New personal insolvency regime

Since Monday the 9th of September this year, the Insolvency Service of Ireland have been accepting applications for the new arrangements provided in the legislation. It is hoped that this legislation will assist in the economic recovery of the Country and help to reduce the overhanging personal debt.

There are well established procedures in place in the restructuring of corporate debt however the new legislation is primarily for personal debt.

There are five separate mechanisms provided for in the new legislation to enable those struggling with debt to resolve as follows:

For those with debt of less than €20,000.00 and effectively no assets, an application can be made for a debt relief notice.

For those with an unsecured debt, a debt settlement arrangement can be applied for.

For those with secured debt not exceeding three million euros, a Personal Insolvency arrangement can be applied for.

The most drastic debt resolution mechanism is through bankruptcy itself which has now been modernised.

In some instances, it will be possible to negotiation arrangements with creditors outside of the formal framework of the debt relief notice, the debt settlement arrangement, the personal insolvency arrangement and bankruptcy. It is clear that many of the banks are reaching agreement on corporate debt and it is yet to be determined if a similar approach will be taken to personal debt.

The legislation surrounding the procedures referenced above can be quite technical and we would be more than happy to advise you in relation to all and any aspect of same. It should be noted that where a successful arrangement has been entered into that it has the benefit of being legally enforceable, offering complete protection from all creditors and where the arrangements are adhered to, the debtor can be free entirely of their debts within a period ranging from three to eight years ( in the majority of cases).

There are new guide lines setting out the living expenses which will take priority to debt payment which is designed to enable a debtor to have a life style prioritising basic needs above the payment of debt. Any person interested in availing of a debt relief scheme through any of the mechanisms referenced above will need to complete a very detailed and comprehensive statement concerning their assets, liabilities, income and expenses.

Please feel free to contact Thomas Norris ( direct dial number 051-840003 and e-mail of our office for any further information in relation to the above. All information provided to us will be treated in strict confidence and once detailed information is supplied, we can advise of the options open to either debtors or creditors seeking solutions to financial problems.

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