If you have ever looked at the insolvency laws in the Republic of Ireland, you will find that they are very harsh, and very antiquated.
You basically lose any property or anything you may have, cannot have a bank account, and are considered bankrupt for a long period of time.
Again, harsh and antiquated.
The other side of that coin is the UK, where the insolvency laws are much more relaxed in that you are only bankrupt for 12 months, and there are options to help you avoid going bankrupt; things like an IVA/Individual Voluntary Arrangement, and debt management plans. And in 2009 a new form of insolvency went into effect, Debt Relief Orders, or DRO’s. This is a sort of mini-bankruptcy, or bankruptcy-light as I like to call it.
But now the government in ROI is looking at proposals to change the options people may have if they find themselves in debt, and also if they need to go bankrupt.
This is a good thing, and also on the heels of how the sinking economy, bailouts, and increase in unemployment and debt levels, has caused many people in ROI to find themselves in debt and with no real way to turn for help.
The proposals being looked at are three types of voluntary settlement arrangements, and a three (3) year bankruptcy term.
This is actually a step further than what is in the UK.
The first proposed debt option would be for people with debt up to €20,000 and would be called a Debt Relief Certificate. This would similar to a Debt Relief Order in the UK.
The second option or solution, would be a Debt Settlement Arrangement, which is a five (5) or six (6) year programme to payback the debts. This sounds similar to an IVA/Individual Voluntary Arrangement in the UK.
Both these types of repayment plans are for unsecured debts only.
Next is a Personal Insolvency Arrangement, which covers secured and unsecured debts over €20,000. This arrangement could last for six (6) or seven (7) years and could include mortgages.
We’ll need to wait and see if it is for mortgages where a person is still residing in the property. In many instances once a property is repossessed, and sold, the shortfall is then unsecured.
And the final option is bankruptcy, which would have a three (3) year discharge period.
No word on payments to the bankruptcy, or how they would be calculated.
The three debt solutions would require both the lenders and the borrower to volunteer and agree to the solution or settlement. This would keep the case out of the courts, where as bankruptcy would involve the courts.
This is the same as in the UK as well.
For me this brings up a few, well a lot, of questions, but all in all is a good sign and something much needed for those experiencing debt and financial issues.
