Category Archives: Debt Relief Notice

ISI Accepting Applications for Insolvency from Sept 9th

The Insolvency Service of Ireland (ISI) announced that it will start accepting applications on Monday the 9th of September.
from authorised Personal Insolvency Practitioners and Approved Intermediaries for the new debt reliefs on behalf of insolvent debtors under the Personal Insolvency Act.

 Debt Relief Notices and Protective Certificates

The ISI will begin accepting applications for Debt Relief Notices and Protective Certificates linked to applications for Debt Settlement Arrangements and Personal Insolvency Arrangements from Monday 9th September.

In advance of this date, insolvent debtors can arrange to meet with duly authorised Personal Insolvency Practitioners or Approved Intermediaries to discuss their situation.

 

Get Your Debts Written Off in Ireland

It will soon be possible , under new Personal Insolvency Legislation , to get certain debts of up to €20,000 completely written off in Ireland. From September – people can apply for a Debt Relief Notice  (DRN) and be debt free after 3 years.

Who is Eligible?

Debt Amounts – only debts of less than €20,000 can be covered by a Debt Relief Notice (DRN). If you have bigger debts you need to look into a Debt Settlement Arrangement.

Types of Debts – Debts that can be written off under a DRN  include ; Credit Card Debts, Store Card Debt,  Overdrafts ,  Personal Loans , Credit Union Loans , Utility bills . (All unsecured) .Mortgage debts and other secured debts  are not covered by DRNs

The following type of  Debts can be included in a DRN but only if the creditor agrees:  Taxes, duties, levies  payable to the State ;  Local government charges/rates/household charges  ;  Amounts due to the HSE under the Nursing Home Support Scheme ; Service charges to owner’s management companies  ; Social Welfare Overpayments

Note – Applicants  must not have incurred 25% or more of these debts during the past 6 months

Assets: You are not eligible for a DRN  if you own assets (including property) valued at more than  €400. So homeowners are not eligible for this type of debt relief.

But – these  assets  are not counted :
1 item of jewellery worth  €750 or less
1  motor vehicle worth  €2000 or less
Reasonably necessary household furniture/tools worth less than €6,000

Income Levels– Your monthly Disposable Income needs to be below specified guidelines  – which depend on the size of your household. Disposable Income is defined as Gross Income less :-
Income tax,
Social insurance contributions (PRSI/USC) ,
Reasonable Rent Payments ,
Payments of debts that are excluded from the DRN.

These are some examples of the maximum Income levels for different households that would allow them to be eligible  for a DRN: (This is after payment of Rent)

Single Adult  €1089
Single Parent  + 1 Primary school Aged Child  €1461
Single Parent  + 1 Infant + 1 Preschool Child  €1694
Couple + 1 Primary School aged child €1727
Couple + Primary Child + Secondary Child  €2236
Couple +  2 Secondary School Children  €2439
Couple + 3 Secondary School Children €2949

These amounts are calculated from the ISI reasonable living expenses guidelines for households with a car ( plus the €60 DRN “allowance”) Note : We have included Child Benefit as income because we haven’t reduced the reasonable living expenses to take account of Child Benefit

SO – using an example listed above
A couple with 2 secondary school children who are renting a house for €800 a month would be eligible for a DRN if their net income was less than €2439 + €800  = €3239 a month.
Take out the €260 child benefit – leaving €2979  a  month.
A take home pay of €2979 a month equates to roughly €43000 annual  gross income for a single earner couple.

If this couple have debts of under €20000 they could get  them all written off  in 3 years. (As long as their assets are no more than  €400 plus 1 item of jewellery worth  €750 or less plus 1  motor vehicle worth  €2000 or less , plus household furniture/tools worth less than €6,000)

If someone on a DRN has an increase in  monthly net income of €400 or more; or they  receive a gift or sum of money of €500 or more –  they have to give  50% to the ISI for the benefit of their creditors.

Once a Debt Relief Notuce is issued it lasts for 3 years – none  of the creditors listed in the DRN can  can pursue you for the debts you owe them that are specified in the DRN. At the end of the 3 year period, all debts listed in the DRN will be written off in full.

Summary of New Insolvency System in Ireland

The Insolvency  Act will  introduce 3 new debt resolution mechanisms to help mortgage-holders and other people with unsustainable debt to reach agreements with their creditors. It will probably be July before anyone can apply for any of these.

The three proposed new mechanisms are summarised below :  Click on the links to find out more about each of them

 

A Debt Relief Notice (DRN) to allow for the write-off of debt (generally unsecured ) up to €20,000, subject to a 3-year supervision period

A Debt Settlement Arrangement (DSA) for the agreed settlement of unsecured debt, with no limit involved, normally over 5 years

A Personal Insolvency Arrangement (PIA) for the agreed settlement of secured debt up to €3 million (though this cap can be increased) and unsecured debt, with no limit involved, normally over 6 years

The Personal Insolvency Act will also introduce automatic discharge from bankruptcy, subject to certain conditions, after 3 years as opposed to 12 years at present.

MABS will be Approved Intermediary Service for Debt Relief Notices

Approved Intermediary Service is established in MABS to provide Debt Relief Notices under the Personal Insolvency Service

 

A Debt Relief Notice is  designed for people who have very low disposable income and little assets, and will allow for the write-off of qualifying debt up to €20,000, subject to a three-year supervision period.

To obtain a Debt Relief Notice, an application must be made through an Approved Intermediary. MABS will be providing an Approved Intermediary service to process applications for Debt Relief Notices

The Citizens Information Board together with MABS,  is working closely with the Insolvency Service to put the Approved Intermediary Service in place. Sixteen temporary money advice staff have been recruited to facilitate the rollout of the service within MABS.

A regionally based Approved Intermediary Service Transition Unit (AISTU) has been established and all Money Advice Co-Ordinators and one Money Advisor in each of the 51 local MABS companies around the country are being trained as Approved Intermediaries to ensure that the service will be available nationwide from the outset.

Insolvency Service of Ireland Website

The Insolvency Service of Ireland is planning to fully launch it’s website in April. The ISI  full publicity campaign launch was  scheduled for the week of  8th of April 2013. That has now been delayed until “mid April”

During April ISI plan to publish  guides to the three new arrangements: Debt Relief Notices (DRN), Debt Settlement Arrangements (DSA) and Personal Insolvency Arrangements (PIA).

The  Insolvency Service of Ireland website will contain various scenarios as to how the new arrangements may work in practice.

The ISI will also publish  Guidelines on Reasonable Standard of Living and Reasonable Living Expenses for debtors.

During that week they will also publish  information about the Regulations for the authorisation and licensing of Personal Insolvency Practitioners (PIP).

The website will be  www.isi.gov.ie

Reasonable Living Expenses

One of the features of the new Insolvency Legislation is that in order to be  eligible for a Debt Relief Notice   a person’s  net monthly disposable income is €60 or less.  The disposable income is income after deductions for reasonable living expenses .

The Insolvency Service of Ireland will be publishing guidelines  very soon about reasonable living expenses to be used here in Ireland

In England  – where similar insolvency legislation has been in place for a few years –  these are the guidelines they use for deciding what kind of expenditure is classed as being ‘reasonable day-to-day living expenses’?

Normal monthly expenses, would include rent or mortgage payments (which are reasonable for the area you live in and the size of your family), food, heating and lighting, etc.
Below are some examples of things that can also be treated as reasonable expenses in England

TV licence, TV and video hire

Household insurance

Car tax and insurance (if the trustee decides your car is ‘exempt property’ and allows you to keep it)

AA/RAC or similar membership (if you still have your car)

Membership of a professional body, needed for your job (unless your employer pays for this)

Prescriptions/dental treatment/opticians

Payment under a maintenance order or Child Support Agency assessment

Mobile phone (a reasonable monthly cost)

Dry cleaning

Other expenditure items that could be considered:

Clothing

Holidays

Hairdressers

Extra curricular activities for children

After school clubs

Pets

Rent arrears

This is not meant to be a complete list, and other expenses could be considered.

 

What kind of expenditure would not be classed as ‘reasonable day-to-day living expenses’ in England ?

The following are examples of expenses which are likely to be disallowed (unless there are special circumstances):

Gym membership, any sports expenses or club membership

Additional pension contributions to enhance a pension

Private healthcare insurance

Money for gambling, alcohol or cigarettes

Satellite TV

Excessive mortgage payments

Regular payments to charitable and religious organizations/tithing

Again, the list is not meant to be complete.

Debt Relief Notices – More Details

Debt Relief Notices  – The Details

The new Irish Personal Insolvency Laws have introduced something called a Debt Relief Notice. The Debt Relief Notice process is like a simplified bankruptcy. It allows for the write off of up to €20,000 of debt  after 3 years .

Debt Relief Notices  are only for debts of  €20,000 or less and only for  people who  have no income and no assets, are insolvent and have no realistic prospect of paying their debts within the following five years. In particular, this will be of relevance to those who do not own their home.

Who qualifies for a Debt Relief Notice

You may be eligible for a Debt Relief Notice if ..

a) your  net monthly disposable income is €60 or less. (Your disposable income is your income after deductions for reasonable living expenses and payments to cover debts that are excluded from this process) . All income, with the exception of Child Benefit, is taken into account.

AND

b) The total value of your assets is €400 or less. Assets  include savings, shares and property.
Assets do not include:

· Essential household equipment and appliances

· Books, tools or equipment needed for employment or business

· One motor vehicle up to a value of €1,200 or a vehicle that is specially adapted for you as a person with a disability

The Debt Relief Notice  covers most types of debt, for example, debts arising from credit cards, overdrafts, personal loans and utility bills. If you owe money because of a hire purchase agreement, you must give up possession of the relevant goods. The outstanding amount can then be treated as a qualifying debt for the purposes of a Debt Relief Notice.

 

The following debts are excluded from the process:

· Debts under family law orders – for example, maintenance orders for spouses and children

· Taxes, duties or levies owed to the State including  the Household Charge and rates

· Money owed to the Health Service Executive (HSE) under the Nursing Homes Support Scheme

· Debts due to owners’ management companies in respect of annual service charges for multi-unit developments

· Debts due under court awards for personal injuries or death

· Debts arising from a loan (or forbearance of a loan – an arrangement to postpone or otherwise rearrange payments) obtained through fraud or similar wrongdoing

Who is not eligible

You will not be able to get a Debt Relief Notice if:

· You have already had one

· You have applied for a protective certificate  in the previous 12 months

· You are currently a party to a Debt Settlement Arrangement or a Personal Insolvency Arrangement or you have successfully completed such an arrangement within the previous five years

· You are involved in bankruptcy proceedings, you are an undischarged bankrupt or you have been discharged from bankruptcy in the previous five years

· You incurred 25% or more of the debts in the six months before you applied

· In the previous two years, you have entered into any transaction at an undervalue or given a preference to any person (where you have intentionally done something to put one creditor in a better position than others)

Approved intermediaries

You may apply for a Debt Relief Notice only through an approved intermediary (the Insolvency Service are going to decide who will be approved intermediaries.) The Money Advice and Budgeting Service (MABS) will be an approved intermediary .

Approved intermediaries may not charge you any fees for their services but the Insolvency Service may give them a grant out of the fees that it collects for its services.

Approved intermediaries will not be liable for damages resulting from their actions unless there is bad faith involved – in effect, the usual rules about professional negligence will not apply to them.

You must disclose all details of your financial affairs to the approved intermediary. The intermediary will then advise you whether or not you meet the conditions for a Debt Relief Notice, the consequences of getting such a notice, the alternative options that may be available to you, and the fees (if any) that you may incur in the process. If you decide to proceed, you must confirm this intention in writing.

The intermediary will help you to complete a Prescribed Financial Statement and will process the application if they consider that:

· The information in your statement is complete and accurate

· You meet the conditions for eligibility

· It is appropriate for you to apply for a Debt Relief Notice (note that appropriate means that there is a reasonable prospect that getting such a notice would facilitate you becoming solvent within five years)

If the intermediary is satisfied about all of this, they will issue a statement to that effect.

The application is then made to the Insolvency Service. The application must include all the details of your financial affairs and your debts. If the Insolvency Service considers that the application is in order, it will issue a certificate to that effect and notify the Circuit Court. The Circuit Court will then review the application and documentation and, if satisfied that the conditions are met, will issue a Debt Relief Notice.

The Court will notify the Insolvency Service, the approved intermediary, you and the relevant creditor(s) of the notice. The notice will relate to specific debts and specific creditors; you may well have other debts that are not covered by it and those creditors are not affected by it. The Insolvency Service will put details of the notice on its Register of Debt Relief Notices.

Supervision period

If you get a Debt Relief Notice, you will be subject to supervision for three years. This period may be extended by the court in certain circumstances.

During the supervision period, the creditor(s) will not be allowed to pursue any action against you for the recovery of the debt. If the debt was guaranteed by another person, the creditor may take action against that person.

During the supervision period, you will be obliged to tell the Insolvency Service of any change in your circumstances, for example, any increases in income, assets or liabilities. If you receive a gift worth €500 or more, you must surrender half of it to the Insolvency Service. If your net income (after tax, PRSI and Universal Social Charge) increases by more than €250 a month, you must surrender half of that increase as well. If you manage to surrender half of the total debts covered by the Debt Relief Notice, then you no longer have to surrender any further money. You may not get credit of €650 or more from any source without informing that source that you have a Debt Relief Notice.

 

At the end of the 3 year supervision period – the Debt Relief Notice ends and you are  discharged from the debts and any interest or penalties on those debts. Your name is then removed from the register and you are given a Debt Relief Certificate

Debt Relief Notice – How Will it Work ?

Under legislation due to come into force in Ireland in 2013 – A Debt Relief Notice  or DRN will  provide an alternative to bankruptcy  and will help you deal with certain types of debt if you :

  • do not own your home
  • have very  little spare income
  • have little chance of your financial situation improving

These notices  will be issued by a new body called the Insolvency Service and once you have one it means that :

  • your creditors (people you owe money to ) can’t take any action to recover their money.
  • you are not allowed to make any payments towards your debts
  • you will be discharged (freed) from your debts when the DRN ends –  after 3 years.

A DRN can be amended or cancelled if your financial situation improves.

To get a Debt Relief Notice  you must:
* owe less than €20,000
* have less than €60 a month spare income – after paying essential bills like rent or food
* have less than €400 worth of assets – (not including motor vehicles worth less than €1200)
* not have applied for a DRN in the last six years

An application for a Debt Relief Notice by a  debtor must be done through an  an approved intermediary . Details of approved intermediaries will be made public. MABS will be providing this service .

More information to follow when these DRNs are available on how to apply.