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16th September 2013

In August we revealed details about the new personal insolvency system that was being introduced in Ireland. Three new debt management solutions were being launched. These included debt relief notices, debt settlement arrangements and personal insolvency arrangements.

The situation has now moved forwards and the Insolvency Service of Ireland (abbreviated as the ISI) has begun accepting debt settlement arrangement (DSA) and personal insolvency arrangement (PIA) applications.

If you’re in debt in Ireland where can you get help with a debt settlement arrangement? Only “personal insolvency practitioners” (PIPs) are authorised to deliver DSA services. At the current time only a relatively small number of these practitioners have completed the application and authorisation process run by the ISI. Over time it’s expected that many more professionals (typically from accountancy, legal and financial advice backgrounds) will become accredited personal insolvency practitioners.

Other advice sources can be approached for advice prior to making a decision to start debt settlement arrangements. Citizens Information and the Money Advice and Budgeting Service (MABS) might be two examples of valid starting points for help with a DSA.

Increasingly there will also be the provision of online information about personal insolvency in Ireland. Some of our team have been involved in creating debt settlement arrangement help forums that enable members of the public to seek information and help from Irish debt advice and insolvency professionals. This will be an especially valuable resource for anyone that wants to further consider their situation without the formality associated with a face-to-face meeting with a PIP.

One question that is likely to be uppermost for many is how the monthly payment to a DSA will be calculated. Nobody wants to commit to a payment over several years that they’re unsure will be manageable or which might become unmanageable due to a change of circumstances that’s outside of their control.

As with debt management plans in the UK the monthly payment to debt settlement arrangements will be worked out by subtracting the reasonable expenditure of an individual (or household) from their total income. The goal is to agree upon a payment that allows the debtor to live reasonably while reassuring the creditors that they’re being paid back as much as is practically possible.

As the first applications for a debt settlement arrangement in Ireland begin to be submitted it will soon become apparent whether the Irish banks are going to “play ball” with the new Irish personal insolvency legislation. As with IVAs and Scottish trust deeds in the UK the consent of a threshold of creditors is required for such an arrangement to come fully into being. Some fear that the Irish banks will seek to scupper the new system by rejecting fair proposals from PIPs.

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