The Republic of Ireland is finally rolling out meaningful assistance for debtors in Ireland with a couple of new plans. Frankly this should have rolled out in 2005 when I was there trying to get meaningful debt help for consumers in Ireland.
Regardless,the Irish papers are now reporting progress made.
“The new Personal Insolvency Bill proposes a number of reforms designed to help borrowers — including both those with secured loans, i.e. mortgages, and unsecured loans, which they are unable to repay in full — to either write off their debts or reduce them to manageable proportions.
For borrowers with unsecured debts such as bank overdrafts, personal loans, car loans and outstanding credit card balances, the Bill introduces two new debt resolution mechanisms.
For borrowers with unsecured debts of less than €20,000 “with no assets and no income and who are insolvent and have no realistic prospect of being able to pay their debts within the next five years” there will be debt relief notices.
The eligibility criteria for debt relief notices have been drawn extremely tightly. Only those with a “net disposable income” of less than €60 per month after “reasonable living expenses” have been deducted will qualify.
It’s not quite the workhouse but neither is it the lap of luxury.
Once the debt relief notice has been issued the debtor will be subject to a three-year “supervisory period” during which he or she must notify the new Personal Insolvency Service, which will be established under the terms of the bill, of any “windfalls” over €500 or any other change in their material circumstances.
Borrowers with unsecured debts of more than €20,000 will be able to apply for a debt settlement arrangement.
While those who qualify for a debt relief notice at least get their debts fully written off, those condemned to debt settlement arrangements won’t even have that consolation.
Their debts will be written down, subject to the agreement of 65pc of their creditors by value, rather than written off.
If their creditors agree to a debt settlement arrangement, the unfortunate borrower will then spend at least the next five years, a period that can be extended to six years, repaying the reduced amount which he or she owes their creditors.
For the borrower the main advantage of a debt settlement arrangement is that the family home is protected.
For borrowers with secured debts of up to €3m there will be personal insolvency arrangements.
Once again these require the approval of 65pc of all creditors and the borrower will be subject to very tight restrictions for at least the next six years, a period which can be extended to seven years, while he or she repays the reduced debt.
Finally, for those who have no option but to file for bankruptcy, the bill also proposes reducing the restriction period on undischarged bankrupts from the current punitive 12 years to just three years.” – SourceRepublic of Ireland Comes to Its Senses On Irish Debt Relief by Steve Rhode