1. How much is this going to cost me?
The cost of any of the arrangements, under the Act, will be met by the creditors. For example, when you make regular payments to your creditors, the PIP’s fees will be deducted before paying creditors.
2. Can I get the mortgage on my home reduced?
The objective of the Act is to ensure the debtor can, following the arrangement, become solvent, i.e. meet his/her ongoing obligations into the future. If it is agreed, by all parties that the debtor is living within their means, that the private residence is practical and justifiable based on the needs of the debtor and his/her family, then the PIP may make a recommendation, as part of the arrangement to have some of the mortgage debt written off.
3. Will my creditors contact me during the process?
No, all contact during the process will be with the Personal Insolvency Practitioner.
4. What are ‘reasonable’ living expenses?
The Insolvency Service of Ireland (isi.gov.ie) has published ‘Guidelines on a reasonable standard of living and reasonable living expenses’. You should take some time to read through these and then take the opportunity to meet with a suitable professional who will be able to answer any detailed questions you may have.
5. Will everyone know I am in an ‘arrangement’ with my creditors?
There will be a Register available from the Insolvency Service of Ireland in which will be recorded details of arrangements in place. Anyone can view this Register.
6. Will I ever be able to borrow again?
If you enter into an arrangement and abide by the terms of that arrangement, then your credit rating should be enhanced and borrowing again, subject to certain criteria, should be possible.
7. What is equity?
It is the difference between the value of your property and the amount outstanding in loans secured on that property.
8. What is Personal Finance?
It covers the range of finance options available to an individual as opposed to a company such as credit cards, debit cards,
credit unions loans, personal bank loans, car loans, student loans, mortgages.
9. What is Debt?
A debt is a monetary obligation owed by one party (the debtor) to another party, the creditor. A debt is created when a creditor agrees to lend a sum of assets to a debtor. Debt is usually granted with expected repayment of the original sum, plus interest.
10. What is APR?
It is the Annual Percentage Rate. In Ireland it is the rate of interest that is charged by lenders and reflects the real cost of borrowing to the consumer.
11. What is Debt Forbearance?
It is the term sometimes used by creditors when they agree to allow you to change the manner in which your debt will be repaid, for example by postponing some payments or by restructuring the manner in which payments are made. You continue to owe the money.
12. What is Debt Forgiveness?
Debt Forgiveness or cancellation occurs when your creditors decide not to pursue the debt or some of the debt. Historically, debt forgiveness has been rare in Ireland. Some creditors may cease to pursue the debt because they recognise that you will never be able to repay it but that does not mean that the debt is forgiven or cancelled. If your circumstances change, you may still be pursued for it.
The new Personal Insolvency Act 2012 endeavours to bring some certainty to the area of debt write off/debt forgiveness.