Debt Relief Notices
Where a Debt Relief Notice is issued and takes effect, the debtor concerned is discharged from the debts specified in it as qualifying debts. He is also discharged from all arrears charges and interest that have arisen during the proceedings (including the supervision period) unless a court order is made otherwise.
The Debt Relief Notice lasts for three years, and the date is recorded in the register. This is the supervision period. It may be extended by the court. Where a Debt Relief Notice ceases to have effect (other than where it is terminated under the Act), the specified debtor stands discharged from the specified qualifying debts concerned and all interest, penalties and other sums which have, since the application date, become payable in relation to those debts
Upon discharge from the specified qualifying debts in the Debt Relief Notice, the person’s name is removed from the register of Debt Relief Notices. The creditors are informed, and a certificate is issued by the Insolvency Service confirming the discharge. This is a debt relief certificate.
Where any other person is liable in connection with a debt/ transaction, for example, as a co-partner or guarantor, his liability is not released by reason of the release of the debtor. The right of a secured creditor to enforce or otherwise deal with his or her security is not affected.
Moratorium on Enforcement
Where a Debt Relief Notice issues, creditors may not take or continue legal proceedings in respect of specified qualifying debts comprised in it, against the debtor. They may not initiate bankruptcy proceedings. They must discontinue existing proceedings. They must not contact the debtor regarding payment of a specified debt, other than at his request.
Creditors included in the Notice must not terminate an agreement or claim an acceleration of payments or forfeiture of rights only by reason of the debtor being insolvent or being the subject of a Debt Relief Notice.
During the period of the Debt Relief Notice, legal proceedings may not be undertaken against the debtor or his assets without the court’s consent. The court may make such orders suspending proceedings or the enforcement of legal orders on foot of proceedings. This period of suspension is not counted in calculating the statute of limitations. The period for enforcing judgments, to the extent that they may be enforced, is extended by the duration of the Debt Relief Notice.
Eligibility and Qualifying Debts I
The Debt Relief Notice procedure is available only to debtors who qualify in accordance with certain criteria. The debtor must satisfy the eligibility criteria in order to in make an application for a Debt Relief Notice. The debtor must have
- qualifying debts of less than €35,000.
- net disposable income (as calculated) must be less than €60 per week,
- net assets (as calculated) of less than €400
- be domiciled or ordinarily resident or have had a place of business in the State.
- be insolvent and have no likelihood of becoming solvent within three years while also maintaining a reasonable standard of living for himself and certain others (largely dependents);
- have complied with the applicable procedures,
- have not entered any transaction at undervalue in the preceding two years,
- have not given preference to any person / creditor within the previous two years.
Eligibility and Qualifying Debts I
In assessing whether the debtor is insolvent, account is taken of his
- current liabilities.
- contingent and prospective liabilities insofar as ascertainable, due dates for payment.
- current and prospective assets and income.
Qualifying debts are credit card debts, overdrafts, unsecured loans from banks or regulated financial services providers, utility bills, debts incurred as a guarantor of another person and certain secured debt.
An undervalue transaction is a gift or a transfer at significantly less than the full value. Preference is given where the debtor while insolvent, intentionally does something to favour one creditor.
There are other conditions of ineligibility, which are set out below:
Net disposable income means income after paying reasonable household expenses and payments in relation to excluded debt. In considering net disposable income, salaries, wages, welfare benefits (other than child benefit), pension income, contributions from household members and other income is taken into account.
The following (where applicable), in relation to a debtor, shall be deducted
- his or her reasonable living expenses;
- income tax payable;
- social insurance contributions payable;
- payments made by him or her in respect of excluded debt (see below);
- payments made by him or her in respect of excludable debts (see below) that are not specifically agreed to be included;
- such other levies and charges on the specified debtor’s income as may be prescribed.
Assets and Excluded Items
In calculating a person’s assets for the purpose of eligibility, the value of the asset is considered to be its market value irrespective of any charge to which it is subject. Assets include all savings, vehicles, shares and property.
Any interest in or entitlement under a relevant pension arrangement is excluded unless, if the debtor performed an act or exercised an option under the pension scheme, cause the debtor to receive income under the pension. Where a person has retired the value of his pension is not counted and is regarded as income.
No account is taken of
- essential household equipment and appliances and tools and equipment necessary for business to a maximum of €6,000,
- one item of personal jewellery worth less than €750 in total, where its purchase is not one of the specified debts,
- one motor vehicle essential for a person’s everyday activities worth €2,000 (or other sum later prescribed or less and its cost is not an included debt;
- a disabled person’s specially designed vehicle.
Where the debtor or his or her dependent is attending a course of primary or second-level education, books, materials and other items of equipment that are reasonably necessary to enable the debtor or that dependent, as the case may be, to participate in and complete that course are excluded.
Grounds of Ineligibility
A debtor may not apply for a Debt Relief Notice if he has
- applied for a protective notice under the alternative insolvency arrangements within a year or is a party to such agreement;
- has completed such an arrangement within five years;
- has applied for a bankruptcy petition which has not yet been heard;
- a creditor has petitioned to make the person bankrupt, but the hearing has not taken place;
- he has been adjudicated bankrupt;
- he is an undischarged bankrupt;
- he is discharged, but subject to a bankruptcy payment order;
- he is an arranging debtor; or
- he has been discharged from bankruptcy within the last five years.
The exclusion for a person who has applied for bankruptcy does not apply where
- the petition has not been presented before the date on which the application for Debt Relief Notice is decided,
- the petition has not been disposed or has been presented, and the proceedings are before the High Court or
- the court has made a reference for the purpose of making a Debt Relief Notice, settlement, arrangement or personal insolvency arrangement.
The exclusion where a creditor has made an application for bankruptcy does not apply where the petition
- has not been presented before the date of application where the Debt Relief Notice has been presented, but the proceedings have not been disposed of, or
- has been presented and the proceedings are before the court, but the making of the application for the notice has been consented to, by the creditor.
The Insolvency Service licenses approved intermediaries in relation to the Debt Relief Notice process. They may not charge the debtor in connection with the functions performed by them. Provided they act in good faith, they are not liable for actions done while acting as an approved intermediary.
The Minister prescribes the criteria in respect of experience, qualification and training of approved intermediaries. The Insolvency Service may make payments to approved intermediaries from fees they charge in connection with their functions.
Initiation of Process; Debtor’s and Approved Intermediary
The debtor must submit a written statement of his financial affairs to an approved intermediary. It must contain information in relation to his creditors, his debts, assets and liabilities and such information as is specified.
The intermediary holds a meeting with the debtor and is to advise
- whether he is eligible;
- on the consequences of becoming subject to the process
- in relation to other options available for resolving financial difficulties including the other options under the legislation;
- the fees involved (if any).
The debtor may confirm that he wishes to proceed. He must disclose his full financial affairs as soon as practicable. He must give consents to the approved intermediary making enquires about his financial affairs.
There is a prescribed form of financial statement, which the intermediary assists the debtor to complete.
The debtor must act in good faith at all times and co-operate fully in the process. He must make full and honest disclosure of his assets, income, liabilities and relevant circumstances. He must comply with reasonable requests from the intermediary to provide assistance, documents, and information, including details of tax, employment, social welfare and the other financial records necessary for the application of the process to the debtor’s case. He must ensure that the financial statement is true and accurate.
Excludable debt is
- liability of the debtor arising out of any tax, duty, levy or other charge of a similar nature owed or payable to the State;
- amount payable as local government charge, household charge, rates,
- Nursing Homes Support Scheme monies due
- management company i annual service charges or contributions
- debt or liability of the debtor arising under the Social Welfare Consolidation Act
A Debt Relief Notice shall include excludable debt only where the creditor concerned has consented, or is deemed to have consented. Where a debtor wishes to include excludable debt, the approved intermediary concerned must notify the creditor concerned of that fact. He must give specified information about the debtor’s affairs (including his or her creditors, debts, liabilities, income and assets) as may be prescribed with a request in writing that the creditor confirm, in writing, whether or not the creditor consents, to the Debt Relief Notice being issued in respect of the debt.
A creditor shall respond within 21 days of receipt of the notification. Where a creditor does not do so he is deemed to have consented.
Certification by Approved Intermediary and Application
If the approved intermediary is of the opinion
- that the information is complete and accurate;
- the debtor satisfies the eligibility criteria and
the intermediary is to make a statement to such effect.
An application for a Debt Relief Notice may be made, only on behalf of an eligible debtor and may only be made by an approved intermediary who is satisfied in relation to the above matters. The application is made to the Insolvency Service. It must include
- the above confirmations by an approved intermediary:
- confirmation by the debtor that he qualifies
- prescribed financial statements
- details of debtors, creditors, assets and liabilities
- consent to disclosure of personal data as necessary
- authorisation to carry out verification check
- confirmation as to judgements or court orders against the debtor relating to qualifying debts
- such other information as may be prescribed.
The debtor must correct any error or omission in the information as soon as he becomes aware of it. He must notify any material change in his circumstances between the application date and the date on which the application is determined.
Insolvency Service Enquiries and Certificate
The Insolvency Service is entitled to request further information from the intermediary. If it is not answered within 14 days, the application is deemed withdrawn. It is entitled to assume eligibility if the required documents have been furnished and there is no reason to believe to the contrary. It is entitled to make such enquiries as it considers necessary to satisfy itself in relation to eligibility.
The Insolvency Service may make enquiries as appropriate to verify the completeness and accuracy of the personal financial statement. The Insolvency Service need not make such enquiries, but it may do so. This may include enquiries of lending institutions, particulars of employment, particulars of liabilities, Department of Social Welfare payments and taxes.
Persons or entities to whom enquiries are directed must furnish the information as soon as practicable. State bodies, such as the Revenue Commissioners, Department of Social Welfare other government departments and local authorities are authorised to disclose information to the Insolvency Service.
Court Makes Debt Relief Notice
If the Insolvency Service is satisfied that the application is in order, it shall issue a certificate and furnish it together with a copy of the application and supporting documents to the court. It must notify the intermediary. The certificate of the Insolvency Service is evidence of the matters contained in it.
Where the court receives the papers, it must review the application and documentation. If satisfied that the criteria have been satisfied, it shall issue a Debt Relief Notice in respect of the debts specified in the application, which are qualifying debts. The Debt Relief Notice must specify in relation to each qualifying debt, the value of the debt and the creditor owed.
A copy of the Debt Relief Notice is sent to the intermediary, the debtor and each creditor. The notice must inform the debtor of the particulars of the notice and his obligations. The notice to creditors must notify the creditor of the Debt Relief Notice, a statement of his rights and a copy of the prescribed financial statement. The notice is registered on the register of Debt Relief Notices.
A Debt Relief Notice lasts for three years. This may be extended on application to court where it is satisfied that the extension is necessary to allow the Insolvency Service carry out any investigation or other matter it considers necessary. It may also extend the supervision period on a number of other grounds.
The Insolvency Service apportions any sums received (if applicable) proportionately amongst the creditors. It must make the payment within a month. Where creditors cannot be located, it may be apportioned to other creditors.
The Insolvency Service may carry out such investigations as it requires during the period of supervision. It may make an application to the court for directions. The court may
- give directions;
- make orders for the enforcement of obligations;
- extend the period;
- amend the Debt Relief Notice or
- make such other orders as it sees fit.
Continuing Duties of Debtor
During the supervision period, the debtor must inform the Insolvency Service of any material change in his circumstances, including in particular an increase in the level of his assets, liabilities, or income or where he becomes aware of any inaccuracy in the prescribed financial statement or other information furnished.
In particular, a debtor whose income post tax increases by more than €400 per month must surrender 50 percent of the increase. Where he receives a gift worth more than €500. he must surrender than 50 percent of the value. The obligations shall cease to apply when the total sum surrendered equal 50 percent of the total qualifying debts.
A debtor may not during the supervision period, obtain credit for more than €650 without disclosing that he is the subject of the Debt Relief Notice process.
A debtor may during the period pay a sum to the Insolvency Service. When the total sums reach 50 percent of the specified debts, the Debt Relief Notice ceases and the person’s name is removed from the register. He is then discharged from all specified qualifying debts.
Appeals and Applications to Court
A decision of the Insolvency Service is to be notified to the applicant, the debtor and other creditors. The debtor or an affected creditor may apply to court where he or she is aggrieved by an act or omission. On application, the court may make any of the above orders.
The creditor may during the supervision period make an application to court if he objects to the inclusion of his debt as a qualifying debt. Notice of the objections is made to the court on notice to the Insolvency Service and the debtor. It may be based on the following grounds:
- the debtor did not satisfy eligibility criteria;
- material inadequacy or omission in the prescribed financial statement;
- debtor failed to comply with obligations;
- adjudication of bankruptcy has been made;
- the debtor has committed an offence under the act; or
- the procedural requirements have not been complied with.
The court may make any of the above orders on the application.
The Insolvency Service may apply to cancel a Debt Relief Notice on the same grounds.
References and Sources
Burke & Comyn Personal Insolvency Law 2014
Bracken Practioner’s Personal Insolvency Handbook 2013
Law Society (Wright) Insolvency Law 2009
Sanfey & Holohan Bankruptcy Law & Practice2nd Ed 2010
Farry, Holohan Consolidated Bankruptcy & Personal Insolvency Legislation2013
Forde, Kennedy & Simms Company Insolvency 2015
Forde & Simms Bankruptcy Law 2nd Ed 2009
Insolvency Law and Practice (Report of the review committee chaired by Sir Kenneth Cork CBE, 1982, Cmnd 8558) (the Cork report)
V Finch, Corporate Insolvency Law: Perspectives and Principles 3rd Ed 2017
RM Goode, Principles of Corporate Insolvency Law (4th Ed, 2011)
A Keay and P Walton, Insolvency law: corporate and personal (4rd Ed, 2017)
Marsh Bankruptcy Insolvency and the Law 2016
WW McBryde, Bankruptcy 2nd Ed, 1995
Butterworths Insolvency Law Handbook 14th Ed 2012
Core Statutes on Insolvency Law and Corporate Rescue (annual editions)
Personal Insolvency Legislation
Personal Insolvency Act 2012
Personal Insolvency (Amendment) Act 2015
Personal Insolvency Act 2012 (Part 6) (Commencement) Order 2013, S.I. No. 14 of 2013
Personal Insolvency Act 2012 (Commencement) (No. 2) Order 2013, S.I. No. 63 of 2013
Personal Insolvency Act 2012 (Establishment Day) Order 2013, S.I. No. 64 of 2013
Personal Insolvency Act 2012 (Authorisation and Supervision of Personal Insolvency Practitioners) Regulations 2013, S.I. No. 209 of 2013
Personal Insolvency Act 2012 (Authorisation of Approved Intermediaries) Regulations 2013, S.I. No. 216 of 2013
Personal Insolvency Act 2012 (Personal Insolvency Practitioner Authorisation and Renewal of Authorisation Prescribed Fees) Regulations 2013, S.I. No. 246 of 2013
Personal Insolvency Act 2012 (Accounts and Related Matters) Regulations 2013, S.I. No. 247 of 2013
Personal Insolvency Act 2012 (Commencement) (No. 3) Order 2013, S.I. No. 285 of 2013
Personal Insolvency Act 2012 (Value of interest in property) Regulations 2013, S.I. No. 330 of 2013
Personal Insolvency Act 2012 (Prescribed Protective Certificate Personal Insolvency Arrangement Application Form) Regulations 2013, S.I. No. 331 of 2013
Personal Insolvency Act 2012 (Prescribed Protective Certificate Debt Settlement Arrangement Application Form) Regulations 2013, S.I. No. 332 of 2013
Personal Insolvency Act 2012 (Prescribed Debt Relief Notice Application Form) Regulations 2013, S.I. No. 333 of 2013
Personal Insolvency Act 2012 (Schedule of Creditors) Regulations 2013, S.I. No. 334 of 2013
Personal Insolvency Act 2012 (Procedures for the Conduct of Creditors’ Meetings) Regulations 2013, S.I. No. 335 of 2013
Personal Insolvency Act 2012 (Notification in relation to Excludable Debt) Regulations 2013, S.I. No. 337 of 2013
Personal Insolvency Act 2012 (Additional Information to be contained in the Registers) Regulations 2013, S.I. No. 356 of 2013
Personal Insolvency Act 2012 (Part 4) (Commencement) Order 2013, S.I. No. 462 of 2013
Personal Insolvency Act 2012 (Prescribed Fees in Bankruptcy Matters) Regulations 2013, S.I. No. 465 of 2013
Personal Insolvency Act 2012 (Prescribed Financial Statement) Regulations 2014, S.I. No. 259 of 2014
Personal Insolvency Act 2012 (Regulatory Disclosure Statement of a Personal Insolvency Practitioner) Regulations 2014, S.I. No.319 of 2014
Personal Insolvency Act 2012 (Written Statement Disclosing All of the Debtor’s Financial Affairs) Regulations 2015, S.I. No. 416 of 2015
Personal Insolvency Act 2012 (Prescribed Fees) Regulations 2015, S.I. No. 620 of 2015
Personal Insolvency Act 2012 (Renewal of Authorisation of Personal Insolvency Practitioners) Regulations 2016, S.I. No.226 of 2016
Justice Courts and Civil Law (Miscellaneous Provisions) Act 2013
Courts and Civil Law (Miscellaneous Provisions) Act 2013 (Part8) (Commencement) Order 2013, S.I. No. 286 of 2013
Courts and Civil Law (Miscellaneous Provisions) Act 2013 (Part 7) (Commencement) Order 2013, S.I. No. 463 of 2013
Courts and Civil Law (Miscellaneous Provisions) Act 2013 (Section 2) (Commencement) Order 2014, S.I. No. 334 of 2014
Personal Insolvency (Amendment) Act 2015 (Commencement) Order 2015, S.I. No. 414 of 2015
Personal Insolvency (Amendment) Act 2015 (Commencement) (No. 2) Order 2015, S.I. No. 514 of 2015