Personal Insolvency Bill

Michelle2012

Hi,

Hope this is the right place for this question. I have read up on the Debt Relief Certificate and understand that basically debts are frozen for a year and if the situation is unchanged at the end of the year the debts are written off. Further to this I want to know for how long will this be on my credit rating, affect future borrowing such as a mortgage etc. I cannot seem to get any clear answer on this. I read a line from businessandfinance.ie that said 'the Personal Insolvency Bill will also reduce the period for the automatic discharge from bankruptcy from 12 years to three' but was unsure of its meaning. Any help would be much appreciated.

roro2

It doesn't directly address your question, but some info from the Dept of Justice website:

General conditions for a DRC
• debtors would have qualifying debts of €20,000 or less;
• debtors will have a net monthly disposable income of €60 or less after provision for "reasonable" living expenses;
• debtors would hold assets (separately or jointly) to the value of €400 or less (one vehicle up to value of €1,200 would be exempt from the asset test);
• debts qualifying for inclusion in a DRC are unsecured debts: e.g. credit card, personal loan, catalogue payments, etc;
• debts that will not qualify for inclusion in a DRC include: secured debt, court fines, and family maintenance payments.

Where a DRC has been granted by the Insolvency Service
• it will be formally registered;
• a further DRC cannot be applied for before 6 years has elapsed;
• a DRC may not be availed of more than twice;
• there is a restriction on the debtor from applying from further credit.

I have also seen other documentation that states that obtaining a DRC will affect future access to "credit of any kind and provision of utility and other services", but I'm not sure whether this was an official document or not. It may be the case that the period that a DRC would affect someone's credit rating will not be part of the legislation, but will be down to individual credit institutions and personal circumstances (at a guess).

The bankruptcy period being reduced to 3 years is separate legislation to the personal insolvency legislation, and I can't really see that this will directly impact someone with a DRC.

2moreMinutes

• debtors will have a net monthly disposable income of €60 or less after provision for "reasonable" living expenses;

Does this mean €60 or less remaining after:

- provision for "reasonable" living expenses or €60 after living expenses AND after making loan/CC repayments? or

- provision for "reasonable" living expenses but BEFORE making any repayments on loans/CC's?

Seems like if its the former, everyone with that size of debt would get a free pass?

roro2

(1) The following general conditions shall apply in regard to an application for a Debt Relief Certificate,
(i) the debtor has qualifying debts amounting to €20,000 or less.
(ii) the debtor has available net disposable income of €60 or less a month after payment of normal household expenses and payments in respect of excluded debts.

(iii) the debtor has assets and savings worth €400 or less.

A max of €60 per month after making loan/mortgage repayments on debts that do not form part of the DRC (any secured debts, or anything over the €20k limit), with details to be confirmed by an Insolvency Practitioner.

I don't think it will really be a free pass, more of a last resort, given the limited scope (debts < €20k), requirements on assets being < €400, restrictions on any form of future borrowings, no prospects of an improvement in circumstances, etc. In saying that, it will be the right move for some.