Debt Relief Notice
What is a DRN?
The Act makes provision for the issue of a Debt Relief Notice (DRN) in certain circumstances. Its purpose is to give relief from debt to people who are in debt and have little or no disposable income or assets which they could use to repay what they owe. The qualifying debts they owe cannot exceed €20,000. The DRN process enables eligible insolvent debtors to write off their debts where they can prove they are not in a position to repay them and it is unlikely their financial situation will improve in the next 3 years.
Who is eligible to seek a DRN?
A DRN is not suitable for, or available to, every debtor. There may be other options open to an insolvent debtor depending on their circumstances.
You are only eligible to seek a DRN if you meet the general conditions set out below:
- You are insolvent in that you are unable to pay your debts in full as they fall due and there is no likelihood of you doing so within 3 years;
- You have a net monthly disposable income of €60 or less after reasonable living expenses (which will be calculated by the AI on a case by case basis using a standard template);
- You owe €35,000 or less in respect of your qualifying debts;
- You have assets of €400 or less (you are also allowed 1 item of jewellery not exceeding a value of €750, one motor vehicle worth a value of €2,000 or less and reasonably necessary household equipment/tools the combined value of which may not exceed €6,000);
- Your domicile must be in the Republic of Ireland, or you must have, within the past year ordinarily resided or had a place of business within the Republic of Ireland;
- You have completed and signed a Prescribed Financial Statement (PFS) and made a Statutory Declaration that it is true and accurate;
- An AI has signed a statement of satisfaction as to your eligibility and the truth and accuracy of your PFS.
- You must not have incurred 25% or more of your debt during the past 6 months;
- You have not had a DRN previously;
- You must not be the subject of a Debt Settlement Arrangement (DSA) or Personal Insolvency Arrangement (PIA) now or within the past 5 years;
- You must not have been the subject of a Protective Certificate issued in respect of a DSA or a PIA within the past year;
- You have not entered into certain transactions at less than market value in the past 2 years;
- You have not given certain preferential treatment to one creditor over another in the past 2 years (e.g. paying off a family member before your bank or credit union);
- You must not be bankrupt or subject to a bankruptcy measure or have been discharged from bankruptcy in the past 5 years
What type of debt may/may not be included in a DRN?
May be included:
- Credit Card Debt
- Personal Loans
- Credit Union Loans
- Utility bills
- Store cards
Requires consent of creditors to be included “Excludable Debts”
- Taxies, duties, levies owed or payable to the State
- Local government charges
- Amounts due to the Health Service Executive under the Nursing Home Support Scheme
- Annual service charges to owners management companies (apartments and housing estate)
- Liabilities arising under the Social Welfare Consolidation Act 2005
- Local authority rates
- Household charges
Cannot be included “Excluded Debts”
- Family maintenance payments
- Court fines in respect of criminal offences
- Liabilities arising out of personal injury or wrongful death claims awarded by the Court
- Liabilities arising from loans obtained by fraud
This list is not exhaustive, if you are unsure if your debt can be included in a DRN talk to an Authorised Intermediary
*Creditor consent to include debt may be requested in which case it becomes a permitted debt. If no response is received the creditor will be deemed to have consented.
How to seek a DRN and who will deal with your case?
You can only seek a DRN via an AI who will act on your behalf during the application process. The ISI will maintain a list of AIs on the ISI website www.isi.gov.ie. Part 2 of this guidebook outlines the detailed steps involved in the DRN process.
The AI will talk to you about your financial situation and eligibility and how a DRN is likely to affect you if you are granted one. In order to be considered for a DRN you will need to give full and accurate details of your financial situation, setting out details of all of your debts, assets, liabilities, income, etc. While this may seem overwhelming, you should bear in mind that the purpose of a DRN is to help you recover from your financial difficulties and the role of the AI is to help you to make the process as straightforward as possible.
If you decide to proceed with an application for a DRN, you will be required to give written consent for the ISI to access your personal data. A full list of the consents you are required to give are set out under Part 2 of this guide.
Note—the ISI will charge an application fee for a DRN. However, an AI cannot charge you for their involvement in the process. Further details are available on the ISI website, www.isi.gov.ie.
If you participate in the DRN process, you will at all times be under a statutory duty to act in good faith and to cooperate fully in the process.
Part 2 The Process
- Meet with AI and give an overview of your financial situation.
- If you are eligible and wish to apply for a DRN confirm this in writing to the AI.
- Gather the relevant documents and fill out forms.
- AI will send application on your behalf to the ISI.
- If all is in order your application will be sent to Court and the Court will issue a DRN.
- The ISI enters details of your DRN on a public Register when it is granted.
- You must provide all relevant information to the AI.
- You must act in good faith and be honest in your application.
- You must comply with requests for any further information required.
- Your DRN will be subject to a 3 year supervision period.
- If your circumstances change during the 3 years you must inform the ISI.
- If you apply for credit over €650 during the 3 year supervision period you must tell the creditor you are subject to a DRN.
- You can exit a DRN at any stage by paying 50% of the amount owed to the creditors specified in the DRN.
- If you comply with the terms of the DRN the debts specified in it will be written off at the end of a 3 year supervision period.
- If the DRN is successfully completed, the entry on the public Register in respect of the DRN will be removed.
Debtor journey—step by step
The following steps set out the process in more detail.
STEP 1: Applying for a DRN
- If you are struggling with your debts and think you might be eligible for a DRN based on the conditions set out in this guide you should contact an AI to get further information as to your eligibility status for a DRN and what’s involved in the DRN process.
- If you decide you would like to apply for a DRN you will need to give the AI full details of your financial situation. The AI will discuss your situation with you and let you know if, in principle, you are eligible to apply for a DRN based on the information you have supplied.
- The AI will talk you through the DRN application process and he/she will outline your duties and obligations. You can expect to receive written advice on whether or not the AI is of the view that the DRN is the best insolvency arrangement for you and the reasons for that opinion. Where applicable, the AI will advise you on what other debt management or resolution option might suit your particular circumstances.
- Having regard to the advice received from the AI, if you are happy to go ahead with an application for a DRN you will be asked to confirm in writing that you want to proceed and request the AI to act on your behalf. You can withdraw your application at any point prior to the issue of a DRN.
- You can expect to have a meeting/series of meetings and/or phone calls with the AI to enable you to progress your application.
- You will be required to complete a Prescribed Financial Statement (PFS), with the assistance of the AI. This is a detailed electronic form that is designed to capture all key financial information about you. You will also be required to give supporting documentation and proof of your financial situation (e.g. up to date statements, bills, etc).
- The AI will examine your completed PFS. If he/she is satisfied that the PFS is true and accurate and that you satisfy the eligibility criteria, he/she will prepare a statement to that effect.
- You are required to sign a statutory declaration (in the presence of a witness authorised to witness such declarations—such as a practising solicitor, Peace Commissioner, Commissioner for Oaths or Notary Public) affirming that the PFS is a complete and accurate statement of your assets, liabilities, income and expenditure.
- You will be asked to complete and sign some documents to accompany your application. Your application must be accompanied by:
- a copy of the statement made by the AI referred to above;
- a document signed by you confirming that you satisfy the eligibility criteria for a DRN;
- a completed PFS form and statutory declaration;
- a schedule of your creditors and amount owed to each; whether the creditor is a secured creditor or not (if so, you must provide details of any security); where a debt is an excludable debt you must state if it is a permitted debt;
- Your written consent to enable;
- the AI to disclose your personal data to the ISI;
- the ISI to process your application;
- the ISI to make any necessary enquiries about you; and
- the ISI to disclose your personal data to the creditors concerned, as required.
- Your written consent to enable;
6. A document signed by you stating whether you are aware of any judgement or Court order in force against you which relates to any of your debts which are included in the DRN.
- The AI will then submit your completed application to the ISI for consideration. If all information is in order, the ISI will then forward your application to the Circuit Court.
- If the Court approves your application, it will issue a DRN. The ISI will notify you, your creditor(s) and the AI of the issue of the DRN. From the date of issue of that DRN there will be a 3 year supervision period. During that time the creditor(s) listed in your DRN cannot pursue you for the debts you owe them that are specified in the DRN. This does not apply to secured creditors. However, creditors are entitled to appeal their inclusion in a DRN where they feel they are within their rights to do so.
- If you are granted a DRN your details will be placed on an electronic public Register of Debt Relief Notices.
You should be aware that under the Act, it is a criminal offence to knowingly or recklessly give information which is false or misleading in your application for a DRN.
Step 2: Complying with the terms of a DRN
- You must act in good faith at all times during your application and supervision period
- You must inform the ISI should your circumstances change materially, as this may create an obligation for you to repay some of the debts included in the DRN.
- You must inform the ISI where:
- your monthly net income increases by €400 or more; or
- you receive a gift or sum of money of €500 or more;
In both cases 50% must be surrendered to the ISI for the benefit of your creditors.
- You can make payment(s) to the ISI at any stage during the supervision period of your DRN and the ISI will distribute the payment(s) to your creditor(s) accordingly.
- You can discharge yourself from the DRN at any stage of the process by making a payment to the ISI of 50% or more of the total amount owed to the creditor(s) specified in your DRN.
- If you do not comply with the agreed terms of the DRN or if it emerges that you were not truthful or complete in the disclosure of information in the PFS, the DRN will be terminated and you will revert to owing the full amount that you owed prior to entering into the DRN agreement including any interest accrued.
- During the supervision period the ISI can apply to the appropriate Court to have a DRN amended (for technical reasons) or terminated, as appropriate
Step 3: Completing a DRN
- Subject to the Act, at the end of the 3 year supervision period, all debts listed in the DRN will be written off in full.
- Details of the DRN will also be removed from the public Register for Debt Relief Notices and creditors will be notified of that fact.
- The ISI will issue a Debt Relief Certificate to you confirming your discharge from your debts listed in the DRN.
- You will now be solvent.
You must inform the ISI where you become aware of any inaccuracy or omission in your PFS, documents or other information provided with your application for a DRN.
- How will participating in a DRN affect you?
One of the main effects of obtaining a DRN is that it creates a ‘moratorium’ period of 3 years (although there are exceptions whereby this may be extended) during which time creditors cannot take any action to try to recover or enforce their debts listed in the DRN.
During the period of your DRN, you are not required to make any direct payments to the creditors in respect of debts that are included in the DRN, provided you comply with the Act and your circumstances do not change as indicated elsewhere in this guide.
After the 3 year period, provided you have complied with the Act, the listed debts specified in the DRN will be written off in full.
Will details of your DRN be published anywhere?
Should you enter into a DRN, your details (name, address, date of birth, date of issue of DRN and any other information the ISI deems relevant) will be placed on an electronic public Register of Debt Relief Notices. This will remain in place for the 3 year supervision period that follows the issue of the DRN.
Members of the public can inspect the Register and request copies of entries contained on that Register. Therefore, if you seek credit while your details are on the Register, the creditor is likely to check the Register before approving your application.
However, upon successful completion of the DRN or if you make a payment of 50% or more of the debts contained in the DRN your details will be removed from the Register.
What happens if you seek to obtain credit from someone while you are subject to a DRN?
If you seek to obtain credit of an amount of more than €650 during the supervision period of 3 years, you must inform the creditor that you are a specified debtor, subject to a DRN.
You should be aware that factors such as the entry of your details on the Register for DRNs may be relevant to your credit rating and influence any information about you held by rating reference agencies such as the Irish Credit Bureau (or the Central Credit Register).
Lenders retain the right to take into account a debtor’s credit history in assessing the merits of a credit application. This means you may find it more difficult to get credit in the future.
Will entering into a DRN affect your employment?
The Act does not require that a person’s employment be affected, however, certain professions may be governed by bodies where members’ personal finances are subject to regulatory requirements.
What happens to your home?
The Act does not impose any requirements on you with respect to your home.
What happens to your vehicle?
You are entitled to keep your vehicle if it is not valued at more than €2,000. There are exceptional circumstances where you may be eligible to keep a vehicle of higher value than €2,000 e.g. where you or a dependent has a disability and your vehicle has been modified for use in that regard.
What happens to your pension?
Any pension arrangements you have will be taken into account at application stage when the AI is considering your eligibility for a DRN. However, if you are deemed to be eligible and receive a DRN, the arrangement will have no further effect on your pension – unless your pension income increases during the supervision period, see below.
What happens if your circumstances change?
If your material circumstances change during the 3 year period of your DRN you must inform the ISI. You must advise the ISI in circumstances where, during your supervision period:
1. your net income increases by €400 or more per month; or
2. you receive a gift or sum of €500 or more.
In both cases you are obligated to submit 50% to ISI for distribution to creditor(s).
Part 3 Supplementary Information
- Related Insolvency Service of Ireland publications
Other relevant publications are available on the ISI website www.isi.gov.ie. A number of scenarios are also available on the website indicating the possible outcome of a DRN application for a given set of circumstances. You will also find information on www.mabs.ie.
- How to make a complaint
If you are unhappy with the way your case has been handled by the ISI or AI it is within your rights to make a complaint. See the separate information document ‘Complaints Procedures’ for further details.
- Data Protection
If you apply for a DRN you will have to provide written consent for the ISI to access your personal data, as appropriate. You should note that if you successfully obtain a DRN:
- your information will be placed on a public Register; and
- your creditors will receive a copy of your Prescribed Financial Statement.
The ISI will comply with the Data Protection Act of 1988 and the Data Protection (Amendment) Act of 2003 except where it is exempted in the case of an investigation process.