The short answer to the question posed in the title is it would be very difficult for a person to get debt relief unless they can comply with extremely strict criteria that are set out in the new Personal Insolvency Bill. The reason for the strict criteria is that the Act, when passed, will have to balance the constitutional property right of the creditor, to a debtor’s relief from the burden of a debt.
The Personal Insolvency Bill envisages setting up an Insolvency Service to oversee an entirely new regime for dealing with personal debt. The earliest that the Insolvency Service will be established will be in 2013 although the Troika, under the Memorandum of Understanding for Ireland’s bailout, are pushing to have it place as early as possible. The Insolvency Service will oversee debt relief certificates, debt settlement arrangements and personal insolvency arrangements. This article will focus solely on debt relief certificates.
In order for a debt relief certificate (DRC) to be granted to a debtor he has to have “qualifying debts” amounting to €20,000 or less and his net disposable income has to be €60 a month or less after payment of normal household expenses. A debtor must also have savings or assets of €400 or less and be or was resident at any time during the three years preceding the application that he makes.
As can be seen, the proposals in the Personal Insolvency Bill are extremely restrictive. There will be further clarification on the sum of €60 per month disposable income. A person may have to prove that they don’t spend any money socialising or have Sky TV, or put a few bob on the horses!
Qualifying debts will mean credit card debt, overdrafts or unsecured loans, rents, utilities, telephones etc.. If a creditor has obtained a Judgment, or if the debt is secured on property or otherwise then it will probably not be written off, depending on what the final wording of the Act decides.
If a person does manage to qualify for a debt relief certificate they can apply for it by going to an approved Intermediary (probably MABS) and an application can be made with a fee of €90. If a person gets a DRC then the debts that are listed in the Certificate shall not be pursued by a creditor and will have to be written off!
The provisions in relation to the DRC are appropriately very restricted. A person can only apply for a second one six years after they have got a previous one. The difficulty is it may lead to social exclusion from lenders if somebody’s name appears on the register the Debt Insolvency Service will operate.