The Insolvency Service of Ireland has released some useful real life examples of debt write off – and the figures might surprise some people.
Debt Settlement Arrangement
One example was of a a female aged 37, married, employed on a part
time basis, with one child in preschool and
another in primary school .
In this case she had debts of €31,534 (unsecured bank loans and credit card debts) . She had assets of a car worth €500 and €348 cash in the bank . Her monthly net income was €1209 and her “reasonable living expenses” came to €1980 when rent costs were included. This meant her income was €771 a month below her assessed needs. (before any debt repayments)
In cases of debts over €30k – the applicant would typically be just considered for bankruptcy. However she was able to get a lump sum of €9,500 from a relative to make available to her creditors
and to cover her PIP’s fee. This payment was split between the creditors and 77% of the debtor’s debt was written off. (€24000).
. In order to remove any perceived barrier to seeking help, the Insolvency Service of Ireland (ISI) SI has suspended all application fees for debt solutions until the end of 2015. Previously, these fees were €100 for a DRN, €250 for a DSA and €500 for a PIA.
“Application fees were raised by some people as a potential barrier,” said Lorcan O’Connor, “so we have removed them. We have tried to remove as many obstacles as we possibly can. While the majority of Personal Insolvency Practitioners (PIPs) charge a consultation fee, in almost all cases this is in the region of €100-€300 and some may not charge an initial fee at all. When a PIP takes on your case, you get protection from your creditors, you may have more to spend at the end of each week on food and day-to-day expenses, and you will be on a path to a fresh start.”
The ISI’s information campaign, ‘Back on Track’, will feature a new user-friendly website www.backontrack.ie, with videos and personal stories from people who have gone through the insolvency process successfully. Print and radio ads will run in regional and national media, starting this week. Guides to the three debt solutions have been revised and simplified, and the ISI will host a series of townhall meetings with community leaders in seventeen venues around the country.
A new government mortgage advisory service, which is to be funded by the banks, is expected to begin work by the end of the summer. The Citizens Information Board will have the overall co-ordinating role of the new advice service .
MABS ( Money Advice and Budgetary Service ) will not have a role in the new mortgage advice service – even though they have years of experience in providing support for people in debts.
It is going to be confusing for people with mortgage problems – MABS is well known as the place to go if you have debt problems.
At the moment people in debt are advised by th egovernamnt and the banks to go to MABS
The MABS helpline is 0761 07 2000 and is open from 9am to 8pm, Monday to Friday. MABS also operates a nationwide network of centres, staffed by specialist money advisers, as well as an email service email@example.com.
You can also contact your local Citizens Information Centre for face-to face information and advice, phone the Citizens Information Phone Service on 0761 07 4000, Monday to Friday, 9am to 9pm,
Ratings agency FITCH has said that Debt forgiveness will be “the dominant factor shaping the Irish mortgage market” if the proposed personal insolvency bill is made law.
Earlier this month, Moody’s rating agency said a quarter of all Irish mortgage debt was susceptible to being written down under proposals in the new personal insolvency legislation
The ratings agency said the proposals were “credit negative” for bonds backed by residential mortgages sold by Irish institutions.
Money Advice and Budgeting Service (MABS) could end up running the new State-run insolvency service .
The insolvency service is to be set up under the Personal Insolvency Bill.
It will be responsible for helping people to manage personal debt through budgeting advice and new arrangements with lenders.
Labour TD Anne Ferris said she would seek her support for the nomination of Mabs, when insolvency practitioners address the committee next week.
Among the groups invited to address the committee next week are Mabs, Free Legal Advice Centres (Flac) and advocacy group New Beginning.
MABS has over 60 offices across the State and Ms Ferris said they seemed the “obvious choice to be the designated intermediary under the insolvency Bill”.
The Citizens Information Board currently has statutory responsibility for Mabs but Ms Ferris’s proposal would see the agency attain statutory responsibility in its own right.