DSA Course
Personal Insolvency Act 2012
Debt Settlement Arrangement: Calling of creditors’ meeting.
70.— (1) Where a personal insolvency practitioner has prepared a proposal for a Debt Settlement Arrangement and the debtor has consented to that proposal and the calling of a creditors’ meeting, the personal insolvency practitioner shall arrange for the holding of a meeting of the creditors of the debtor for the purpose of considering the proposal for a Debt Settlement Arrangement.
(2) When calling a creditors’ meeting under this section, the personal insolvency practitioner shall do so in accordance with any regulations under section 74 and, in any case, shall—
(a) give each creditor at least 14 days written notice of the meeting and the date on which, and time and place at which, the meeting will be held,
(b) ensure that the notice referred to in paragraph (a) is accompanied by a copy of each of the documents referred to in section 71 , and
(c) lodge a copy of the notice referred to in paragraph (a) and the documents referred to in section 71 with the Insolvency Service.
(3) Where a creditors’ meeting referred to in subsection (1) does not take place before the expiry of the protective certificate, the Debt Settlement Arrangement procedure shall be deemed to have come to an end.
Debt Settlement Arrangement: Documents to be given to creditors and the Insolvency Service when calling a creditors’ meeting.
71.— (1) The documents referred to in section 70 (2)(b) are—
(a) a completed statement of the debtor’s financial affairs, showing the debtor’s position of insolvency, in the form of the Prescribed Financial Statement;
(b) a document containing the terms of the proposal for a Debt Settlement Arrangement;
(c) a statement by the personal insolvency practitioner to the effect that—
(i) he or she has been instructed by the debtor to act as personal insolvency practitioner in connection with the Debt Settlement Arrangement procedure, he or she has consented to so act and that he or she is a person entitled to act as a personal insolvency practitioner,
(ii) he or she has advised the debtor in accordance with section 52 of the debtor’s options for managing the debtor’s financial difficulties,
(iii) he or she is not aware of any reasonable grounds to believe that the information contained in the debtor’s Prescribed Financial Statement is not complete and accurate, and
(iv) he or she is of the opinion that the debtor satisfies the eligibility criteria for the proposal of a Debt Settlement Arrangement specified in section 57 ;
(d) a report of the personal insolvency practitioner—
(i) describing the outcome for creditors and, having regard to the financial circumstances of the debtor, whether or not the proposed Debt Settlement Arrangement represents a fair outcome for the creditors, and indicating, where relevant, how that financial outcome for creditors, (whether individually or as a member of a class of creditors) under the terms of the proposal is likely to be better than the estimated financial outcome for such creditors if the debtor were to be adjudicated a bankrupt (having regard to, amongst other things, the estimated costs of the bankruptcy process), and
(ii) indicating whether or not he or she is of the opinion that the debtor is reasonably likely to be able to comply with the terms of the proposed Debt Settlement Arrangement.
(2) Where a debtor’s financial position has materially changed in the period between the completion by him or her of a Prescribed Financial Statement under section 50 and the sending of the notice under section 70 (2)—
(a) the debtor shall inform the personal insolvency practitioner of that fact, and
(b) the personal insolvency practitioner shall, if he or she considers that the change merits the completion of a new Prescribed Financial Statement, assist the debtor in completing such a new Statement, which shall accompany the notice under section 70 (2).
Debt Settlement Arrangement: Conduct of creditors’ meeting.
72.— (1) A creditors’ meeting called by the personal insolvency practitioner for the purpose of approving a proposal for a Debt Settlement Arrangement given to the creditors under section 70 (3) shall be conducted in accordance with section 74 and any regulations made under that section.
(2) The personal insolvency practitioner may, where he or she believes it is in the interests of obtaining approval of a proposed Debt Settlement Arrangement by the creditors at the meeting, adjourn the meeting and, with the consent in writing of the debtor, shall prepare an amended proposal for a Debt Settlement Arrangement.
(3) Where the personal insolvency practitioner prepares an amended proposal for a Debt Settlement Arrangement pursuant to subsection (2) he or she shall—
(a) notify the debtor of the date on which, and time and place at which, the adjourned meeting will be held,
(b) at least 7 days before the day of the adjourned meeting, unless all of the creditors agree in writing to receive a shorter period of notice, notify each creditor of the date on which, and time and place at which, the adjourned meeting will be held,
(c) ensure that the notices referred to in paragraphs (a) and (b) are accompanied by a copy of the amended proposal, and
(d) lodge a copy of the notice referred to in paragraph (b) and a copy of the amended proposal with the Insolvency Service.
(4) An adjournment for the purpose of preparing an amended proposal for a Debt Settlement Arrangement pursuant to subsection (2) may occur once only in the course of the period of validity of a protective certificate (including any extension of such period).
(5) Subject to subsection (6), creditors at a meeting under this section, having considered a proposal for a Debt Settlement Arrangement shall vote, in accordance with section 73 , either by voting in favour or against the approval of the proposed Debt Settlement Arrangement.
(6) Subject to subsection (2), the proposal for a Debt Settlement Arrangement may, before the proposal has been voted upon, be subject to a proposal for a modification where the modification addresses an ambiguity or rectifies an error in the proposed Debt Settlement Arrangement and where—
(a) the modification has been proposed by a creditor or the personal insolvency practitioner, and
(b) the debtor gives his or her written consent to the modification.
(7) Where, on the taking of a vote under subsection (5), the proposal is not approved in accordance with section 73 , the Debt Settlement Arrangement procedure shall be deemed to have come to an end, and the protective certificate issued under section 61 shall cease to have effect.
(8) Where only one creditor is entitled to vote at the creditors’ meeting (whether in respect of one or more debts), the requirement to hold a creditors’ meeting may be satisfied where the creditor concerned notifies the personal insolvency practitioner in writing of that creditor’s approval or otherwise of the proposal for a Debt Settlement Arrangement.
Debt Settlement Arrangement: Voting at creditors’ meeting.
73.— (1) A vote held under section 72 (5) shall be held in accordance with this section and regulations under section 74 .
(2) The voting rights exercisable by a creditor at a creditors’ meeting shall be proportionate to the amount of the debt due by the debtor to the creditor on the day the protective certificate is issued.
(3) A creditor to whom a preferential debt is owed shall not be entitled to vote in respect of that debt in favour of a proposal for a Debt Settlement Arrangement at a creditors’ meeting unless that creditor has furnished to the personal insolvency practitioner a waiver in writing of the creditor’s right to have that debt treated as a preferential debt.
(4) A creditor who is a connected person of the debtor may not vote in favour of a proposal for a Debt Settlement Arrangement at a creditors’ meeting.
(5) Subject to any regulations made under section 74 relating to proxies, for the purposes of this section, only the person who appears to the personal insolvency practitioner to be the owner of the debt (or an agent acting on behalf of that person) shall be entitled to receive notices required to be sent to a creditor under this Chapter or to vote at the creditors’ meeting.
(6) A proposal for a Debt Settlement Arrangement shall be considered as having been approved by a creditors’ meeting held under this Chapter where a majority of creditors representing not less than 65 per cent in value of the total of the debtor’s debts due to the creditors participating in the meeting and voting have voted in favour of the proposal.
(7) Where no creditor votes, the proposed Debt Settlement Arrangement shall be deemed to have been approved under this section.
Debt Settlement Arrangement: Procedures for the conduct of creditors’ meetings.
74.— (1) The Minister may make regulations relating to the holding of creditors’ meetings under this Chapter, and without prejudice to the generality of the Minister’s power under this section, such regulations may provide for—
(a) the holding of a meeting in circumstances where not all of the creditors are present in the same venue,
(b) the voting process including providing for the communication of creditors’ votes to the personal insolvency practitioner by telephony or electronically, and
(c) appointment of proxies to vote at such meetings.
(2) The venue for the holding of a creditors’ meeting shall be situated within the State.
(3) The period of notice of the meeting of creditors may be waived or abridged where the consent of all the creditors to such waiver or abridgement is given in writing.
Steps to be taken by personal insolvency practitioner following approval of proposal for Debt Settlement Arrangement.
75.— (1) Where a Debt Settlement Arrangement is approved at a creditors’ meeting in accordance with section 73 , the personal insolvency practitioner shall as soon as practicable after the meeting has concluded notify the Insolvency Service and each creditor concerned and enclose with that notification—
(a) a certificate with the result of the vote taken at the creditors’ meeting, identifying the number of votes, in value of the creditors present and voting, in favour and against the proposed Debt Settlement Arrangement, and
(b) a copy of the approved Debt Settlement Arrangement.
(2) The personal insolvency practitioner shall, in addition to the documents referred to in subsection (1) also send a notice to each creditor indicating that he or she may make objection to the coming into effect of the Debt Settlement Arrangement by lodging a notice of objection with the appropriate court, within 14 days of the date of the sending of that notice.
(3) A creditor may lodge a notice of objection with the appropriate court within 14 days of the date of the sending by the personal insolvency practitioner of the notice referred to in subsection (2) and shall at the same time send a copy of the notice of objection to—
(a) the Insolvency Service, and
(b) the personal insolvency practitioner.
Steps to be taken by Insolvency Service following notification of approval of Debt Settlement Arrangement by personal insolvency practitioner under section 75 .
76.— (1) On receipt of a notification by the personal insolvency practitioner pursuant to section 75 (1), the Insolvency Service shall record the approval in the Register of Debt Settlement Arrangements, and notify the appropriate court and furnish to that court a copy of the Debt Settlement Arrangement.
(2) Where the notification of the personal insolvency practitioner is received by the Insolvency Service before the expiry of the period of the protective certificate, such protective certificate shall continue in force until the Debt Settlement Arrangement comes into effect or all objections lodged with the appropriate court pursuant to section 75 (3) have been determined by the court.
Determination of objection lodged under section 75 .
77.— (1) The grounds on which objection may be made to the coming into effect of the Debt Settlement Arrangement are those specified in section 87 .
(2) The hearing of an objection lodged under section 75 (3) shall be heard with all due expedition.
(3) Where the appropriate court upholds the objection to the Debt Settlement Arrangement, the Debt Settlement Arrangement procedure shall be deemed to have come to an end, and the protective certificate issued under section 61 shall cease to have effect.
Coming into effect of Debt Settlement Arrangement.
78.— (1) Where—
(a) no objection is lodged by a creditor with the appropriate court within 14 days of the giving of the notice referred to in section 75 , or
(b) an objection is lodged with the appropriate court and the matter is determined by the court on the basis that the objection should not be allowed,
the appropriate court shall proceed to consider, in accordance with this section, whether to approve the coming into effect of the Debt Settlement Arrangement.
(2) For the purposes of its consideration under subsection (1), the appropriate court shall consider the copy of the Debt Settlement Arrangement furnished to it under section 76 (1) and, subject to subsection (3)—
(a) shall approve the coming into effect of the Arrangement, if satisfied that the—
(i) eligibility criteria specified in section 57 have been satisfied,
(ii) mandatory requirements referred to in section 65 (2) have been complied with,
(iii) Debt Settlement Arrangement does not contain any terms that would release the debtor from an excluded debt, an excludable debt (other than a permitted debt) or a secured debt or otherwise affect such a debt, and
(iv) requisite percentage of creditors referred to in section 73 (6) has approved the proposal for a Debt Settlement Arrangement,
and
(b) if not so satisfied, shall refuse to approve the coming into effect of the Debt Settlement Arrangement.
(3) The appropriate court, where it requires further information or evidence for the purpose of its arriving at a decision under subsection (2), may hold a hearing, which hearing shall be on notice to the Insolvency Service and the personal insolvency practitioner concerned.
(4) A hearing referred to in subsection (3), unless the appropriate court considers it appropriate to hold it in public, shall be held otherwise than in public.
(5) For the purposes of subsection (2), the court may accept—
(a) a certificate issued by the Insolvency Service certifying that the eligibility criteria specified in section 57 have been satisfied as evidence that such eligibility criteria have been satisfied, and
(b) the certificate issued by the personal insolvency practitioner concerned pursuant to section 75 (1) as evidence that the requisite percentage of creditors referred to in section 73 (6) has approved the proposal for a Debt Settlement Arrangement.
(6) The registrar of the appropriate court shall notify the Insolvency Service and the personal insolvency practitioner concerned where the court—
(a) approves or refuses to approve the coming into effect of the Debt Settlement Arrangement under this section, or
(b) decides to hold a hearing referred to in subsection (3).
(7) On receipt of a notification under subsection (6) of the approval of the coming into effect of the Debt Settlement Arrangement, the Insolvency Service shall register the Debt Settlement Arrangement in the Register of Debt Settlement Arrangements.
(8) The Debt Settlement Arrangement shall come into effect upon being registered in the Register of Debt Settlement Arrangements.
Effect of Debt Settlement Arrangement.
79.— (1) A Debt Settlement Arrangement having been registered in the Register of Debt Settlement Arrangements shall have effect according to its terms and remain in effect until—
(a) it is completed in accordance with its terms or the terms of any variation made, or
(b) it is terminated in accordance with this Chapter.
(2) While a Debt Settlement Arrangement is in effect, the following shall be parties to it and, subject to this Act, shall be bound by its terms—
(a) the debtor, and
(b) in respect of every specified debt, the creditor concerned.
(3) Where a Debt Settlement Arrangement is in effect, a creditor who is bound by it shall not, in relation to a specified debt—
(a) initiate any legal proceedings;
(b) take any step to prosecute legal proceedings already initiated;
(c) take any step to secure or recover payment;
(d) execute or enforce a judgment or order of a court or tribunal against the debtor;
(e) take any step to recover goods in the possession or custody of the debtor, unless title to the goods is vested in the creditor or the creditor has security over the goods;
(f) contact the debtor regarding payment of the specified debt otherwise than at the request of the debtor;
(g) in relation to an agreement with the debtor, other than a security agreement, by reason only that the debtor is insolvent or that a Debt Settlement Arrangement is in effect—
(i) terminate or amend that agreement, or
(ii) claim an accelerated payment under that agreement.
(4) Where a Debt Settlement Arrangement is in effect, a creditor of that debtor shall not apply for the issue of a summons under section 8 of the Bankruptcy Act 1988 or present a petition to have the debtor concerned adjudicated a bankrupt in respect of a debt covered by the Debt Settlement Arrangement.
(5) Where a Debt Settlement Arrangement is in effect, and a creditor of that debtor has applied for the issue of a summons under section 8 of the Bankruptcy Act 1988 or has presented a petition to have the debtor concerned adjudicated a bankrupt in respect of a debt covered by the Debt Settlement Arrangement, the creditor shall not proceed with the summons or the petition.
(6) Nothing in subsections (3) and (4) shall operate to prevent a creditor taking the actions referred to in those subsections as respects a person who has jointly contracted with the debtor or is jointly liable with the debtor to the creditor and that other person may sue or be sued in respect of the contract without joining the debtor.
(7) Subsection (6) does not apply where a Debt Settlement Arrangement is also in effect as respects the other person.
(8) In reckoning any period of time for the purpose of any applicable limitation period in relation to any proceedings or process to which this section applies (including any limitation period under the Statute of Limitations 1957), the period in which the Debt Settlement Arrangement is in effect shall be disregarded.
(9) The period for which any judgment against the debtor in relation to a debt which is the subject of a Debt Settlement Arrangement has effect (whether under statute or rule of court) shall, subject to the provisions of this Act be extended by the period that the Debt Settlement Arrangement is in effect.
(10) Notwithstanding subsections (3) and (4), the fact that a Debt Settlement Arrangement is in effect in relation to a debtor under this Chapter shall not operate to prevent a creditor taking the actions referred to in subsection (3) or (4) as respects another person who has guaranteed the specified debts concerned.
(11) The Deeds of Arrangement Act 1887 does not apply to a Debt Settlement Arrangement.
(12) In this section, “specified debt” means a debt that is specified in a Debt Settlement Arrangement as being subject to that Arrangement.
Operation of terms of Debt Settlement Arrangement.
80.— (1) Subject to the provisions of this section, a Debt Settlement Arrangement shall operate according to the terms of that Arrangement and a debtor or creditor who is party to that Arrangement shall perform his or her obligations in accordance with its terms.
(2) Unless otherwise provided by the Debt Settlement Arrangement, payments to be made to creditors under the terms of the Arrangement shall be made by the debtor through the personal insolvency practitioner concerned.
(3) The personal insolvency practitioner shall transmit payments received to each of the creditors in the agreed proportion on a timely basis.
(4) The personal insolvency practitioner shall maintain regular contact with the debtor and request such reports and conduct such reviews as may be required, but such review shall in any event be carried out at least once in every period of 12 months.
(5) The personal insolvency practitioner shall monitor implementation of the Arrangement and where the debtor has defaulted or appears likely to default in his or her obligations under the Arrangement, discuss the matter with the debtor.
(6) Where the circumstances of the debtor have changed in a material respect the personal insolvency practitioner shall provide information to the debtor regarding his or her right or obligation to initiate an application to vary the Arrangement in accordance with section 82 .
(7) Where the circumstances of a debtor have changed to such an extent that a variation in the terms of an Arrangement is appropriate, the personal insolvency practitioner shall take the necessary steps to initiate a variation of the Arrangement under section 82 .
(8) The personal insolvency practitioner shall deal with the property of the debtor in accordance with the Debt Settlement Arrangement.
(9) The personal insolvency practitioner shall respond in a timely manner to requests for information regarding the operation of the Arrangement from—
(a) the Insolvency Service,
(b) the debtor, and
(c) the creditors.
(10) The personal insolvency practitioner shall maintain complete and accurate records of account of the moneys received from the debtor and the moneys disbursed to the creditors and such moneys shall while in the possession and control of the personal insolvency practitioner be maintained in an account in the State with a bank authorised to carry on business in the State, which account is used solely for the purposes of receiving payments from the debtor and transmitting such payments to creditors (after the deduction of any fees, costs and outlays payable to the personal insolvency practitioner permitted to be made under this Act and in accordance with the Debt Settlement Arrangement).
General duties and obligations of debtor arising under Chapter 3.
81.— (1) A debtor who participates in any process under this Chapter is under an obligation to act in good faith, and in his or her dealings with the personal insolvency practitioner concerned to make full disclosure to that practitioner of all of his or her assets, income and liabilities and of all other circumstances that are reasonably likely to have a bearing on the ability of the debtor to make payments to his or her creditors.
(2) A debtor who participates in any part of the process of applying for or operating a Debt Settlement Arrangement shall co-operate fully in the process, and in particular comply with any reasonable request from the personal insolvency practitioner to provide assistance, documents and information necessary for the application of the process to the debtor’s case or the carrying out of the personal insolvency practitioner’s functions, including any debt, tax, employment, business, social welfare or other financial records.
(3) A debtor in respect of whom a Debt Settlement Arrangement is in effect is under an obligation to inform the personal insolvency practitioner as soon as reasonably practicable of any material change in the debtor’s circumstances, particularly an increase or decrease in the extent of the debtor’s assets, liabilities or income, which would affect the debtor’s ability to make repayments under the Debt Settlement Arrangement.
(4) A debtor in respect of whom a Debt Settlement Arrangement is in effect shall not, either alone or with any other person, obtain credit in an amount of more than €650 from any person without informing that person that he or she is subject as a debtor to a Debt Settlement Arrangement.
(5) A debtor in respect of whom a Debt Settlement Arrangement is in effect shall not transfer, lease, grant security over, or otherwise dispose of any interest in property above a prescribed value otherwise than in accordance with the terms of the Debt Settlement Arrangement.
(6) A debtor shall inform the personal insolvency practitioner as soon as reasonably practicable after becoming aware of any inaccuracy or omission in the debtor’s statement of affairs based on the Prescribed Financial Statement.
(7) A debtor who participates in a Debt Settlement Arrangement shall not pay to creditors any additional payments separate to the Debt Settlement Arrangement in respect of debts covered in the Debt Settlement Arrangement.
Variation of a Debt Settlement Arrangement.
82.— (1) Unless its terms provide otherwise, a Debt Settlement Arrangement may be varied in accordance with this section.
(2) The debtor’s written consent shall be required to any variation of a Debt Settlement Arrangement provided that any unreasonable refusal by the debtor to consent to a variation shall be subject to challenge in accordance with section 87 .
(3) A debtor shall be considered to be acting reasonably where the debtor refuses to consent to a variation of a Debt Settlement Arrangement where that variation would require the debtor—
(a) to make additional payments in excess of 50 per cent of the increase in his or her income available to him or her after the following deductions (where applicable) are made:
(i) income tax;
(ii) social insurance contributions;
(iii) payments made by him or her in respect of excluded debts;
(iv) payments made by him or her in respect of excludable debts that are not permitted debts;
(v) such other levies and charges on income as may be prescribed,
or
(b) to make a payment amounting to more than 50 per cent of the value of any property acquired by the debtor after the coming into effect of the Debt Settlement Arrangement unless receipt of that property had been anticipated by the terms of that Arrangement.
(4) Where it appears to the personal insolvency practitioner concerned that there has been a material change in the debtor’s circumstances which would affect his or her ability to make repayments under the Debt Settlement Arrangement, the personal insolvency practitioner (whether on his or her own initiative or at the request of a creditor) shall call a meeting of creditors to be held in accordance with this section.
(5) When calling a creditors’ meeting to be held under this section, the personal insolvency practitioner shall—
(a) give each creditor at least 14 days written notice of the meeting and the date on which, and the time and place at which, the meeting will be held,
(b) ensure that the notice referred to in paragraph (a) is accompanied by a written proposal for the variation of the Debt Settlement Arrangement, and
(c) lodge a copy of the notice referred to in paragraph (a) and the proposal referred to in paragraph (b) with the Insolvency Service.
(6) A creditors’ meeting under this section shall be conducted in accordance with regulations under section 74 .
(7) Subject to subsection (8), creditors, at a creditors’ meeting under this section, shall vote, in accordance with section 73 —
(a) in favour of the approval of the proposal for the variation, or
(b) against the approval of the proposal for the variation.
(8) For the purposes of subsection (7), the voting rights exercisable by a creditor at a creditors’ meeting under this section shall be proportionate to the amount of the debt due by the debtor to the creditor on the date on which the vote takes place.
(9) Where the variation of a Debt Settlement Arrangement is approved under subsection (7), the personal insolvency practitioner shall as soon as practicable notify the Insolvency Service and each creditor concerned of the fact, and enclose with that notification a copy of the Debt Settlement Arrangement as varied.
(10) On receipt of a notification under subsection (9), the Insolvency Service shall record the variation in the Register of Debt Settlement Arrangements.
(11) A variation to a Debt Settlement Arrangement shall take effect immediately upon its being recorded under subsection (10), and shall remain in effect until the Debt Settlement Arrangement, as varied—
(a) is completed in accordance with its terms,
(b) is terminated in accordance with this Chapter, or
(c) is further varied in accordance with this section.
(12) A variation to a Debt Settlement Arrangement shall, while it is in effect, be binding upon the debtor and each creditor who was entitled to vote at the meeting held under this section, regardless of whether such creditor voted to approve that variation.
(13) References in this Chapter to a Debt Settlement Arrangement include references to such an Arrangement as varied in accordance with this section.
Application to appropriate court to have Debt Settlement Arrangement terminated.
83.— (1) Without prejudice to section 87 , a creditor or a personal insolvency practitioner may, as respects a Debt Settlement Arrangement, at any time during which the arrangement concerned is in effect, apply to the appropriate court to have that Debt Settlement Arrangement terminated, and such application shall be limited to the following grounds:
(a) a material inaccuracy or omission exists in the debtor’s Prescribed Financial Statement, which causes a material detriment to the creditor;
(b) the debtor, when the Debt Settlement Arrangement was proposed, did not satisfy the eligibility criteria specified in section 57 ;
(c) the debtor did not comply with the duties and obligations imposed on him or her under the Debt Settlement Arrangement process;
(d) the debtor has since the coming into effect of the Debt Settlement Arrangement committed an offence under this Act;
(e) the debtor is in arrears with his or her payments for a period of not less than 3 months;
(f) the debtor has failed to carry out any action necessary to enable a term of the Debt Settlement Arrangement to have effect;
(g) the debtor has unreasonably refused to consent to a variation of the Debt Settlement Arrangement.
(2) For the purposes of subsection (1)(e), a debtor is in arrears with his or her payments for a period of not less than 3 months where—
(a) at the beginning of the 3 month period ending immediately before the day on which the application was made, one or more than one payment in respect of the debts became due and payable by the debtor under the Debt Settlement Arrangement, and
(b) at no time during that 3 month period were any obligations in respect of those payments discharged.
(3) On hearing an application under subsection (1), the appropriate court may—
(a) dismiss the application,
(b) terminate the Debt Settlement Arrangement, or
(c) order the personal insolvency practitioner to propose the variation of the Arrangement in accordance with section 82 .
Debt Settlement Arrangement deemed to have failed after 6 month arrears default.
84.— (1) Where the debtor is in arrears with his or her payments for a period of 6 months the Debt Settlement Arrangement shall be deemed to have failed and shall terminate where the personal insolvency practitioner notifies the Insolvency Service and the debtor of such default.
(2) Where the Insolvency Service receives a notification of default referred to in subsection (1), it shall record the failure of the Debt Settlement Arrangement in the Register of Debt Settlement Arrangements.
(3) For the purposes of subsection (1), a debtor is in arrears with his or her payments for a period of 6 months on a given date if—
(a) at the beginning of the 6 month period ending immediately before that date, one or more than one payment in respect of a debt became due and payable by the debtor under the Debt Settlement Arrangement, and
(b) at no time during that 6 month period were any obligations in respect of those payments discharged.
Effect of premature termination of Debt Settlement Arrangement on debts.
85.— (1) Subject to subsection (2), where a Debt Settlement Arrangement has been deemed to have failed or has terminated under this Chapter, the debtor shall thereupon be liable in full for all debts covered by the Debt Settlement Arrangement (including any arrears, charges and interest that have accrued during the continuance of the Debt Settlement Arrangement but excluding any amounts paid in respect of those debts during the continuance of the Debt Settlement Arrangement), unless:
(a) the terms of the Debt Settlement Arrangement provide otherwise; or
(b) the appropriate court has made an order otherwise.
(2) Subsection (1) has effect without prejudice to the validity of any act done or property disposed of in accordance with the Debt Settlement Arrangement.
Successful completion of Debt Settlement Arrangement.
86.— (1) Upon the expiration of the Debt Settlement Arrangement, and where the debtor concerned has complied with his or her obligations under the Debt Settlement Arrangement, the personal insolvency practitioner shall notify the debtor, creditors and the Insolvency Service.
(2) Where the debtor has complied with his or her obligations under the Debt Settlement Arrangement, the debtor stands discharged from the debts specified in the Debt Settlement Arrangement.
(3) Where the Insolvency Service receives the notice referred to in subsection (1), it shall record the successful completion of the Debt Settlement Arrangement in the Register of Debt Settlement Arrangements.
Grounds of challenge by creditor to coming into effect of Debt Settlement Arrangement.
87.— The grounds on which a Debt Settlement Arrangement may be challenged by a creditor under section 77 are, without prejudice to section 83 , limited to the following matters:
(a) that the debtor has by his or her conduct within the 2 years prior to the issue of the protective certificate under section 61 arranged his or her financial affairs primarily with a view to being or becoming eligible to apply for a Debt Settlement Arrangement or a Personal Insolvency Arrangement;
(b) the procedural requirements specified in this Act were not complied with;
(c) a material inaccuracy or omission exists in the debtor’s statement of affairs (based on the Prescribed Financial Statement) which causes a material detriment to the creditor;
(d) the debtor, when the Debt Settlement Arrangement was proposed, did not satisfy the eligibility criteria specified in section 57 ;
(e) the Debt Settlement Arrangement unfairly prejudices the interests of a creditor;
(f) the debtor has committed an offence under this Act, which causes a material detriment to the creditor;
(g) the debtor had entered into a transaction with a person at an undervalue within the preceding 3 years that has materially contributed to the debtor’s inability to pay his or her debts (other than any debts due to the person with whom the debtor entered the transaction at an undervalue);
(h) the debtor had given a preference to a person within the preceding 3 years that had the effect of substantially reducing the amount available to the debtor for the payment of his or her debts (other than a debt due to the person who received the preference).
Debt Settlement Arrangement: Excessive pension contributions.
88.— (1) Where, as respects a debtor who has entered into a Debt Settlement Arrangement which is in force, a creditor or the personal insolvency practitioner concerned considers that a debtor has made excessive contributions to a relevant pension arrangement, the creditor or personal insolvency practitioner may make an application to the appropriate court for relief in accordance with this section.
(2) The reference to the debtor having made contributions to a relevant pension arrangement shall be construed as a reference to contributions made by the debtor at any time within 3 years prior to the making of the application for a protective certificate on behalf of the debtor under section 59 .
(3) Where the appropriate court considers that having regard in particular to the matters referred to in subsection (4) the contributions to a relevant pension arrangement were excessive it may:
(a) direct that such part of the contribution concerned (less any tax required to be deducted) be paid by the person administering the relevant pension arrangement to the personal insolvency practitioner for distribution amongst the creditors of the debtor, and
(b) make such other order as the court deems appropriate, including an order as to the costs of the application.
(4) The matters referred to in subsection (3) as respects the contributions made by the debtor to a relevant pension arrangementare:
(a) whether the debtor made payments to his or her creditors in respect of debts due to those creditors on a timely basis at or about the time when the debtor made the contribution concerned;
(b) whether the debtor was obliged to make contributions of the amount or percentage of income as the payments actually made under his or her terms and conditions of employment and if so obliged, whether the debtor or a person who as respects the debtor is a connected person could have materially influenced the creation of such obligation;
(c) the amount of the contributions paid, including the percentage of total income of the debtor in each tax year concerned which such contributions represent;
(d) the amount of the contributions paid, in each of the 6 years prior to the making of the application for a protective certificate on behalf of the debtor under section 59 including the percentage of total income of the debtor concerned which such contributions represent in each of those years;
(e) the age of the debtor at the relevant times;
(f) the percentage limits which applied to the debtor in relation to relief from income tax for the purposes of making contributions to a relevant pension arrangement in each of the 6 years prior to the making of the application for a protective certificate on behalf of the debtor under section 59 ; and
(g) the extent of provision made by the debtor in relation to any relevant pension arrangement prior to the making of the contributions concerned.