A Pathway Through Insolvency?

On the 18th of April this year, Insolvency Service of Ireland (ISI) was launched. Insolvency applications are now being taken from this month, June, under the new scheme.

This provides an alternative to declaring bankruptcy, a process which can prove costly. MABS co-ordinator Lorraine Waters provided NewsFour with details.

The Personal Insolvency Act 2012 puts three new mechanisms in place to help those with unsustainable debt find a solution to their situation. A distinction is made between secured debt (e.g. mortgages) and unsecured debt (e.g. credit cards and bank loans).

1. A Debt Relief Notice (DRN) allows for the write-off of debt up to €20,000, subject to a supervision period of three years. This is generally for unsecured debt.
2. A Debt Settlement Arrangement (DSA) for an agreed settlement of unsecured debt, with no limit, normally over five years.
3. A Personal Insolvency Arrangement (PIA) for an agreed settlement of secured debt up to €3 million and unsecured debt, with no limit, normally over six years.

The DRN is designed for those with virtually no disposable income or assets and no prospect of being able to pay off your debt in the next three years. During this three-year period, your creditors will be unable to pursue you. Should your circumstances improve during this period, you may be required to pay part of your debts. At the end of the three years, all of the debts covered by the DRN are written off. To see if you qualify, you can visit misc.ie. Applications can be made through MABS.

If you’re ineligible for a DRN, you can apply for a DSA. Under this, you must make some repayments to your creditors in return for a discount on your debts. Applications must be made through a Personal Insolvency Practitioner.

You can only be involved in one of these mechanisms at any time and can avail of each only once in your lifetime. If you plan to use one of these mechanisms, be aware it can take a few months for your application to be processed. Ensure you maintain payments to your creditors during this time as failure to do so may void your application. Be aware that your name will be added to a public register should you use any of these mechanisms.

For more information visit www.mabs.ie or call the MABS helpline on 0761072000.

By Eric Hillis