Debt Relief Notices – What are they and how do I apply?

1. Debt Relief Notices – What are they and how do I apply? Colette Bennett, Project Development Manager, Approved Intermediary Service Transition Unit, MABS ndl

2. Disclaimer This presentation is for information purposes only It is not intended as training or legal / financial advice. If you require advice in relation to your specific circumstances, please contact MABS, FLAC or a suitable alternative.

3. Presentation Outline • What is a Debt Relief Notice? • How will I know if I’m eligible? • What are the effects of a Debt Relief Notice? • How do I apply?

4. Debt Relief Notices • What are they? • Provided for by the Personal Insolvency Act, 2012 • Debtors with low levels of debt, assets and disposable income • Subject to a 3 year supervision period – write off at the end • Applied for through an Approved Intermediary

5. Debt Relief Notices - Eligibility • Three “headline” criteria • Debt Levels • Asset Levels • Net Disposable Income • And “Other” • Require a little more discussion to determine

6. Debt Levels • Qualifying Debt of €20,000 or less • Includes personal loans, credit cards, credit union loans, store cards etc. • Does not include Excluded Debts • May include Excludable Debts

7. Debt Levels • Excluded Debts • Domestic support orders • Debts arising from personal injury / wrongful death claims • Loans obtained through fraud / embezzlement • Court fines for criminal offences / Court Orders under the Proceeds of Crime Acts

8. Debt Levels • Excludable Debts • Taxes / duties / levies or other charges owed to the State • Local Government Charges • Household Charge • Local Authority Rates • Debts due under the Nursing Home Support Scheme • Management Service Charges • Debts due under the Social Welfare Consolidation Act

9. Debt Levels - Example John has €32,000 worth of debt, as follows: • €12,500 owed to credit card companies • € 4,500 owed to legal moneylenders • € 9,000 owed to the Revenue Commissioners • € 6,000 owed in arrears of maintenance payments What are his qualifying debts?

10. Asset Thresholds • General - €400 • Exceptions: • Car - €2,000 • One item of jewellery - €750 • Household Goods / Tools of Trade - €6,000 • Books / Equipment needed for primary / secondary education • Interest in a pension

11. Net Disposable Income • €60 per month • Statutory Calculation: • Income (excl. Child Benefit) • LESS Reasonable Living Expenses • LESS tax, PRSI, USC, levies • LESS payments to excluded debts • LESS payments to excludable debts

12. Net Disposable Income - Example Jane is a shop assistant earning €1,200 per month after tax etc. She lives alone and has no car. She shares a house near work and pays rent of €200 per month. According to the ISI Guidelines her Reasonable Living Expenses are €900.08 plus reasonable housing costs. She has a debt to the Department of Social Protection and pays €100 per month to this. What happens if this debt is permitted?

13. Net Disposable Income - Example DoSP Debt not included Income €1,200.00 LESS RLEs €1,100.08 LESS DoSP € 100.00 Net Disposable Income -€0.08c DoSP Debt included Income €1,200.00 Less RLEs €1,100.08 Net Disposable Income €99.92

14. Other Criteria • Domiciliary Condition • Likelihood of solvency in next 3 years • Preferences and Dispositions • When were the debts taken out? • Other Arrangements under the Act • Bankruptcy

15. What are the effects / consequences of a Debt Relief Notice? Debtor • 3 year supervision period • Protection from creditors • Change in circumstances • Increase in income - €400+ • Lump sum / gift - €500+ • Disclosure requirement on borrowing >€650 • Public Register Creditor • Cannot start or continue legal proceedings • No debt collection action • Cannot enforce a judgment • Cannot recover goods • Cannot request payment • Cannot terminate an agreement • Right to object

16. Offences • False representation • Failure to comply with obligations under a Debt Relief Notice • Concealing or falsifying documentation • Fraudulently disposing of property • Obtaining credit in excess of threshold without disclosing arrangement • Unauthorised person acting as authorised intermediary or PIP

17. How do I apply? • Through an Approved Intermediary – MABS • Provide documents to support your application before first meeting • Meet with your Approved Intermediary (AI) to discuss options • If applicable, AI will request consent of Excludable Creditors • Complete a Prescribed Financial Statement • Swear Affidavit

18. How do I apply? • Approved Intermediary will process the application and send to the Insolvency Service of Ireland (ISI) • ISI will review and send to the Circuit Court • Circuit Court will either approve the application or reject it

19. How do I apply?

20. What happens next? • If successful – debtor is subject to the supervision period (3 years) • AI will send the debtor’s file to the ISI • If debtor has further queries, contact the ISI • If debtor keeps to the terms of the Debt Relief Notice, any outstanding balance will be written off at the end of the supervision period • Details removed from Register within 3 months

21. Summary • Option of last resort – not a solution for everyone • Applied for through Approved Intermediaries • Debtor must have low levels of qualifying debt, assets and net disposable income • Strict eligibility criteria • 3 year supervision period – debtor and creditor obligations • Discharge from debt at end

22. Thank You