12th September 2013
By Andrew Graveson
Last month we added an article to the site reporting on the range of new personal insolvency debt solutions that were being created in Ireland. The process has now moved forwards with the Insolvency Service of Ireland beginning to accept applications for a DSA (Debt Settlement Arrangement) or a PIA (Personal Insolvency Arrangement) this week. Some of our team have been involved in the creation of new advice websites covering these subjects.
What exactly is a debt settlement arrangement? Like an IVA in most of the UK, a DSA is a personal insolvency procedure that can be used to deal with serious unsecured debt problems while avoiding the need to become formally bankrupt. In fact the DSA process has many similarities with the way that individual voluntary arrangements are handled here in the UK.
An IVA must be set up by a licenced insolvency practitioner, a role which in Ireland will be known as the personal insolvency practitioner (or more commonly known as the PIP). As in the UK the insolvency practitioners have been drawn from the ranks of accountants and lawyers. There have also been applicants from the Irish financial advice sector as well. They’ve had to pass an exam as well as proving that they meet the stringent authorisation requirements of the ISA (the Insolvency Service of Ireland) in a number of important areas such as tax compliance.
A financial statement will be prepared to analyse what the debtor is able to contribute towards their debts. This analysis will factor in the reasonable financial needs of the debtor’s household when assessing how much they can afford to pay into the DSA. The PIP is responsible for negotiating a contributory arrangement that is affordable for their client but likewise acceptable to the creditors. The debtor’s assets will also be reviewed though keeping the individual in their home will be a priority wherever it is fair and reasonable for this to be the case.
Provided that the debtor meets their responsibilities to their debt settlement arrangement (DSA) they should be restored to solvency once the arrangement has been completed. The PIP will draw their fees from the contributions and distribute the remainder to the creditors by way of a dividend. Any element of the debts that haven’t been fully repaid will cease to exist legally upon discharge from the DSA.
As in the UK, debtors will have a number of options to choose from. They can also consider informal repayment plans (debt management plans), debt relief notices, personal insolvency arrangements and bankruptcy. There are also established processes to resolve mortgage debts directly with the lending institutions without recourse to personal insolvency.
A new debt advice forum (similar to our own) has been created where members of the public can ask questions about debt settlement arrangements and the other new personal insolvency processes. Anyone that asks questions on this DSA forum will be able to obtain answers from licenced insolvency practitioners, debt advice experts and very shortly also from personal insolvency practitioners.