Personal debt problems are a worry for many people today. If you feel that your finances are out of control you are more prone to suffer from stress which can lead to bad health.
In need of debt help
You want to do something to relieve your symptoms but you don’t know what. Ideally you want your problems to go away but you just don’t know where to begin. You may sometimes feel that your debt problems are intractable to the point of being hopeless. Except of course that there is always hope!
First thing to do, just like when you have a medical problem, is to diagnose your condition. If you’re sick but ‘not too bad’, you may require an over the counter medication and treat yourself or if you feel that you are more seriously ill you may decide to go to your doctor. The doctor will probably ask you some questions, perhaps examine you there and then, perhaps run some tests immediately or schedule you to go to hospital for tests or other procedures and perhaps offer you a diagnosis of your ailment, if not immediately then when your test results are available. If your condition appears to be serious and/or urgent or if your doctor cannot make a definitive diagnosis, they may refer you to a more senior medical person such as a consultant. All of this may take some time. In urgent situations you may be asked to undertake some remedial treatment even before your condition is fully diagnosed. Sooner or later a course of treatment will be prescribed for you and you of course will have to decide whether to proceed with such treatment or not.
The assessment of your financial circumstances can follow a very similar process as medical diagnosis. The process kicks off with you realising that you may have a debt problem and naturally you will want to know how serious it is, particularly if you feel that you cannot deal with it yourself without advice and if you feel that you may be insolvent, commonly defined as ‘being unable to pay your debts as they fall due’. Your ‘doctor’ for diagnosis is a Debt Advisor or an Insolvency Practitioner (IP) who will personally or have one of their staff interview you when they will ask you some questions, examine any documentation you may be able to provide quickly and perhaps ask for further back-up documentation (such as a property valuation, pay-slips, creditor statements, bank statements and mortgage statement). At quite an early stage the IP will be able to determine whether you are insolvent or not and will usually proceed to outline the options open to you. It will be entirely your decision whether to proceed with the recommended option or not.
Debt Solutions in the UK
In the UK, apart from bankruptcy, the principal options for insolvent debtors are a Debt Relief Order (DRO) or an IVA (Individual Voluntary Arrangement). The legislation and terminology for these two solutions vary in different regions of the UK with England and Wales being quite similar, Northern Ireland being somewhat different and the insolvency regime in Scotland being more different again. Of course debtors can seek to pursue an informal arrangement such as a Debt Management Plan or Debt Consolidation but these are not particularly well legislated for and aren’t appropriate long term solutions for the genuinely insolvent debtor.
Debt Solutions in Ireland
Options available to persons with financial difficulties vary widely from one jurisdiction to the next. Ireland has in the last couple of years brought forward new solutions for debtors who become insolvent. The bankruptcy regime in Ireland has been reformed somewhat making it easier and cheaper for insolvent debtors to avail of this course of action although it is acknowledged that it is still quite stringent compared to bankruptcy in the UK where more of a ‘fresh start’ approach is taken with insolvent debtors able to look forward to discharge from bankruptcy in one year being one of its most attractive facets.
In Ireland there are three new solutions being implemented over a year now. Ireland’s Debt Relief Notice (DRN) is remarkably similar to the UK’s Debt Relief Order (DRO), the principal difference being that the term of a DRN is three years compared to one year for a DRO. Ireland’s Debt Settlement Arrangement (DSA) is somewhat similar to the UK’s IVA but the Irish legislation is more complex and the DSA process takes much longer in Ireland than the IVA takes in the UK. In Ireland debtors are discouraged from seeking to enter a DSA if they have mortgage debt and are encouraged to pursue a Personal Insolvency Arrangement (PIA) instead. The PIA deals with mortgage debt and buy-to-let debt as well as unsecured debt and there is no equivalent insolvency process as a PIA in the UK.
Uptake of the new solutions in Ireland has been slow although it is now gradually accelerating. This is commonly attributed to the tardiness if not resistance and downright opposition by creditors in Ireland, particularly certain banks. However other significant factors in slowing the uptake has been the complexity of the legislation and the slow investigative and preparation process which seems to require every ‘t’ to be crossed and ‘i’ to be dotted. The government is also adjudged to have erred badly in appointing judges to oversee what was originally supposed to be a ‘non-judicial’ set of insolvency arrangements and implementing the requirement for a ‘Protective Certificate’ when the UK abolished their ‘Interim Order’ procedure years ago in relation to IVAs.
Get debt help
If you need some help with your debts then get in touch with us at McCambridge Duffy. We have expert advisors and insolvency practitioners who can assess you situation. They will be able to determine if you are solvent or insolvent and if you need a formal or informal debt solution. Whatever you do, do take advice from competent advisors. It pays to establish the nature and extent of your financial ailments and to choose the best solution for your particular case, having carefully considered all the alternatives.