One in five Irish households in debt struggle with repayments, rising to a third of those who fall into the low income bracket. Despite official figures suggesting that, measured as a ratio of GDP and disposable income, personal debt in Ireland has reached record lows, that’s little comfort to the thousands of people facing difficulties with repayments.
Many of those people find themselves facing personal insolvency, or defaulting on repayments without the means to pay. Insolvency can be a scary and lonely place to be, with creditors taking action through debt collection services and the courts to recover what they are owed.
All too often, those facing insolvency end up being pushed further into problem or risky debt, taking out more loans and credit just to pay previous creditors. It’s a dangerous cycle that can quickly spiral out of control.
If you do have concerns about the amount of debt you are in, we recommend contacting our Personal Insolvency teamwithout delay. Our experts specialise in debt restructuring and management with a focus on protecting you, your family and your assets in the long term.
Here are five options available for dealing with personal insolvency.
Personal Insolvency Arrangement
A Personal Insolvency Arrangement (PIA) is a formal agreement with creditors brokered by an insolvency professional according to statutory guidelines. With unsecured loans, a PIA can lead to portions of your debt being written off, on the basis that, for creditors, it is better to receive some of what they are owed rather than risk the debtor defaulting completely and going bankrupt
With secured debts such as mortgages where assets like property are used as collateral on the loan, a PIA aims to restructure the payment terms to make them more manageable.
Debt Settlement Arrangement
A Debt Settlement Arrangement (DSA) is similar to PIA, but is available for unsecured loans only. DIAs are commonly used for debts arising from credit cards, overdrafts and personal loans. Like a PIA, a DSA will initially seek to restructure payments over a period of several years, after which any unpaid amount still outstanding is written off. The terms of the agreement are legally binding for both parties and protects you from any further recovery action.
Debt Relief Notice (DRN)
If you are on a low income and have unsecured debts under €35,000, a Debt Relief Notice (DRN) provides a possible alternative to a DSA. Under a DRN, debts are suspended for a period of up to three years, with all recovery action by creditors halted by law. If after this time you are still materially unable to repay what you owe, your debts can be written off in full.
Abhaile
Abhaile is a government-funded support service for mortgage holders who fall into insolvency. While it doesn’t directly offer restructuring and moratoriums on mortgages as the other insolvency relief options discussed above do, it does provide free legal and insolvency advice to anyone who cannot meet their mortgage repayments.
Bankruptcy
If you are struggling with significant debts (over €20,000), you can apply for bankruptcy as a last resort. Bankruptcy rules specify that insolvent individuals must have explored all other options first, and can only apply for bankruptcy if they remain unable to pay their debts. Being declared bankrupt will halt all creditor action against you and can result in significant debts being wiped clean. But it also means you must forfeit personal assets, which will then be sold in order to pay creditors.
Speak to an expert
If you have any questions about personal insolvency, contact our team by completing the form below.
