Financial Planning – Personal Insolvency


Previously, if you were insolvent, that is, you were unable to pay your debts or meet your liabilities, bankruptcy was the only formal mechanism available for you to settle your debts and get protection from your creditors. Bankruptcy proceedings are taken in the High Court and can be expensive.

Bankruptcy also placed certain restrictions on doing business in the future and from taking up certain positions within companies and government.

Three new debt resolution mechanisms are being introduced in 2013 for people who cannot afford to pay their personal and mortgage debts. The Insolvency Service of Ireland will oversee these debt resolution processes. The new system is being set up under the Personal Insolvency Act 2012.

The rules on bankruptcy will also change when the Personal Insolvency Act is fully in effect.

Below is a handy summary table on the old and new regimes. The table is taken from the Citizens Information website which has loads of other useful information.

These new mechanisms are not yet available. The Insolvency Service of Ireland will inform the public when it is ready to accept applications, expected to be in June 2013.  When the mechanisms are available, you can apply as below:

For a Debt Relief Notice, your application must be made through an Approved Intermediary (AI). The Money Advice and Budgeting Service (MABS) plans to launch its Approved Intermediary service during 2013.

For a Debt Settlement Arrangement or a Personal Insolvency Arrangement, you must apply through a Personal Insolvency Practitioner (PIP). The Insolvency Service of Ireland will be responsible for authorising various categories of professionals as PIPs.

Summary of mechanisms

Arrangement Type of debt covered Value Duration Apply through
Bankruptcy now Unsecured and secured At least €1,900 (1 creditor) or €1,300 (combined creditors) 12 years High Court (voluntary declaration or else creditors can petition)
Debt Relief Notice (DRN) Unsecured (and secured in certain cases) Up to €20,000 3 years Approved Intermediary (AI)
Debt Settlement Arrangement (DSA) Unsecured No limit 5 years (+1) Personal Insolvency Practitioner (PIP)
Personal Insolvency Arrangement (PIA) Unsecured and secured No limit on unsecuredUp to €3m secured (though cap can increase if agreed) 6 years (+1) Personal Insolvency Practitioner (PIP)
Bankruptcy in future Unsecured and secured €20,000 3 years High Court

Note: You cannot apply on your own for a DRN, DSA or PIA. You must apply through an Approved Intermediary (for a DRN) or a Personal Insolvency Practitioner (for a DSA or PIA).

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