The new system for personal insolvency makes it easier to resolve debts and move on with your life.
Stress is a killer, with worries about unsustainable debts particularly lethal. In the past few years, you could hardly blame people for having a sense of dread about their debts. For a long time, Ireland’s insolvency laws have been hugely punitive, and bankrupts had to spend years in financial limbo before moving on with their lives.
While having problem debt is never pleasant, dealing with it has become easier with the launch of the Insolvency Service of Ireland (ISI). This gives people a process for resolving personal debts – and business debts that they’re responsible for – without resorting to the expensive court system. Depending on a person’s situation, they can use one of three procedures: a Debt Relief Notice (DRN), a Debt Settlement Arrangement (DSA) or a Personal Insolvency Arrangement (PIA).
Debt Relief Notices
Debt Relief Notices (DRNs) are designed for people with a relatively low level of unsecured debt (€20,000 or less), means of under €60 per month after reasonable living expenses and up to €400 in assets. If you can demonstrate that you aren’t in a position to pay these debts, and your financial position isn’t likely to improve in the next three years, they offer a quick write-off. People can get a DRN organised through an approved intermediary (AI), which shouldn’t be an expensive process.
Debt Settlement Arrangements
Of course, many people are dealing with larger debts, and more complex arrangements are needed here. A Debt Settlement Arrangement (DSA) gives relief to people with unsecured debt above the €20,000 mark. There’s no limit to the debt that can be resolved with it, though creditors will have to approve an arrangement before it goes ahead.
To get started, you need to speak with a Personal Insolvency Practitioner (PIP), who will draw up a plan to get your creditors paid without leaving you destitute. Under a DSA, a person’s unsecured debts will be settled over five years, though this can be extended to six years in certain situations. To get a DSA approved, creditors holding 65% of your combined debt must approve the plan, which also needs to be rubber-stamped by the ISI and the court. This may sound daunting, but it’s considerably simpler than going down the adversarial bankruptcy route.
Personal Insolvency Arrangements
If your debts include secured debt, then you’ll need to get a Personal Insolvency Arrangement (PIA). These work in a similar way to the DSA, with some key differences. A maximum of €3m in secured debt can be dealt with through the process (unless all the secured creditors agree otherwise), and the term of payment is longer – six years, or seven in certain circumstances. Once again, you will need a Personal Insolvency Practitioner (PIP) to deal with the creditors and put together a plan that they will accept.
Both DCA partners Declan Dolan and Eamonn Garvey will be registered as Personal Insolvency Practitioners when the ISI publishes its list later this year. In the meantime, we are in a position to advise individuals and businesses of their options. Simply contact us [link] to set up an initial, no-obligation meeting.