Personal Insolvency

What are the Personal Insolvency Solutions that a Personal Insolvency Practitioner can provide?

There are two Personal Insolvency solutions that a Personal Insolvency Practitioner can provide:

A PIA, or Personal Insolvency Arrangement is for both secured and unsecured debt.

A DSA or Debt Settlement Arrangement is for unsecured debt only.

Both resolution mechanism are legally binding and supported by law. Every month you pay your creditors one affordable payment through your Personal Insolvency Practitioner who in turn distributes that payment to your creditors. Any unsecured debt balances that remain after the PIA or DSA is complete are written off, while secured debt balances are dealt with according to the terms of the PIA agreement.

What is a Personal Insolvency practitioner (PIP)?

A Personal Insolvency Practitioner is the person who sets up and administers your PIA/DSA throughout its term. They talk to your creditors, deal with any court proceedings, and run your PIA/DSA on a daily basis until you have made all the payments you have committed to and are discharged.

How long does a PIA/DSA last?

A PIA can last from 6 months to six years, although sometimes depending on events it can be extended by a year if you have an emergency and have to take a payment break.

A DSA has a maximum duration of 5 years which can be extended by a year if you have an emergency and have to take a payment break.

What debts can be included in a PIA/DSA?

A DSA is for unsecured debts that would mainly be loans, credit cards, store cards and overdrafts.

PIAs differ from other debt management solutions in that you must have both secured and unsecured debt to apply. Secured debts would include mortgage arrears, hire purchase agreements and any loans secured to a property that you can no longer afford to pay.

Do I have to actually live in Ireland to have a PIA/DSA?

Yes, you have to have lived in Ireland for the 12 months prior to starting the process of applying for a PIA or a DSA.

Will I have to sell my home?

One benefit of a PIA or DSA is that you will not be asked to sell your home. You may be asked to release some equity from it if this is available and if you can find a lender willing to re-mortgage. The one exception to this is if the costs of running your home greatly exceed expected costs and are far beyond your budget, in this case your PIP will look at whether it would make financial sense for you to move somewhere less expensive.

What if I have a buy-to-let property but I’m renting at the moment?

You may not be asked to sell your Buy-to-Let unless the costs of doing so are so high it does not make financial sense to continue to pay for it. As far as your rental home in concerned, if the costs of living in it are within expected limits given your income and expense you will not be asked to move somewhere less expensive.

What will happen to my assets if I have a PIA/DSA?

Use of your assets to help mitigate your debts are down to the discretion of your PIA/DSA. It is unlikely you will be allowed by your debtors to carry a large balance of assets while they are only getting a percentage of what they are owed.

Will I lose my car?

PIPs have specific rules to abide by concerning cars, although they are able to use some discretionary powers within those rules. Generally, if you live and work in a city with good public transport links you may have to prove a solid financial case for keeping your car if public transport is cheaper. If however you have to travel some distance to your place of work or live rurally then you will be able to use a car. Two car households will be assessed to see if they can reduce to one car. A car value of €5,000 is deemed acceptable in most cases.

Could I lose my job if I have a PIA/DSA?

The vast majority of occupations will not be affected by your decision to have a PIA/DSA. However, some occupations may require a modification in regulatory body oversight if you are subject to a PIA/DSA. These may include roles where you are responsible for other people’s money, such as solicitors and accountants.

Could a PIA/DSA stop me getting a job?

The Personal Insolvency legislation does not require that you inform an employer that you are in an arrangement. Many persons whom we have assisted have changed jobs while in arrangements.

Can I have a PIA/DSA if I am self-employed?

Being self-employed is no impediment to having a PIA/DSA. As long as you fulfil the eligibility requirements and have an income that could provide a surplus every month to pay to your creditors you can apply for a PIA/DSA.

Can I have a PIA/DSA if I am unemployed?

Yes you can in circumstances where you might be lucky enough to have third party assistance or assets that can be encashed.

Do I have to deal with my creditors?

Once your Protective Certificate is in place you will no longer have to deal with your creditors. They must go through your PIP at all times. If they ring you can simply give them your PIP’s contact details and request they speak to them.

Does a PIA/DSA affect my credit rating?

Yes, a PIA/DSA will affect your credit rating and it is unavoidable. However, one of the criteria for having a PIA/DSA is that you are no longer able to make your payments to your creditors so your credit rating will already be affected by defaults and arrears that being recorded every day.

What if I change my mind and don’t want to do the PIA/DSA anymore?

Once you have started your PIA/DSA and change your mind, the consequences can be very serious. First, if you cease making payments your PIA/DSA will be deemed to have failed. Once this happens your creditors can take action against your immediately to recover their money. The PIA/DSA holds your creditors at bay only while you are paying it. A PIA/DSA can only be entered into once in your lifetime.

Can I keep an inheritance or lottery win?

You will have to declare a lottery win or inheritance to your PIP, as it will only be a matter of months before they find out during an annual review of your finances. It is up to them how much of the lump sum you get to keep, but they will almost certainly want to a good chunk to go towards paying your creditors.

Can I keep a credit card?

Under the rules of a PIA/DSA you cannot take on any more than €650 of credit without being legally required to tell the lender. As it stands, you may find that your PIA/DSA is flagged up to any credit card provider when they do a credit check on you, so you may be turned down by them for credit as a result.

Can I keep my bank account?

You can keep your account where you keep it in credit. The banks however can and do apply set off against a debtor’s account whereby they will take funds in credit to set off against debt owing on the date that a Protective Certificate issues. For this reason we advise all debtors who are pursuing a PIA/DSA to open a new account with a bank that they do not have any debts with.

More information

For access to the ISI short guide to DSA please follow this link.

For access to the ISI detailed guide to DSA please follow this link.

For access to the ISI short guide to PIA please follow this link.

For access to the ISI detailed guide to PIA please follow this link.