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 :-
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.