New Insolvency Regime Launched

New Insolvency Regime Launched

The Insolvency Service of Ireland (ISI) has been set up under the Personal Insolvency Act 2012 , which provides for three new debt settlement procedures and reduces the term of bankruptcy to three years. The ISI will be responsible for all matters concerning personal insolvency. This is the government's response to the ongoing debt crisis facing the country and hampering growth in the economy.

The Insolvency Service will have a central role in administering the new debt settlement mechanisms:

  • Debt Relief Notices (DRNs)
  • Debt Settlement Arrangements (DSAs)
  • Personal Insolvency Arrangements (PIAs)

Debt Relief Notice (DRN)

You may apply for a DRN if you have:

  • debts below €20,000
  • a low income, and
  • few assets.

Your DRN can include some secured debts and unsecured debts (such as credit card loans, utility bills, store cards and personal loans).

Your DRN will normally last for 3 years. After this, the money you owe to the creditors named in your DRN will be cleared as long as you meet all the conditions in your DRN.

During this time the unsecured creditors named in your DRN cannot take any legal or debt collection action against you.

You must apply for a DRN through an Approved Intermediary (AI). This is someone authorised by the ISI to submit DRN applications. A list of AIs can be found on www.isi.gov.ie

Details are placed on a public Register of Debt Relief Notices. (It will include debtor's name, address, year of birth and the date of the DRN). Anyone can view this register.

DRN will finish earlier than 3 years if you pay back half of what you owe

A debtor can only have one DRN in your lifetime.

Debt Settlement Arrangement (DSA)

A DSA is only for unsecured debts. These include credit card loans, personal loans, store cards and business loans. You cannot include secured debts such as your mortgage

A DSA will normally last up to 5 years (or 6 years in some cases). During this time the unsecured creditors named in your DSA cannot take any legal or debt collection action against a debtor

A DSA allows a debtor to pay off as much of your unsecured debt as they can, with the outstanding balance after 5 years (or 6 years in some cases), written off

A debtor must apply for a DSA through a Personal Insolvency Practitioner (PIP). This is someone licensed by the ISI to make DSA or PIA applications. You can find a list of PIPs on www.isi.gov.ie

Here is how it works:

  1. Debtor applies for a DSA through your PIP.
  2. If the ISI and the Court are happy with the application, your PIP gets 70 days to develop a proposal, to be put to creditors.
  3. The debtor has to agree to the proposal.
  4. Creditors representing 65% of debt must agree with the proposal.
  5. The ISI and the Court carry out final reviews of the case and the debtor will then get a DSA.
  6. Details are put on a public Register of Debt Settlement Arrangements. (It will include name, address, year of birth and the date of the DSA). Anyone can view the register.

A debtor can only have one DSA in his/her lifetime.

Personal Insolvency Arrangement (PIA)

A PIA can include both secured debts (such as mortgages) and unsecured debts (such as credit card and personal loans)

A PIA will normally last up to 6 years (but can be 7 years in some cases). During this time the creditors named in the PIA cannot take any legal or debt collection action against the debtor.

A PIA allows a debtor to settle and or restructure debts over a period of 6 years (but can be 7 years in some cases)

A debtor must apply for a PIA through a Personal Insolvency Practitioner (PIP). This is someone licensed by us to make DSA or PIA applications. A list of PIPs can be found on www.isi.gov.ie.

Here is how it works:

  1. Debtor applies for a PIA through a PIP.
  2. If the ISI and the Court are happy with the application, the PIP gets 70 days to develop a proposal, to be put to creditors.
  3. Debtor has to agree to the proposal.
  4. Creditors representing 65% of debt must agree with the proposal. This must include half of secured debt and half of unsecured debt.
  5. The ISI and the Court will carry out final reviews of case and debtor will then get a PIA.
  6. Details will be put on a public Register of Personal Insolvency Arrangements. (It will include name, address, year of birth and the date of the PIA). Anyone can view the register.

A debtor can only have one PIA in your lifetime

Summary

The following table lists some of the key actions under the new arrangements and which body or individual is responsible for each.

Who performs the action for each procedure?
Action DRN DSA PIA
Prepare application/proposal with debtor Approved Intermediary (AI) Personal Insolvency Practitioner (PIP) Personal Insolvency Practitioner (PIP)
Verify application Insolvency Service of Ireland (ISI) ISI ISI
Register protective certificate after Court approval n/a ISI ISI
Issue DRN Specialist judges of the Circuit Court n/a n/a
Review DSA/PIA proposal and approve or reject: if total liabilities are not over €2,500,000 n/a Specialist judges of the Circuit Court Specialist judges of the Circuit Court
Review DSA/PIA proposal and approve or reject: if total liabilities are over €2,500,000 n/a High Court High Court
Register DRN/DSA/PIA ISI ISI ISI
Administer terms of DRN/DSA/PIA when in effect ISI Personal Insolvency Practitioner (PIP) Personal Insolvency Practitioner (PIP)
Monitor operation of DRN/DSA/PIA ISI Personal Insolvency Practitioner (PIP) Personal Insolvency Practitioner (PIP)

The system will be automated as far as possible and will be closely linked with the Courts Service.

Further information is available on the ISI's website.

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