Earlier in the year, the new Insolvency Service of Ireland released its first quarterly statistical report which showed that, despite receiving over 500 applications, only a small percentage had resulted in debt relief for the applicants.
Many commentators remarked these figures were underwhelming and questioned the effectiveness of the new legislation.
However the potential of the new scheme was apparent in Ennis Circuit Court this summer when a stonemason obtained a €223,000 write-down on the mortgage of €346,390 over his family home, as a result of a personal insolvency arrangement being agreed between him and his creditors.
The write-down came after the man had struggled with debts of over 2 million euro following the property market collapse.
As part of the arrangement the man will also be allowed to hold on to his family home, and will be required to pay a revised monthly mortgage of €1,200 on his home for the next 10 years.
A personal insolvency arrangement is one of the relief’s provided for by the Personal Insolvency Act 2013.
It provides for debt relief by way of agreement between creditors and debtor up to a limit of €3 million where the debt is secured, with no limit on unsecured debts.
To avail of the scheme, a person must be able to make some repayments to their creditors in return for the discount of their debts.