Insolvency Service of Ireland Guidelines
The Insolvency Service of Ireland or ISI has published guidelines in regard to what debts may be included and what debts may not be included when a debtor seeks to obtain one of the new Personal Insolvency Solutions:
- The Debt Relief Notice or DRN
- The Debt Settlement Arrangement or DSA
- The Personal Insolvency Arrangement or PIA
The DRN, DSA and PIA are the three totally new options now being made available to insolvent persons in Ireland in accordance with the Personal Insolvency Act 2012.
Deciding which Solution to Pursue
In earlier articles we looked at the ISI guidelines in regard to the level of reasonable living expenses that applicants for any of these personal insolvency options or solutions may claim or be entitled to claim and the total ‘set costs’ that are allowable to applicants. We also looked at the general eligibility criteria attaching to each of the three options. This article is concerned with clarifying what debts may be included in each of the three solutions. A debt may be included in one solution but it may not be permitted to include it in another solution. This factor may be significant when an insolvent debtor is deciding which solution to pursue, assuming they are otherwise eligible to pursue at least one of the three solutions.
Excludable Debts which may become Permitted Debts
The Personal Insolvency Act 2012 introduced the concept of ‘excludable debts’ into Irish law. ‘Excludable debts’ are debts which may be included in a DRN, DSA or PIA with the consent of the relevant creditor. The debtor requests the permission of the creditor to include the debt and if the creditor grants permission the debt can be included and it then becomes known as a ‘permitted debt’. If the creditor fails to expressly give or withhold consent for the relevant debt to be included i.e. does not respond to the debtor’s request to include the debt, then the creditor will be deemed to have consented to the request and the ‘excludable debt’ is included and becomes a ‘permitted debt’.
Debts which may be included in a DRN, DSA or PIA
Certain debts may be included when a debtor pursues any of the three insolvency solutions of a DRN, DSA or PIA. Creditors have no power or discretion to prevent a debtor from including such debts and in fact the debtor is bound to include any and all such debts in their proposal. They are:
- Overdrafts
- Credit card debts
- Store card debts
- Personal loans
- Credit union loans
- Utility Bills – Note 1
Debts which may be included in a DSA or PIA but not in a DRN
- Business or commercial loans
- Personal guarantees – Note 2
Debts which may be included in a PIA but not in a DRN or a DSA
- Principal private residence housing loans
- Investment property loans
Excludable Debts which may become Permitted Debts in a DRN, DSA or PIA
- Taxes, duties, levies owed or payable to the state
- Local government charges
- Amounts due to the Health Service Executive under the Nursing Home Support Scheme
- Annual service charges to owner’s management companies (apartments and housing estates)
- Liabilities arising under the Social Welfare Consolidation Act 2005
- Local Authority Rates
- Household Charges
- Property Charges
Excluded debts which cannot be included in a DRN, DSA or PIA
- Family maintenance payments under Court orders
- Court fines in respect of criminal offences
- Liabilities arising out of personal injury or wrongful death claims awarded by the Court
- Liabilities arising from loans obtained by fraud
Excluded Debts which cannot be included in a DSA
- Secured debts – Note 3
Notes
Note 1: The ISI guidelines list utility bills as debts that may be included in a DRN only. However they do state that their list is not exhaustive and there seems to be no reason why utility bills should not be included as unsecured debts in either a DSA or in a PIA.
Note 2: Personal guarantees have to be liquidated to be included in a DSA or a PIA i.e. if the debt has not been crystallized and called up as due and payable it cannot be included. The ISI guidelines list a personal guarantee as a debt that may be included in a DSA or a PIA but do not list it as a debt that can be included in a DRN.
Note 3: Secured debts may be included in a PIA only and cannot be included in a DRN or in a DSA.
