THOUSANDS of people whose incomes have been destroyed will be able to apply to the state budgeting service MABS to have their debts written off.
The Money Advice and Budgeting Service is set to administer a new scheme that will see those with borrowings of less than â‚¬20,000 apply to have their debts cleared.
People struggling with unsecured loans -- such as credit card debt and credit union loans -- are expected to apply. But the write-down deal will only apply to those with little or no income and very limited assets.
Many of those who are expected to avail of the scheme had good incomes until recently but have seen their careers or businesses wiped out.
They will be able to apply for what is to be known as a debt-relief certificate. If granted, their debts would be frozen for a year, after which they would be written off if their financial circumstances have not changed.
The new scheme is set to form part of the Personal Insolvency Bill, which could become law by the end of the year.
Commercial companies offering financial advice are already trying to entice heavily indebted people to sign up for their services by citing the new law -- even though the legislation giving effect to debt-relief certificates has yet to be enacted. These firms charge hefty fees.
Yesterday, the chief executive of the Citizens Information Board, Tony McQuinn, confirmed that MABS would administer the new scheme and it will cost €90.
MABS is managed by the Citizens Information Board, which in turn comes under the ambit of the Department of Social Protection.
Advisers from MABS will help indebted consumers fill out a financial statement. They will then make an application on behalf of the consumer for a debt-relief cert. This will go to the new state insolvency service, which is due to be set up.
Mr McQuinn said there would be a €90 administration cost to consumers.
He expects that a "few thousand" consumers will qualify for the scheme. But only those with very limited incomes -- or none at all -- and no assets will qualify.
He said the fact that MABS staff were considered to be trusted advisers meant it was appropriate that the agency would become the approved intermediary to administer debt-relief certs.
A spokeswoman for the Department of Justice, which is in the process of drafting the new Personal Insolvency Bill, said: "It was always likely that MABS would be involved, given its role in assisting people with debt problems."
She added that there may also be other organisations that may be interested in acting as authorised intermediaries.