Published 10/09/2013 | 05:00
THE Insolvency Service of Ireland (ISI) has finally started accepting applications.
Q How do I qualify?
First, you must be insolvent. That means that you can no longer pay your debts as they fall due.
This could refer to your mortgage, or other debts such as credit union loans and catalogue debts, or even all of your debts combined.
Q What sort of deals are on offer?
These are the three types of debt relief deals available. These include:
1) A debt relief notice (DRN). This is for unsecured debts of up to €20,000 – debts where there is no asset the lender can make a claim on if you stop repaying the loans. So, unsecured debt does not include a mortgage.
2) A debt settlement arrangement (DSA). Again this is for unsecured debt, but this time for amounts over €20,000. There is no maximum.
3) A personal insolvency arrangement (PIA). This includes unsecured and secured debts. So, everything from a car loan to a residential mortgage, to buy-to-let mortgages. There is no upper limit on the unsecured debt that can be included in a PIA. A PIA could last for between five and seven years.
These three options are arranged outside the courts, approved by the Insolvency Service, but have to be approved by a judge in the circuit court.
Q What do I do to get one of these deals?
Anyone who wants a DRN will have to seek out what is called an approved intermediary.
State budgeting service MABS has approved intermediaries as part of its service.
When it comes to DSAs and PIAs, an authorised Personal Insolvency Practitioner (PIPS) can make applications on your behalf. See the Insolvency Service's website at www.isi.gov.ie for a list of PIPs.
Individuals need to apply through these third parties.
Just a handful of Money Advice and Budgeting Services (MABS) are currently approved as authorised intermediaries and only 37 PIPs had been approved so far.
The ISI telephone information line is on 076 106 4200.
Q What about bankruptcy?
A court determines that a person is bankrupt, and legal orders are put in place to resolve bankruptcy.
Bankruptcy is generally seen as a last option and hugely affects your credit rating.
Ordinary people can apply for bankruptcy, but the costs are high and you might lose your house, according to Paul Carroll of Neo Financial Solutions, who has produced a guide to the process.
Q What are reasonable living expenses?
If you get one of these deals, you will be required to keep to specific guidelines on weekly expenditure. These are known as 'Reasonable Living Expenses'.
There are limits on spending on food, health and entertainment. A second car is a no-no, and health insurance is out, unless you can give a good reason for keeping it.
Q Who pays the PIP?
The fees for PIPs will range from anything from €5,000 to €20,000. The fees will form part of the money going to the bank, but if you have no job and no assets to sell as part of a deal, a PIP is unlikely to take you on.