Excluded And Excludable Debts In A Personal Insolvency Arrangement
Debts can be made up of a considerable number of different things, from the straight balances on credit cards and overdrafts, to arrears on utility bills, hire purchase agreements and fines from court orders.
While the term debt management solution is often used to describe a PIA, it hides the fact that not all debts can be included in a PIA under the Personal Insolvency Act 2012. Certain types of debt cannot be included in a PIA under any circumstances, and these are called excludable debts. On the other hand some are only included if the creditor agrees, and if they do not they are excluded (excludable).
Generally, excludable and excluded debts are those where the State is considered the lender or where a debt is considered owned by the State.
Generally these debts are incurred by a court case that has been brought or the courts have issued a judgment. The State considers these to be appropriate payments to fulfill your obligations for what you owe. These include;
- Family law orders (e.g. maintenance orders)
- Court awards for personal injury and death
- Loans obtained through fraud or wrongdoing
- Fines or court orders imposed for criminal offences
Usually these are owned by the State i.e. the State is the lender, and whether or not they can be included is considered on a case-by-case basis. Debts that are excludable include:
- Taxes, duties, charges or levies owed to the State (VAT, capital gains, household charge etc)
- Any monies owed under the Nursing Homes Support Scheme
- Local authority services charges
- Anything owed to the Department of Social Protection
There is also one debt within this category that can be included which is not a State-owned debt, and that is any debts or arrears owed to management companies for annual service charges or other payments for multi-unit developments.
So, what about the debts that are definitely included in a PIA? These include:
- Mortgage arrears on your main home
- Mortgage arrears on any buy-to-let properties you own
- Personal guarantees*
- Unsecured loans
- Credit union loans
- Business/commercial loans
- Credit cards
- Store cards
- HP loans
- Car leasing loans
- Irish tax or customs payments, both preferential and unsecured
- Household utility arrears**
*Personal guarantees can only be included if the debt is due. If it has not due yet it must be left alone and dealt with when and if it does become due.
**Unlike many personal insolvency debt management solutions in other countries in the UK, arrears arising from household bills were not included on the list of permitted debts when the new law was written. The Insolvency Service of Ireland however has stated that the list of permitted debts is not exhaustive. As utility arrears are unsecured debts there does not appear to be a good reason why they cannot be included, however it would be important to take advice from a qualified professional advisor on this.
While PIAs may at first seem like an ideal way of managing all of your secured and unsecured debts once and for all, the reality is that only some debts can be included in your PIA. For more information on which of your debts could be included call one of our PIA advisers now on 0800 193 1024.