New Personal Insolvency  legislation for Ireland is being promised by the government before the end of April 2012. It is something that the IMF and EU demanded as part of the bailout agreement.
Debt forgiveness has been  discussed many times over recent years – and now this bill will  hopefully help to address some of the  financial difficulties that many people in Ireland are experiencing .

There are going to be three main types of debt settlement systems that will not involve going to court.

1)  Debt Relief Certificate  or DRC – which will allow for the full write-off of  smaller qualifying unsecured debts of  up to €20,000, after a one-year period.  Applicants will need to be unable to pay the debts because their disposable income is less than €60 a month and their assets and savings are less then €400.  Applicants will have to go through an approved intermediary and  pay a processing fee of €90. See more about Debt Relief Certificates here

2)   Debt Settlement Arrangement  or DSA  which caters for the agreed settlement  of larger unsecured debt of €20,001 or more.
It will involve agreeing the repayment of some or all of the debts. At the satisfactory conclusion of the DSA after 5 years, all the  debts covered by it would be discharged in full. A  DSA will have to be prepared by a personal insolvency trustee.
More details here about Debt Settlement Arrangements

3)  Personal Insolvency Arrangement  (PIA) which is for the agreed settlement of both secured and unsecured debt of €20,001 and over. It allows for  unsecured loans to be completely settled over a six year period.

The treatment of mortgages and other secured loans is more flexible.  They can be settled over a six year period (e.g. where there is a sale of the property) or restructured and continue in existence beyond the six years  period (e.g. write-down of some of the loan principal, or deferred interest )

A PIA also has to be prepared by a personal insolvency trustee.

Read more about Personal Insolvency Arrangemants here .

The option of Bankruptcy will still be available through a legal process BUT  the  automatic discharge from bankruptcy will be reduced  to 3 years instead of  the current 12 years (subject to certain conditions)

Proposed new Insolvency laws in Ireland will allow for the full write off of  certain debts under €20,000  with a Debt Relief Certificate or DRC.
The changes are expected to come into force in the first half of 2012.

A Debt Relief Certificate will apply  to unsecured debts only – so mortgages will not be covered. It will cover debts such as  Bank Overdrafts , Rent, Credit Cards, Personal Loans  , Gas, Electricity Phone .
Debts over €20k will be dealt with by a Debt Settlement Arrangement

(Mortgage debts will be covered by a Personal Insolvency Arrangement)

To be eligible for a DRC – the debtor
1)  Cannot have more than  €60  a month disposable income (after payment of normal household expenses and payments in respect of any other excluded debts such as mortgages).

2) Cannot have  assets or  savings worth more than €400.(So homeowners will be excluded) . (Assets do not include:  a) any household equipment such as bedding, clothing and furniture ; (b) tools, books and other items of equipment used by the person in their job or business ; c)  a single car worth less than €1200 )

Applications for a Debt Relief Certificate will be handled by a new body called the Insolvency Service . Applications will have to be made through authorised intermediaries  and will cost €90 . The fee is to pay the Insolvency Service.  (How will someone with serious debts be able to afford this?)

Once a Debt Relief Certificate has been issued by the Insolvency Service- any creditors listed on the  certificate who are owed money cannot  start  any action or other legal proceedings  to recover  the debt.

At the end of a  moratorium period – (expected to be a year) -  the debtor will be  discharged from all the  debts specified in the debt relief certificate (including all interest, penalties and other sums whichmay have become payable since the application date

A person who is granted a Debt Relief Certificate cannot apply for another  DRC for  6 years.  A person can only ever obtain two DRCs in their lifetime.  They will