NEW laws to allow debt write-offs could end up being a bonanza for advisers.
Solicitors, accountants and financial advisers are expected to make money from the new personal insolvency regime to be set up.
Between 10,000 and 30,000 people who are struggling with borrowings are set to attempt to get debts wiped out. The fee structure will be key to how the system works, experts said.
Paul Joyce of the Free Legal Advice Centres (FLAC) said there was a risk that new non-court insolvency arrangements could end up being a bonanza for advisers.
A new system of personal insolvency trustees, who will be regulated, will be set up to propose debt deals to banks on behalf of indebted households.
There is little detail in the legislation published on Wednesday on how these trustees would operate and nothing on how they would be paid.
"Strong criteria will needed to ensure the system of regulated trustees is not abused," Mr Joyce said.
And it emerged yesterday that the system used in the north can see advisers who negotiate debt write-off deals to banks earn fees of up to €14,000 for securing an agreement.
Ronan Duffy of McCambridge Duffy insolvency practitioners in Derry said the non-court debt settlement deals in the north and England generally generate fees of £4,000 (€4,780).
The fee is usually a percentage of what is realised for the creditors, or banks, from the debt deal.
But he was recently involved in a highly complex deal where the overall debt was £800,000. A total of £200,00 was recovered for the lenders.
The individual voluntary arrangements in the UK do not include mortgage debt.
One of the options to be introduced here, a debt settlement arrangement, will also not involve mortgage debt.
Mr Duffy said banks and other lenders were happy to pay the fees in a debt settlement deal as the alternative of a bankruptcy means they get little or nothing. Any fees have to be approved by the creditors.
"In a lot of cases, creditors are not getting anything in payments. It was banks who pushed to have individual voluntary arrangements put into law in the UK. It avoids court and means they get something," he said.
"A non-court debt settlement is still a statutory declaration of insolvency. It is not an easy option," he said.