West, Fine Gael)
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I wish to clarify for the Deputy that the Land Conveyancing and Reform Act 2013 provides that in repossession proceedings involving a borrower's principal private residence, a court may, where it considers it appropriate or on application by a borrower, adjourn the proceedings to enable the borrower to explore whether a Personal Insolvency Arrangement (PIA) under the Personal Insolvency Act 2012 would enable him or her to resolve their financial difficulties otherwise than via repossession.

The intention of the legislation is that homeowners in mortgage arrears who are at risk of losing their homes should be aware of, and have an opportunity to access, the legally protected debt resolution arrangements available under the Personal Insolvency Act 2012, which may enable the borrower to remain in their home while resolving the debt in a sustainable manner. The Personal Insolvency Practitioner has important statutory responsibilities and duties under the 2012 Act, in examining a debtor’s financial situation, providing expert independent advice on available options, drawing up a proposal for a PIA, and negotiating it with creditors. The PIA itself is designed to provide a fair balance between the rights of creditors and of borrowers, and includes a number of important protections for the debtor, such as legal enforceability, statutory priority for protecting the debtor staying in the family home where that is possible, protection for reasonable living expenses, and, under the Personal Insolvency Amendment Act 2015, the option of seeking review by the courts if creditors refuse a reasonable proposal.

It is where a Personal Insolvency Arrangement has been approved by the courts and has entered into force, that a creditor is restrained by the Personal Insolvency Act from seeking to dispose of or take possession of, a property covered by the Arrangement.

It is of course always possible for the owner of a principal private residence to formulate a proposal to the lender outside the scope of the Personal Insolvency Acts, and without the help of a Personal Insolvency Practitioner, if they choose to do so. Such a proposal may come into effect if it is agreed between the parties. However, it does not provide the legal protection for the parties which applies under the 2012 Act.