- Introduction
- The Insolvency Service of Ireland (ISI)
- Personal Insolvency Solutions
- The Role of a Personal Insolvency Practitioner (PIP)
- The Personal Insolvency Process and Courts
- Repossession and Mortgage Arrears
- Revenue Debt
- Support Services and State Schemes
- Who This is Relevant For
- Next Steps
Introduction
Personal insolvency is a formal legal framework in Ireland designed to assist individuals who are unable to meet their debt obligations as they fall due. These processes provide structured solutions to manage, restructure, and, in some cases, write off debt in accordance with the revised Personal Insolvency Act 2012.
Chartered Accountants frequently act as trusted advisers to individuals experiencing financial distress. This webpage provides an overview of the personal insolvency landscape in Ireland, outlines the available statutory solutions, and signposts key resources and support services.
The Insolvency Service of Ireland (ISI)
The Insolvency Service of Ireland (ISI) is the statutory body established under the revised Personal Insolvency Act 2012 to oversee Ireland’s personal insolvency framework. The ISI administers and regulates insolvency processes, maintains statutory registers (including Debt Relief Notices, Protective Certificates, and arrangements), and ensures compliance with the legislative framework.
The ISI also provides public guidance and access to information through its Back on Track portal, which outlines options available to individuals in financial difficulty.
Personal Insolvency Solutions
Under the Personal Insolvency Act 2012, four primary solutions are available, each tailored to different financial circumstances.
Personal Insolvency Arrangement (PIA)
A PIA is a legal agreement covering both secured and unsecured debts. It is typically used where a borrower has mortgage arrears and seeks to retain their home. Arrangements can last up to six years (extendable in certain cases) but are usually 12 months in duration, and may result in the restructuring of secured debt and write-off of a portion of unsecured debt.
Debt Settlement Arrangement (DSA)
A DSA applies to unsecured debts only, such as personal loans, credit cards, overdrafts, and Revenue liabilities. It typically operates over a period of up to five years but can be accelerated in certain situations. After this period, any remaining qualifying debt will be written off.
Debt Relief Notice (DRN)
A DRN is designed for individuals with low income, low assets, and unsecured debts below prescribed thresholds (currently €35,000). After a three-year supervision period, qualifying debts are written off.
Bankruptcy
Bankruptcy is a formal court-based process, generally considered where other insolvency solutions are not viable. Assets may be realised by the Official Assignee, and debts are typically discharged after one year (subject to income payment obligations).
The Role of a Personal Insolvency Practitioner (PIP)
A Personal Insolvency Practitioner (PIP) is a regulated professional authorised by the ISI to act as an intermediary between a debtor and their creditors.
The PIP will:
- Assess the debtor’s financial circumstances
- Advise on the most appropriate insolvency solution
- Prepare and submit formal proposals
- Negotiate with creditors
- Oversee the implementation of arrangements
PIPs are central to the personal insolvency process and are required to comply with the Personal Insolvency Act and associated regulations on an ongoing basis.
The Personal Insolvency Process and Courts
Personal insolvency solutions operate within a statutory framework involving both the ISI and the Courts Service.
A key feature is the Protective Certificate (PC), which is issued by the court and provides a period of legal protection (typically 70 days) during which creditors cannot take enforcement action.
Under Sections 62 and 96 of the Personal Insolvency Act 2012, once a Protective Certificate is in place, creditors are prohibited from:
- Initiating or continuing legal proceedings
- Enforcing judgments or recovering debts
- Contacting the debtor for repayment
This protection allows time for a formal arrangement to be developed and, where appropriate, can halt repossession proceedings while a solution is being negotiated.
Repossession and Mortgage Arrears
Repossession may arise where mortgage repayments are not maintained and arrears persist. This can result in legal proceedings and, ultimately, the loss of the family home (Principal Private Residence, PPR).
Personal insolvency Arrangements (PIAs) provide a structured mechanism to address mortgage arrears and, in many cases, enable borrowers to remain in their homes. A Protective Certificate can immediately halt repossession proceedings, allowing time to negotiate a sustainable solution.
This is also applicable for buy-to-let properties (BTLs).
Useful Link: Courts.ie - Repossession
Revenue Debt
Revenue debt is commonly encountered in personal insolvency and generally arises from unpaid taxes such as income tax, CGT, VAT, PAYE/PRSI/USC and Local Property Tax.
Within insolvency arrangements, Revenue debt is typically treated as unsecured debt. However, certain elements may be classified as preferential, meaning they must be paid in priority to other unsecured creditors. This can impact how funds are distributed within a Debt Settlement Arrangement (DSA) or Personal Insolvency Arrangement (PIA).
Revenue is also an excludable creditor, meaning its debts are not automatically included in an arrangement. A Personal Insolvency Practitioner (PIP) or Approved Intermediary (AI) must make a formal request to Revenue, who then has 21 days to decide whether to consent (DRN) or opt in or out (DSA/PIA). It is worthwhile noting that larger Revenue write-offs are feasible through the Personal Insolvency framework than what can be agreed when negotiating directly with Revenue outside of this legal framework.
Where Revenue participates, it will submit a proof of debt and engage in the arrangement in line with statutory requirements. It is important to note that:
- All tax returns must be up to date for Revenue to consider participation
- Only existing (“specified”) tax debt can be included
- All ongoing tax liabilities must be paid in full as they arise
Failure to remain compliant with current taxes can result in the arrangement being terminated.
For further details, please refer to Revenue’s guidance.
Support Services and State Schemes
A number of State-funded supports are available to assist individuals experiencing financial difficulty.
Abhaile Scheme
The Abhaile scheme provides free financial, legal, and insolvency advice to individuals in mortgage arrears who are at risk of losing their home. This allows individuals to have a consultation with a PIP free of charge, who can then advise on what the best next steps are.
MABS (Money Advice and Budgeting Service)
MABS provides confidential and independent advice on managing debt, budgeting, and accessing appropriate supports.
Legal Aid Board
The Legal Aid Board offers legal advice and representation, including services under the Abhaile scheme for individuals facing repossession proceedings. If a Personal Insolvency Arrangement is rejected at its creditors meeting and is eligible for the section 115A appeals process the Legal Aid Board covers the associated legal costs and PIP costs of this appeal process ensuring no additional costs come to the individual.
Who This Is Relevant For
This guidance is relevant to:
- Chartered Accountants advising individual clients with debt difficulties
- Sole traders experiencing financial distress
- Individuals facing mortgage arrears or creditor enforcement action
- Clients considering formal insolvency solutions
Early engagement is critical. Chartered Accountants are well-placed to identify financial distress and guide clients towards appropriate professional advice at an early stage.
Next Steps
Where an individual is unable to meet their debt obligations, it is advisable to seek independent professional advice at the earliest opportunity. A Personal Insolvency Practitioner (PIP) can provide a full assessment of options and recommend a suitable course of action tailored to the individual’s circumstances. A number of our members are authorised by the Insolvency Service of Ireland to act as PIPs.
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