In December 2012, a Bill was enacted that introduced several new Personal Insolvency solutions into Ireland. It’s name was The Personal Insolvency Act 2012 and it’s purpose is to provide relief and assistance to people struggling with various types of debt. The solutions are available to individuals who are facing financial difficulties and are unable to meet their secured and unsecured debt obligations. The four main solutions are:
- Debt Settlement Arrangement (DSA):
- A Debt Settlement Arrangement (DSA) is a formal insolvency agreement between you and your creditors which usually lasts about 5 years. A DSA helps people who cannot afford to repay their unsecured debts, such as credit cards, loans, shortfall debts etc…
- In a DSA, you make affordable monthly payments from the money that is left over from your income after all reasonable living expenses have been considered. On successful completion of the DSA, any remaining debts are legally written off.
- Personal Insolvency Arrangement (PIA):
- A Personal Insolvency Arrangement (PIA) is another formal insolvency agreement between you and your creditors, which can help you address difficulties with both secured and unsecured debts.
- The main aim of a PIA is to help you protect your home. This can be done by restructuring mortgage debt in a variety of different ways, and also dealing with any unsecured debts, and other financial obligations.
- Like a DSA, a PIA typically lasts for a set period (usually six years) and any remaining unsecured debt is discharged at the end of the arrangement.
- Debt Relief Notice (DRN):
- A Debt Relief Notice (DRN) is another formal process suited to people who are on a limited income, with little to no assets and have unsecured debts they cannot repay (that do not total over €35,000).
- A DRN will clear your debts after successful completion, which is usually after a 3 three-year supervision period.
- Bankruptcy is a legal Insolvency process and is typically considered as a last resort. You must have explored the other Insolvency options above before you can proceed down the Bankruptcy route.
- In Bankruptcy you legally declare your inability to pay your debts. Any assets, including your home, may be sold to repay creditors.
- Bankruptcy usually lasts for one year, and at the end of this period, you are usually discharged from most of your debts.
These personal insolvency solutions aim to provide you with a way of addressing your debt problems, whilst protecting your essential assets wherever possible and allowing for a reasonable standard of living and offering you a chance for a fresh financial start.
To access these solutions, you must first speak with an Insolvency provider or a licensed Personal Insolvency Practitioner (PIP) who will assess your financial situation and run through your available options. They will also be able to help you in applying if you wish to proceed with any solution.
It’s important to note that the specific terms and conditions of these arrangements can vary depending on your financial circumstances and the agreement that is reached with creditors. Your PIP will be able to run through how the solution will work for you, so that you can give some careful consideration and weigh up the pros and cons of each option before proceeding.