HELPING YOU DEAL WITH
UNSUSTAINABLE DEBT

There are 4 types of solution available to debtors.

Personal Insolvency Arrangement (PIA)

A personal insolvency arrangement (PIA) is a solution for unmanageable debts including the mortgage on your family home.  

Where you have had a reduction in your household income, a breakdown in a relationship or other issue you may not be able to afford to make the full monthly repayment payable in accordance with your mortgage contract.

In addition,  you may have other unsecured debts such as personal loans, credit cards, personal guarantees, or other financial obligations that you cannot afford.

Your PIA will restructure all your debts in a fair, equitable and transparent manner based on your personal financial circumstances and affordability.

A court approved PIA can help you achieve the following;

• Protection from your creditors
• Protect your family home
• Restructure your mortgage so that the monthly repayment is affordable
• A reasonable standard of living during and after the PIA 
• Reach final settlement on all unsecured debts
• Certainty and peace of mind of a Court approved arrangement
• A successfully completed PIA will help restore your credit rating 
• PIA can be approved by the Court even if it is rejected by a majority of creditors if certain eligibility criteria is met.

A PIA is typically run over a 72-month (6 year) term, however some arrangements can be completed in 12 months or less. 

Further information can be obtained from https://backontrack.ie 

Example of a 72-month court approved PIA

Separated mother 38 with two children aged 5 and 8 and net monthly household income of €3,139.  Mortgage debt of €309,547 on family home worth €140,000 and other unsecured debt of €85,282.

Mortgage loan of €309,547 written down by €169,547 to €140,000. (54.77% debt write off)

Monthly mortgage payment reduced from €1,428.79 to €652.78. 

Unsecured debt of €85,252 was settled in full from monthly payments of €277.38 over the 72 month term of PIA. Resulting in debt write off of €65,310. (76.6% debt write off)

Example of a 12-month court approved PIA

Married couple both 49 with no dependents and net monthly household income of €3,507.  Mortgage debt of €308,836 on family home worth €190,000 and other unsecured debt of €102,360.

Mortgage loan of €308,836 written down by €118,836 to €190,000. (38.47% debt write off)

Monthly mortgage payment reduced from €1,729.67 to €629.84. 

Unsecured debt of €102,360 was settled in full from monthly payments of €656.97 over the 12 month term of PIA. Resulting in debt write off of €94,476. (92.29% debt write off)

Debt Settlement Arrangements (DSA)

A debt settlement arrangement (DSA) is a solution for unmanageable unsecured debts.

If you have unsecured debts such as personal loans, credit cards, personal guarantees, trade creditors, residual debt on a secured loan such as a mortgage, lease or hire purchase agreement, contingent debts or any other unsecured financial obligation which you cannot afford these can be included in a debt settlement agreement.

Your DSA will restructure all your unsecured debts in a fair, equitable and transparent manner based on your personal financial circumstances and affordability.

A court approved DSA can help you achieve the following;

• Protection from your creditors
• Protect your family home against claims from unsecured creditors
• A reasonable standard of living during and after the DSA 
• Reach full and final settlement on all unsecured debts
• Certainty and peace of mind of a Court approved arrangement

A PIA is typically run over a 60-month (5 year) term, however some arrangements can be completed in 12 months or less where a lump sum payment is introduced. 

Further information can be obtained from https://backontrack.ie/dsa 

Example of a 60-month court approved DSA

Single person aged 59, no dependents with net monthly household income of €2,252.64 living in rented accommodation with multiple unsecured debts.

Example of a 6-month court approved DSA

Married couple aged 71 and 68 with net monthly household income of €1,930. No mortgage on their family home worth €300,000.  They had joint debts of €107,732 with two creditors in respect of bank debt/personal guarantees from a former family business which had ceased trading.  

The couple had savings of €7,000 and obtained a lump sum of €12,500 from a family member to contribute to their DSA.

Debt Relief Notice (DRN)

A debt relief notice (DRN) is a solution for people with debts of less than €35,000.

If you have a low income, a small number of assets and do not have a mortgage loan you may be eligible for a Debt Relief Notice.

Your financial advisor who is also referred to as an approved intermediary will deal with all your unsecured creditors and include them in your DRN which will last for a period of three years.

If your personal financial situation does not change during that time all your debt will be automatically written off in full after three years.

There is no cost involved in applying for a DRN and an Authorised Intermediary can be accessed through the MABS (Money Advice and Budgeting Service) network details of which can be found on the ISI website www.isi.gov.ie or at 076 106 4200the ISI.

Further information can be obtained from https://backontrack.ie/drn 

Bankruptcy

Where you have debts of €20,000 you may apply to the High Court to be adjudicated bankrupt.

A bankruptcy application should only be considered as a last resort to dealing with debt.  It can only be pursued where you can satisfy the court that you have explored and exhausted all of the alternative solutions outlined in the Personal Insolvency Act.   

If you are adjudicated bankrupt by the court all of your debts will be written off on the adjudication date and you will be obliged to co-operate with Official Assignee in Bankruptcy (OA) who will take control of you assets and manage your bankrupt estate.  There are implications for your family home in bankruptcy which need to be clearly understood in advance.

In the event that you co-operate with the OA you will be automatically discharged from bankruptcy after 12 months, however this can be extended if required.  The OA will also assess your income and household expenditure in order to determine if  there is surplus monthly  income which can be captured within an income payment order for the 12 month term of your bankruptcy and for up to two years after your discharge date.  

Further information can be obtained from https://backontrack.ie/bankruptcy 

We can assist with the bankruptcy application process.