I am unemployed, getting social welfare and living in rented accommodation. I have large credit card debts and a credit union loan of €13,300. I can’t make my repayments and the only asset I have is a car worth €1,200, which I need to take my son to school. Is there anything I can do to reduce my debts?
You may qualify for a Debt Relief Notice (DRN). This is one of three debt resolution mechanisms introduced under the Personal Insolvency Act 2012 for people who cannot afford to pay their personal debts. In general, you can qualify for a DRN if your net monthly income after deductions for reasonable living expenses is under €60 and your total assets are valued at €400 or less. There are some exceptions. You are allowed, for example, to own a motor vehicle valued at €2,000 or less. You may qualify for a DRN if all your qualifying debts are below €20,000, excluding certain “non-permitted” debts.
You must apply for a DRN through an Approved Intermediary (AI). You must disclose all details of your financial affairs to the AI, who will then advise you whether or not you meet the conditions for a DRN, the consequences, and any alternative options. The AI service is free.
The DRN provides you with protection from creditors for three years. If your circumstances do not change and you meet all the conditions of your DRN, at the end of the three-year period the money you owe to the creditors named on the DRN will be written off.
You can choose an AI from the Register of Approved Intermediaries published by the Insolvency Service of Ireland (ISI). Several Money Advice and Budgeting Service (MABS) companies have been authorised as AIs. If you plan to apply for a DRN through MABS, you will first need to answer some questions to check if you meet the eligibility criteria. You will need to gather all relevant information about your debts, assets, income and circumstances.
You can get further information from MABS on 0761 07 2000 (Monday to Friday, 9 am to 8 pm) mabs.ie or from the ISI’s helpline 0761 06 4200 (Monday to Friday, 9 am to 6 pm) and isi.gov.ie. The ISI also has a new website backontrack.ie for people who are struggling with debt.
Know Your Rights columns cover topical subjects every month in a question-and-answer format. They are published by the Citizens Information Board online and syndicated through Citizens Information Services to local newspapers around Ireland.
Further information is available from Citizens Information Centres and from the Citizens Information Phone Service, call 0761 07 4000.