# Debt Release Cert for debts under €20,000



## Brendan Burgess (25 Jan 2012)

This seems fair enough. 

The Insolvency Service will be able to write off people's small unsecured debts.


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## Brendan Burgess (25 Jan 2012)

*[FONT=&quot]Debt Relief Certificates
[/FONT]*[FONT=&quot]The Bill (in Part 3) provides, subject to certain conditions, for a Debt Relief Certificate of forgiveness for persons with no assets and no income that are unable to meet qualifying debts totalling not more than €20,000. The purpose is to create an efficient non-judicial means of allowing persons to resolve unmanageable unsecured debt problems. (Similar systems operate in the UK, Northern Ireland and Australia).[/FONT]
  [FONT=&quot]With the assistance of an approved intermediary the debtor may apply to the Insolvency Service to certify that the qualifying debts be frozen for one year following which if, the person still cannot pay, the Service will certify that the debt is written off.[/FONT]
*[FONT=&quot]General conditions for a DRC[/FONT]*[FONT=&quot] 
·        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.[/FONT]
*[FONT=&quot]Where a DRC has been granted by the Insolvency Service
[/FONT]*[FONT=&quot]·        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.[/FONT]


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## Brendan Burgess (25 Jan 2012)

*Debt Release Certificate - worked example*

_From the Department of Justice briefing papers_

*What is a Debt Relief Certificate?*

  The Debt Relief Certificate (DRC) provides for the forgiveness of debt for debtors with no assets and no income who are unable to meet qualifying debts totalling not more than €20,000. The purpose is to create an efficient means, non-judicial, of allowing persons to resolve unmanageable unsecured debt problems.

*For example:* Lets assume that John has the following unsecured debts which he has difficulty repaying: 

  Bank overdraft €5,000
  Credit card                   €5,000
  Personal Loan              €5,000
  Store catalogue €2,000
  Utilities             €1,000

  John unfortunately now finds himself unemployed and in receipt of a social welfare payment or that his income has been severely reduced. He has little or no capacity to pay off his debts following the payment of rent and meeting his basic household needs such as food, heat, etc. He lives in rented accommodation and has no assets to dispose of to help pay his debts and he is not in a position to receive assistance from family or friends.

*What can John do?*
  John could now contact an approved intermediary (such as MABS) and request their assistance in completing the application form and statement of affairs for a Debt Relief Certificate. The approved intermediary will advise John on his options regarding his qualifying debts and the implications of entering into a DRC. These implications may be significant in terms of future access to credit of any kind and provision of utility and other services.

If John proceeds with the application, the approved intermediary will request *full disclosure of his income and outgoings* and any other information required by the Insolvency Service. John must pay a processing fee of (€90) to the approved intermediary prior to the submission of the DRC application. 

The authorised intermediary submits the documentation to the Insolvency Service for approval. The Insolvency Service will examine the submitted documentation and if satisfied will issue a Debt Relief Certificate. The Certificate will list the qualifying debts of the debtor on the application date, specify the amount of each debt and the creditor to whom it was owed. The Service then gives a copy of the Certificate to John and records the relevant details on the Insolvency Register. 

A 1 year moratorium period during which creditors cannot pursue action against John in respect of the debts covered by the DRC commences on the date of the Certificate’s registration in the Insolvency Register.  

At the end of the 1 year moratorium period, John is discharged from the debts listed in the Debt Relief Certificate. John cannot apply for a further DRC before 6 years has elapsed and a DRC may not be availed of more than twice in a lifetime.


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## triciamonty (15 May 2012)

Has anyone gone through this procedure,or is it still in the process of geing passed through the dail


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## Wishes (15 May 2012)

triciamonty said:


> Has anyone gone through this procedure,or is it still in the process of geing passed through the dail



There seems to be nothing set in stone nor has it been discussed in the dail as yet.


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## Bronte (16 May 2012)

Shatter has said the legislation will be brought to the Dail before the summer, that will be June.  Then we have the long summer holidays and then they will be back to debate it.  This one looks like it's going to be very complex, not going to do the job properly and open to all sorts of legal challenges when it does become law and fees to experts no doubt all along the way.  Don't hold our breath Triciamonty.


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## frostie (1 Aug 2012)

Bronte said:


> Shatter has said the legislation will be brought to the Dail before the summer, that will be June.  Then we have the long summer holidays and then they will be back to debate it.  This one looks like it's going to be very complex, not going to do the job properly and open to all sorts of legal challenges when it does become law and fees to experts no doubt all along the way.  Don't hold our breath Triciamonty.



The Debt relief cert will be fairly straight forward. Also as far as  fees are concerned, the approved intermediary will NOT be allowed to  charge the applicant a fee, it's in the bill. Any fees applicable to an  intermediary would be payable from the fee nominated by the Insolvency  Service to cover the costs. 

In the UK, a DRO costs £90, and approved intermediaries get a slice of  this to cover their costs, so it's not exorbitant there, but then again,  it only lasts 12 months in the UK, therefore little costs to supervise. I don't think that the DOJ has considered this in making these amendments to the bill (with obvious involvement from the IBF).

The changes put forward to the debt relief cert, changing it from 1 year  to 3 years will mean much more unnecessary supervisory costs, which  will mean the cert itself will cost the applicant much more to apply for  it.

The fact that it's three years will make it inoperable for the Insolvency service, given the fact 1) the applicant has means of less than €60 per month and therefore cannot afford a large fee and 2) The state will have to fund the supervision of the applicant for the term by the intermediary.

Given the associated costs, it should not go further than 12 months. Thousands will be applying for this, and unless the banking federation are planning on paying for the supervision of all of these applicants, it should be revised back down to 12 months.


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## jpd (1 Aug 2012)

frostie said:


> The state will have to fund the supervision of the applicant for the term by the intermediary.



So it's another free picnic for the professional classes - how surprising!


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