PIA

How does a PIA work?

A Personal Insolvency Arrangement is a great solution if your finanical difficulties are mainly caused by mortgage arrears or unaffordable mortgage payments aswell as payments on loans and credit cards. The main purpose of a PIA is to allow you to regain control over your financial affairs in a way that is fair and realistic for you and your creditors, whilst allowing you to keep your home.

The first thing we do when you get in touch is have a chat to see what all of your options are to addressing your debts. We will analyse your living situation, your mortgage and your debts and work out what you can realistically afford to pay towards your debts and mortgage each month, after giving priority to your other living expenses.

What happens to my mortgage?

In order to reduce your monthly mortgage repayments your mortgage lender can agree to do one of or a combination of the following, depending on what your circumstances are:

Principal reduction (write off)
Interest rate reduction
Term Extension (Restructure / Warehouse / Split)
Fixed Payments
Interest only or Interest only Part Capital
Debt for equity swap
Mortgage to rent
Deferred payments
Capitalisation of arrears

On completion of the Personal Insolvency Arrangement, any potential negative equity is written off by the mortgage lender(s). There is a condition which will mean that should you subsequently sell your property in the future there may be a claw back on any written off amounts for the lesser of 20 years or the expiry of the mortgage term.

What happens to my unsecured debts?

You negotiate affordable lower monthly repayments towards your unsecured debts (credit cards, loans etc...) which usually last for the term of your Arrangement (72 months) or sometimes shorter depending on your circumstances. Interest and charges are frozen. On completion of the arrangement, any remaining unsecured debts are written off.

Need further information?

If you would like to find out more about a Personal Insolvency Arrangement or to find out what other options are available, fill in the form and one of our advisors will call you for a chat. At McCambridge Duffy, we offer free and confidential advice and we do not charge any upfront or consultation fees.

The process of a PIA

1. Get Advice

Contact us to discuss your situation. We will determine what your best option is for addressing your debts. All of advice is free and confidential.

2. Application

Our PIP submits your application to the ISI and court. If happy they will grant your protective certificate. Your PIP then drafts your proposal for your creditors.

3. Creditor Voting

Your proposal is sent to your creditors for voting. Atleast 65% of the creditors (50% of both secured and unsecured) must vote in favour of the proposal in order for it to be approved.

4. Case Approved

The ISI & court carry out a final review. Once approved your arrangement becomes legally binding and payments start. You will have a case manager for support.

5. Completion

When complete, you will be discharged from your unsecured debts. Any outstanding balances will be cleared and you can start over debt free. Depending on the terms of the PIA, you may be released from a secured debt or the secured debt may continue to be payable.

Example of a PIA

Client background

Below is an example of one our actual PIA cases. Our clients, a married couple with 3 children, ran into financial difficulty after going through a period of incapacity and unemployment. Contractual payments on their mortgage and other debts became difficult to manage during this time. Mortgage arrears started to build and they contacted us for advice. After assessing their situation, it was determined that a PIA might be a suitable option to help address their financial problems. After careful consideration they decided to proceed with a PIA. Their PIA was successfully approved. Below is a breakdown of how their PIA was structured.

PIA structure

Mortgage interest rate was reduced, lowering the monthly mortgage repayments to an affordable amount.
Mortgage balance was reduced. €165,647 debt was written off (on completion of the PIA).
Mortgage payments were reduced from €1,436/mo to €474/mo for the duration of the PIA (6 years). On completion, the mortgage payments will be set at €582/mo for the remainder of the mortgage term.
Monthly unsecured debt repayments were also lowered to an affordable amount for the duration of the PIA. On completion, any remaining debts will be written off (€82,900).

More PIA examples

Pros and cons of a PIA

Pros

You will have 1 affordable monthly payment based on what you can afford towards your Unsecured debts.

You can reduce your monthly mortgage payment to an affordable amount.

You have complete protection from your creditors.

Your home is protected in the arrangement.

We do not charge upfront fees.

Creditor pressure is stopped. Your creditors must deal with your PIP.

All interest and charges are frozen on your unsecured debts.

Any remaining unpaid debt in the arrangement will be written off on completion.

A PIA can be completed a lot sooner if you can gain access to a lump sum amount to be put towards the debt.

Cons

Your credit rating will be affected during the plan and further credit cannot be obtained while on the plan.

If you have a change in circumstances and your creditors do not agree to the amended terms, your PIA could fail.

If you fail to make payments on time or fall into arrears your PIA could fail.

Your PIA will be entered on a public register.

You can only do 1 PIA in your lifetime.

Download PIA Guide

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PIA FAQs

Below is a list of our most frequently asked questions relating to a Personal Insolvency Arrangement. If you have a question that isn't answered below click here and ask us a question on WhatsApp.

Who can do a PIA?

You can enter a Personal Insolvency Arrangement with your creditors when you are considered insolvent. You are considered insolvent when you are unable to pay your debts in full and as of when they fall due. You can be single, married, employed, self-employed, a homeowner or a tenant...

There are certain criteria involved in order to be elligible for a Personal Insolvency Arrangement, such as mortgage outstanding, mortgage amount, mortgage interest, debt level and number of creditors, but we can discuss this further when we chat. If a PIA is not suitable, we can recommend other various options for you to consider.

How are my payments calculated?

Your payments are calculated by analysing your income and expenses on a monthly basis (not including any debt or mortgage payments). We determine how much money you have left over to go towards your mortgage and your debts. The amount of that money that goes towards your mortgage and the amount of that money that goes towards your debts is entirely dependent on your mortgage situation and the amount of debt you owe.

What debts can be included?

The types of debts that can be included are

What debts can't be included unless you have creditor consent?

Taxes, duties, levies owed or payable to the state
Local Government charges
Amounts due to the Health Executive under the Nursing Home Support Scheme
Annual service charges to owner’s management companies ( Apartments and Housing estates)
Liabilities arising under the Social Welfare Consolidation Act 2005
Local Authority Rates
Household Charges

What debts cannot be included?

Family maintenance payments under court orders
Court fines in respect of criminal offences.
Liabilities arising out of injury or wrongful death claims awarded by the Court
Liabilities arising from loans obtained by Fraud

Do all my creditors have to agree to the proposal?

Not all of your creditors have to agree to your proposal in order for it to be approved. Atleast 65% of your total creditors (at least 50% secured and 50% unsecured) in terms of value must vote in favour of your proposal in order to make it binding on all of your creditors.

What are the criteria for a PIA?

You are considered suitable for a PIA if you meet the following conditions

You are insolvent and unable to pay your debts in full as they fall due.
You have debt owing to atleast 1 secured creditor.
Your total debts (including mortgage debt) is less than €3,000,000.
Your domicile must be in the Republic of Ireland or you must have, within the past year, ordinarily resided or had a place of business in the Republic of Ireland.
You have completed a prescribed financial statement (PFS) and signed the statutory declaration stating that it is both true and accurate.
You have obtained a statement from the Personal Insolvency Practitioner, that they are of the opinion that:

The information in the PFS is true and accurate.
You are eligible to make a proposal for a PIA; and
Having considered the PFS, they are of the opinion that you will not be solvent in the next 5 years.

Having considered all possible options, a PIA is the best solution for you and that there is reasonable prospect that you will become solvent upon completion.

What criteria might prevent me from getting a PIA?

You are not eligible to seek a PIA should the following requirements apply

You have incurred 25% or more of your unsecured debts within the past 6 months.
You have been subject of a Debt Relief Notice now, or within the past 3 years.
You must not be the subject of a Debt Settlement Arrangement now, or within the past 5 years.
You have been the subject of a PIA before.
You are currently bankrupt, subject to a bankruptcy measure or have been discharged from Bankruptcy in the past 5 years.
You have been the subject of Protective Certificate issued in respect of a PIA within the last year.

What happens when my PIA is in place?

Your lower repayments will commence. We will assign dedicated case managers who will look after you and your PIA for it's duration. Your case manager will be there to answer any queries you might have throughout the term of the PIA. When your PIA is complete you will be discharged from any outstanding balances on your unsecured debts. You may be released from your secured debts or you may continue to pay these, depending on the terms of the agreement.

How much does it cost to do a PIA with McCambridge Duffy?

Unlike most other Insolvency providers, we do not charge for our advice and we do not charge upfront fees as we believe this to be unethical. You will never receive a bill from us.

Only if your PIA is accepted will we receive any payments for fees for managing your case. If your PIA is not accepted then you pay nothing. Our fees vary depending on your circumstances and they are built into your affordable monthly payment to your creditors. All of this is clearly explained when you chat to us. It is your creditors who determine what we get paid and we cannot draw fees without their approval.