UNDER the new Personal Insolvency Service, a number of new arrangements will be available for those in financial trouble, without having to declare themselves bankrupt in a court:
Q Debt relief notice
People with small amounts of debt that does not include a mortgage will be able to apply for a debt relief notice.
They can approach the Money Advice and Budgeting Service (MABS), which will charge €90 for processing an application.
The debt relief notice will apply to consumers who have no income and no assets.
What they owe will need to be under €20,000. To qualify, their net monthly income will need to be less than €60.
In general, they will not be able to live on any more a month than is set out in the Personal Insolvency living standard guidelines.
If the insolvency service is satisfied, then a certificate will be issued.
There will be a one-year period when creditors will be unable to chase the person for money. After a year, the debts will be discharged.
Q Debt Settlement Arrangement
For people who owe more than €20,000 in non-mortgage debt, there will be the option of a debt settlement arrangement.
You go to a personal insolvency practitioner. The PIP will check out your finances.
If the state insolvency service agrees, then a protective certificate will be issued protecting you from your creditors for 30 days.
If the deal is approved by creditors who are owed at least 65pc of the debt, then the arrangement is registered.
If the consumer keeps to the deal, and lives within the expenditure guidelines, their debts will be discharged after five years.
Q Personal Insolvency Arrangement
People who have debts of up to €3m – including mortgage debt, buy-to-let borrowings and other personal debts –may be able to get a deal from their creditors.
They will have to be in a situation where they are unable to ever again be in a position to meet the repayments.
They would approach a personal insolvency practitioner, and honestly outline their financial situation.
Every asset would have to be disclosed and the true extent of their income laid out.
The PIP, regulated by the State, would then work out a plan.
Under the plan, the borrower will have to live according to the income guidelines issued by the Personal Insolvency Service over the period of the agreement.
If the borrower keeps to the deal, they will get a chunk of their debt written off after six to seven years.