Access to credit is something most of us take for granted, whether it’s an overdraft, personal loan or mortgage, and provided your repayments are manageable, everything is generally fine.
However, if the unexpected happens, such as illness or layoff, and your situation changes, you could find yourself unable to cover your debts and become insolvent through no fault of your own.
This has been accentuated during the Covid pandemic, which has led to people losing their jobs and many businesses struggling to make ends meet.
If this sounds familiar, don’t worry – help is at hand. The Insolvency Service of Ireland (ISI) is a government organization that helps people from all walks of life get back on track following debt problems.
The ISI has a website ( backontrack.ie ), an information line and a network of regulated advisers – approved intermediaries (IAs) and personal insolvency practitioners (PIPs) – to help you determine what your options are.
A PIP will deal with all of your creditors to find a long-term solution to your debt problems. During this time, you will obtain a certificate of protection, which means that your creditors will not be able to contact you. Informal solutions offered by lenders or debt advisers that are not regulated by the ISI cannot offer this protection.
Once you have contacted the ISI and established that you have a debt problem, several solutions are available to you depending on your situation:
A DRN is the right solution for someone with less than €35,000 in debt, few assets and low income. It basically allows you to cancel your debt entirely.
A DRN is not suitable for mortgage debt, but rather for personal loans, credit cards, overdrafts, etc.
Once you have registered for a DRN, creditors cannot contact you to ask you to repay your debts for up to three years – after which all unmanageable debts will be completely forgiven.
- Debt Settlement Arrangement (DSA)
A DSA is useful if you are having trouble with unsecured debt, such as credit cards, personal loans, or overdrafts. This is a formal agreement with your creditors that will cancel part of your debt.
If you enter into a DSA, your PIP will negotiate with creditors on your behalf, which means that they will no longer be able to contact you with demands for payment. You will be required to pay a percentage of your overall debt, depending on what you can afford, and once you have made all agreed monthly payments, the remaining debt will be written off.
- Personal Insolvency Arrangement (PIIA)
If you have secured debt, such as a mortgage, as well as unsecured debt that you cannot repay, a PIA might be the best option for you.
This is a formal agreement with your creditors that will see some of your unsecured debt written off and secured debt restructured while in most cases being able to keep your family home.
If you have explored all of the other avenues mentioned above and they are not suitable for your particular situation, you may be eligible to file for bankruptcy.
This is a formal procedure in the High Court for people who are over €20,000 in debt. Once you are declared bankrupt, all your unsecured debts are written off.
In this scenario, your property and possessions will be transferred to the official assignee, who will deal with your creditors. Bankruptcy usually lasts for a year and all of your debts will be written off.
Each of the above debt solutions is designed to get you back on track financially, which means that at the end of the process, you will be solvent again.
The ISI believes that you are entitled to a reasonable standard of living while dealing with your debt, which is another reason to contact them as soon as possible as you may be better off.
For more information about ISI and the services they offer, visit backontrack.ie, call their information line on 01 764 4200 or send a free text to GEHELP on 50015 to be called back.
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