The Insolvency Service of Ireland or ISI have published guidelines in regard to eligibility criteria for availing of each of the three totally new solutions now being made available to insolvent persons in Ireland in accordance with the Personal Insolvency Act 2012.
The three new Irish Debt Solutions now becoming available are a Debt Relief Notice or DRN, a Debt Settlement Arrangement or DSA and a Personal Insolvency Arrangement or PIA.
In earlier articles we looked at the ISI guidelines in regard to the level of reasonable living expenses that applicants for any of these insolvency options or solutions may claim or be entitled to claim and the total ‘set costs’ that are allowable to applicants. Each of the three solutions also has its own set of eligibility criteria attaching to it and applicants must comply with all of these criteria to avail of the chosen solution.
To be eligible for a DRN the applicant must:
- Be insolvent. That is they must be unable to pay their debts as they fall due and there must be no likelihood that they will be able to do so within three years.
- Have a net disposable income of no more than €60 per month after reasonable living expenses are deducted. The applicant’s Approved Intermediary or AI will check if the applicant complies with this criterion.
- Owe no more than €20,000 to their creditors in respect of qualifying debts.
- Have assets with a value of no more than €400 other than one item of jewellery not exceeding €750 in value, one motor vehicle not exceeding €2,000 in value and reasonably necessary household equipment and tools not exceeding €6,000 in value.
- Be domiciled in the Republic of Ireland or must have, within the past year, ordinarily resided or had a place of business within the Republic of Ireland.
- Have completed and signed a Prescribed Financial Statement or PFS and made a signed Statutory Declaration that it is true and accurate.
- Have their AI sign a statement of satisfaction as to their eligibility for a DRN and as to the truth and accuracy of their PFS.
- Not have incurred 25% or more of their debt during the past six months.
- Not have had a DRN previously.
- Not be the subject of a DSA or a PIA now or within the past five years.
- Not have been the subject of a Protective Certificate or PC issued in respect of a DSA or PIA within the past year.
- Not have entered into certain transactions at less than market value in the past two years. These are known as Transactions at an Undervalue or TAUs.
- Not have given certain preferential treatment to one creditor over another in the past two years. These are known as Preferential Transactions or PTs. For example, the applicant for the DRN may have paid off a debt to a family member before paying off a debt to a bank or to a credit union.
- Not be bankrupt or subject to a bankruptcy measure or have been discharged from bankruptcy in the past five years.
To be eligible for a DSA the debtor must:
- Be insolvent. That is they must be unable to pay their debts as they fall due.
- Have one or more unsecured creditors.
- Be domiciled in the Republic of Ireland or must have, within the past year, ordinarily resided or had a place of business within the Republic of Ireland.
- Have completed and signed a Prescribed Financial Statement or PFS and made a signed Statutory Declaration that it is true and accurate.
- Have obtained from their Personal Insolvency Practitioner or PIP a statement which confirms that the PIP is of the opinion that :
- The information in the PFS is true and correct.
- The debtor is eligible to make a proposal for a DSA.
- Having considered the PFS there is no likelihood of the debtor becoming solvent in the next five years.
- If the debtor enters into a DSA there is a reasonable prospect that they will become solvent within the next five years.
- Not have incurred 25% or more of their debt during the past six months.
- Not be the subject of a DRN now or within the past three years.
- Not be the subject of a PIA now or within the past five years.
- Not have been the subject of a DSA previously.
- Not be bankrupt or subject to a bankruptcy measure or have been discharged from bankruptcy in the past five years.
- Not have been the subject of a Protective Certificate or PC issued in respect of a DSA in the past year.
To be eligible for a PIA the debtor must:
- Be insolvent. That is they must be unable to pay their debts as they fall due.
- Owe debt to at least one secured creditor holding security over Irish property or assets.
- Have secured debts of less than €3 million unless all of the secured creditors consent to increasing this limit.
- Have co-operated under a mortgage arrears process for a period of six months with their secured creditor in respect of their principal private residence or PPR and the result was that no alternative repayment arrangement was agreed or the secured creditor confirmed that it would not put in place such an arrangement. An example of an acceptable mortgage arrears process is that provided for in the Central Bank of Ireland’s Code of Conduct on Mortgage Arrears. If however the PIP believes that even if the debtor were to enter into an alternative repayment arrangement under such a mortgage arrears process it is unlikely that they would become solvent within a period of five years, then this condition does not apply.
- Be domiciled in the Republic of Ireland or must have, within the past year, ordinarily resided or had a place of business within the Republic of Ireland.
- Have completed and signed a Prescribed Financial Statement or PFS and made a signed Statutory Declaration that it is true and accurate.
- Have obtained from their Personal Insolvency Practitioner or PIP a statement which confirms that the PIP is of the opinion that :
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- The information in the PFS is true and correct.
- The debtor is eligible to make a proposal for a PIA.
- Having considered the PFS there is no likelihood of the debtor becoming solvent in the next five years.
- If the debtor enters into a PIA there is a reasonable prospect that they will become solvent within the next five years.
- Not have incurred 25% or more of their debt during the past six months.
- Not be the subject of a DRN now or within the past three years.
- Not be the subject of a DSA now or within the past five years.
- Not have been the subject of a PIA previously.
- Not be bankrupt or subject to a bankruptcy measure or have been discharged from bankruptcy in the past five years.
- Not have been the subject of a Protective Certificate or PC issued in respect of a PIA in the past year.
These are the general criteria that are applied to determine the eligibility of an insolvent debtor to avail of a DRN, a DSA or a PIA. In our next article we will look at the types of debts that may or may not be included in a DRN, DSA or PIA.
Written by Paddy Byrne 08 / 08 / 2013
