An Introduction to Personal Insolvency
The Personal Insolvency Act 2012 was introduced in Ireland to provide 3 debt relief mechanisms for individuals who are personally insolvent.
The definition of a person who is personally insolvenct is simple; it is an individual who is unable to pay debts and meet financial commitments as they fall due.
The 3 debt relief mechanisms were designed to bring people back to solvency and to shed all of their qualifying debts that they cannot afford to pay.
Since its inception, Debt Relief Notices, Debt Settlement Arrangements and Personal Insolvency Arrangements have been providing financially incapacitated individuals with a new lease of life. Below we have summarised the key elements to each mechanism.
Debt Relief Notice (‘‘DRN’’)
A Debt Relief Notice is for people who have very low disposable income or assets and has total qualifying debts of less than €35,000.
An Approved Intermediary (‘‘AI’’) will determine if an individual meets the qualifying criteria to enter into a DRN. If suitable, there will be a 3 year supervisory period and once this expires all remaining qualifying debt will be written off.
As there is no decision to be made from creditors in DRNs, a Personal Insolvency Practitioner (‘‘PIP’’) does not partake in the facilitation of this debt relief mechanism.
The MABS Helpline does provide a free service to check if you are eligible for a DRN.
More infomation on DRNs is available on the Back on Track website.
Debt Settlement Arrangement (‘‘DSA’’)
If you have unsecured debt such as credit cards, loans and overdrafts, a DSA could be the right choice for you. A DSA is a formal agreement with all your creditors that will write off some of your debt.
Under the DSA you may agree to repay a percentage of your overall debt that you can afford in monthly payments over a given period of time.
A Personal Insolvency Practitioner will arrange the DSA and negotiate with your creditors on your behalf.
At Boyne Valley Financial, we will discuss with you in detail the mechanics of a DSA during your financial review, however if you would like to read more about this solution first please visit the Back on Track website.
Personal Insolvency Arrangement (‘‘PIA’’)
A PIA is a formal agreement with all your creditors that will write off some of your unsecured debt and restructure any remaining secured debt.
If you have secured debt and unsecured debt that you cannot repay, a PIA could be the right choice for you.
Many PIAs involve an affordable restructure being implemented on your home, allowing you and your family to remain living there with an affordable repayment while simultaneously settling any other qualifying debt you may have.
A Personal Insolvency Practitioner will arrange the PIA and negotiate with your creditors on your behalf.
At Boyne Valley Financial we will discuss with you in detail the mechanics of a PIA and the effect this will have on your home during your financial review, however if you would like to read more about this solution please visit the Back on Track website