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Identify the most appropriate debt solution for you
The Personal Insolvency Act 2012 introduced a number of debt solutions to help individuals reach agreement with their creditors, thus restoring an individual to solvency.
The Act provides for three new forms of personal insolvency that can be invoked, being a Debt Relief Notice (DRN), a Debt Settlement Arrangement (DSA) or a Personal Insolvency Arrangement (PIA).
A Debt Relief Notice (DRN) allows for the write-off of qualifying debt up to €20,000, subject to a 3-year supervision period with an exit at the earlier of payment of 50% of debts or three years after entering the process. A debtor is entitled to a reasonable standard of living and can only obtain one such relief notice in a lifetime.
A Debt Settlement Arrangement (DSA) is a scheme of arrangement formulated by a licenced Personal Insolvency Practitioner (PIP) and only includes unsecured debts with no limit on the amount of debt. A 70 day protection period is given to formulate an arrangement (additional 40 days may be available). A debtor is provided with protection from unsecured creditors and debts are settled over a period of up to 5 years (extendable to 6 years in certain circumstances). A DSA must be agreed by the debtor and approved at a creditor’s meeting by 65% of creditors (in value). In addition it must be processed by the Insolvency Service of Ireland (ISI) and approved by the Court. If successfully complied with, the debtor will be discharged from debts specified in the DSA at the end of the period.
As with a DSA, a Personal Insolvency Arrangement (PIA) involves the appointment of a licenced Personal Insolvency Practitioner (PIP). A PIA includes both unsecured debt and secured debt. The secured debt is limited to €3m, unless written consent is obtained from all secured creditors. Under a PIA, a debtor’s unsecured debts will be settled over 6 years (extendable to 7 years in certain circumstances). Depending on the terms of the PIA, the debtor may be released from secured debt at the end of the PIA period. A PIA must be agreed by the debtor and approved at a creditors’ meeting by a qualified majority of creditors. In addition it must be processed by the ISI and approved by the Court.
If you’re an individual facing financial difficulties and you can’t seem to find a solution to your problems on your own, Deloitte can provide timely and invaluable support – and the sooner you contact us, the quicker we can help you stabilise your financial situation. We can advise sole traders, Directors of collapsed companies and any individual with personal liabilities.