Debt in Ireland
With the Irish Government under enormous political and financial pressure due to the economic crisis, the bank crisis and soaring unemployment, little has been done to alleviate the suffering of people with personal debt. The builders, the banks and the politicians have hogged the limelight each seeking solutions to enable them to rise from the ashes of a crumbling uncompetitive economy.
Some observers predict a tsunami of personal debt and the startling thing is that successive governments have failed to legislate to provide relief in this area. The contrast between the UK and Ireland in terms of possible solutions is remarkable. In the UK the Insolvency Act was enacted in 1986 and gave birth to Individual Voluntary Arrangements, commonly called IVAS.
An IVA is a formal agreement between you and your creditors to repay a portion of your debt over a limited period - usually five years, but it can be for a shorter period – and it is binding on all parties. At the end of the term, provided you have adhered to the agreed terms, all your debts are discharged. For more information on IVAS see " How does an IVA work?" on our sister website or go to our IVA section on National Debt Relief.
In 2002 the UK also enacted the Enterprise Act, further bolstering the insolvency legislation.
No such solution for personal debt above £15,000 has been enacted by the Irish government in the intervening twenty three years. The UK has also introduced Debt Relief Orders to cater for people with debts of less than £15,000 and Administration Orders for people with debts of less than £5,000. The bankruptcy legislation has also been modernized in the UK, making it a most attractive option for many people in financial difficulty, with discharge within twelve months the norm nowadays. In the UK in 2008, more than 67,000 people petitioned for bankruptcy. By contrast, only four people opted for bankruptcy in Ireland in 2008 although this is expected to rise sharply in 2009. The cost, delay, complexity and consequences of bankruptcy in Ireland are so severe that it is a most unattractive solution for either debtors or creditors. Of these factors, cost is undoubtedly the greatest barrier.
Most financial commentators agree that the Irish bankruptcy legislation should be thoroughly overhauled and that alternative additional solutions such as IVAS be enacted in legislation. With the availability of the UK blueprint of its 1986 Insolvency Act together with its successful implementation over the last quarter of a century, it should not be a difficult challenge for Irish legislators to draft and enact proper personal insolvency laws. Apart from the obvious goal of enabling debtors to deal with their personal financial problems in a finite time frame and to the satisfaction of their creditors, it would also enable creditors to crystallize the extent of their personal bad debt impairment, and report this more accurately in their balance sheets. This would enhance confidence in the Irish financial system and provide a regulatory framework for dealing with personal insolvency.
To explore any of this further please contact us at National Debt Relief.
About National Debt Relief
National Debt Relief belong to a firm of leading chartered accountants who are one of the largest insolvency practices in the UK. We offer a complete portfolio of personal insolvency services in relation to IVA, Debt Management Plan and Bankruptcy. All our debt advice is free, confidential and with no obligation.
Call us on 0800 043 5135 or 028 71 376854 or email enquiries@nationaldebtrelief.co.uk
