THE first personal insolvency case has come before the courts – in a move legal experts said offers hope for thousands who are deep in debt.
A Donegal man was granted protection from his creditors for 70 days, as part of the first steps in a formal debt deal.
The case was heard in Monaghan before a new special circuit court judge, who was appointed to deal with cases processed by the new Insolvency Service of Ireland.
It is understood the man has six-figure borrowings that he is unable to repay. He is seeking a debt settlement arrangement, which involves debts other than mortgage borrowings.
A debt settlement arrangement involves a person paying back what they can over five to six years, and at the end of this time they are likely to get some borrowings written off.
The Donegal man will now have to agree a deal on what he can repay his creditors.
The case was brought by New Beginning lobby group of legal experts, which helps people who are over-indebted.
Barrister Vincent P Martin of New Beginning said that experience of similar cases in Britain suggested that up to 70pc of debts could be written off with these type of deals.
"This is a significant milestone for the ordinary people of Ireland on the road to financial recovery," Mr Martin said.
However, it would require the borrower to meet an agreed schedule over five to six years, and meet strict rules on what they can spend – on everything from food to doctors' visits. After that period, the remaining debt would be written off.
Insolvency Service of Ireland CEO Lorcan O'Connor told RTE he welcomed the development.
It is expected that there will be further cases in the coming weeks, and that these will include Personal Insolvency Arrangements for mortgage borrowers.