I owe debt of just a little over €40,000 to an Irish bank. It has now been sold to a Debt collection company. I initially borrowed €35,000 as part of a restructure of an overdraft in the downturn of 2008. I have paid some €17,000 to date. (over 15 years in total)I still owe €40,000 including interest. What options are available through the insolvency process. A DRN, A DSA or Bankruptcy? I ceased trading as a sole trader in 2021 and am now a stay at home parent while my wife is working full time. I dont have any income or I dont have any monthly outgoings. I do not own my own home or do I have any savings or assets. Is a settlement the best option?
Looking for insolvency options for long term debt?
- Thread starter David2023
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Personal insolvency options
There are 3 debt resolution procedures to help people with unsustainable debt to reach agreements with their creditors.
Thank you. In your opinion (if any). What would be the best option?Personal insolvency options
There are 3 debt resolution procedures to help people with unsustainable debt to reach agreements with their creditors.www.citizensinformation.ie
Jim Stafford
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You generally use a DSA if you have multiple debts and a PIA if you have "secured" debt. In your case, you appear to have just a single unsecured creditor, so a negotiated solution is the best and cheapest option. (A DSA could cost you about €5,000),
The debt collection company would have purchased the debt at a discount, so they should be receptive to a deal, particularly given your new financial circumstances.
There could be a sting in the tail if you do negotiate a write off. The amount written off may become taxable if the loan was used to finance your sole trader business.
Jim Stafford
The debt collection company would have purchased the debt at a discount, so they should be receptive to a deal, particularly given your new financial circumstances.
There could be a sting in the tail if you do negotiate a write off. The amount written off may become taxable if the loan was used to finance your sole trader business.
Jim Stafford
Thank you for your advice. If they do not accept a settlement what would be the worst case scenario. Will they take it to court or would I have to go into bankruptcy?
Jim Stafford
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If you make an honest transparent disclosure they are very likely to agree a settlement with you.
They are very unlikely to make you bankrupt for €40,000 (as the bankruptcy petition would cost them approx, €10,000)
If the loan is recorded with the CCR and is settled then the CCR may show that it was settled for less than PAR.
Jim Stafford
They are very unlikely to make you bankrupt for €40,000 (as the bankruptcy petition would cost them approx, €10,000)
If the loan is recorded with the CCR and is settled then the CCR may show that it was settled for less than PAR.
Jim Stafford
If you have not already, but are in a position to make an informal arrangement (lump sum settlement), you might try to do so. For example, you may have a friend or family member who is willing to support your offer (on the condition that the settlement is full and final). As above, the debt was purchased at a discount. Make them an offer, the worst they can do is refuse. This would be the most simple and cost effective solution. I am not a legal or financial advisor.
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You have received excellent advice from a well known professional here, and some very bad advice from an anonymous poster, you should certainly not try to get a friend or family member to give their money to debt collectors. That is called feeding the shark.
Here is some more anonymous advice.
Ignore them and they will go away. You have no income, you have no assets, it will cost them €10k to make you bankrupt , and they would get no benefit from that. Engaging with them only encourages them.
Here is some more anonymous advice.
Ignore them and they will go away. You have no income, you have no assets, it will cost them €10k to make you bankrupt , and they would get no benefit from that. Engaging with them only encourages them.
While it's true you can't get blood out of a stone what's to stop the creditor from getting a judgement in the circuit court, thus giving them 12 years to enforce the judgement? Costs would be minimal to get such a judgement.
Brendan Burgess
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Cremeegg
With respect, your advice is terrible.
People should face up to problems and resolve them. Not bury their heads in the sand.
He is obviously worried about this and having an unsecured debt hanging over my head would worry me too.
What happens if he ignores them and subsequently gets a job or an inheritance. They could come after him again.
While he has no assets and no income, it is the time to resolve this.
David, you should go to MABS who will advise you on your best options and who will probably negotiate a deal with the lender for you.
If the lender does not agree, MABS will introduce you to a PIP to organise a DSA.
And if that is not appropriate, you can go bankrupt and be completely debt-free in one year.
Brendan
With respect, your advice is terrible.
People should face up to problems and resolve them. Not bury their heads in the sand.
He is obviously worried about this and having an unsecured debt hanging over my head would worry me too.
What happens if he ignores them and subsequently gets a job or an inheritance. They could come after him again.
While he has no assets and no income, it is the time to resolve this.
David, you should go to MABS who will advise you on your best options and who will probably negotiate a deal with the lender for you.
If the lender does not agree, MABS will introduce you to a PIP to organise a DSA.
And if that is not appropriate, you can go bankrupt and be completely debt-free in one year.
Brendan
Brendan Burgess
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Check with MABS first. If MABS can get it written off without any payment, that would clearly be better.
But if you can access a small amount e.g. €2,000 to get the balance written off, it's worth considering.
Brendan
This is why I suggested making a full and final offer in an attempt to avoid such an outcome, which has lasting implications for the security.
Often good advice but that is a moral position and not the only possible view, see below.
The OP received good advice on here from a leading expert in the field, and it is wonderful that AAM allows for this and admirable that Jim Stafford contributes.
However many people want to do the best they can for themselves and while that may not be the most morally responsible thing, it is not unreasonable. As an anonymous poster it is possible to address this. I feel strongly that people who plead a hard case are often treated more sympathetically than those who just state the facts. I think everyone is entitled to seek their own advantage.
And ignoring debt collectors is by no means illegal.
If these are considerations then the OP should do as you say. And I am sure you are right that the OP is concerned about the debt. If it were me, and I am glad I am not in that situation, I would be asking, well what can they do to me, rather than be generally worried. People are different.
If this was a consideration I might agree but the OP does not own his own home, see post #1
If a debt collector smells money they are only encouraged. If he offered E2,000 their reaction would be, well why not E4,000 or more. If they got E2,000 what is to stop them coming back for more. Before you say a binding legal agreement, that would cost more than the E2,000.
Re-reading the original post I think the OP will take your good advice and sleep better for it. Some people like to actively face up to their problems. However a close friend of mine surrendered his home to EBS in 2009, he thought he was being responsible and facing up to his problems. Many, many, people in far worse difficulties held onto their homes through a willingness to tough it out. I am in no doubt that the debt collectors will go away if he ignores them, what alternative do they have? Get a judgement against him for E5 a week at a cost of several thousand.
This would clearly be the ideal solution
Brendan Burgess
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You are missing the point. It will continue to hang over him and he would have to commit himself to never improving his own financial position through work or an inheritance for the rest of his life.
Brendan
Brendan Burgess
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You will find occasional posts on askaboutmoney along the lines of "I am leaving this country for good but I owe the bank €5,000 , will they do anything about it?" They are often advised that it would be too expensive for the bank to pursue them so forget about it.
Then 5 years later "I have returned from abroad and have been turned down for a mortgage because I had forgotten about money I owed the bank some years ago. How can I get a mortgage?"
So it's best to pay your debts if you can. And if you can't, get them formally written off via bankruptcy or insolvency.
Brendan
Then 5 years later "I have returned from abroad and have been turned down for a mortgage because I had forgotten about money I owed the bank some years ago. How can I get a mortgage?"
So it's best to pay your debts if you can. And if you can't, get them formally written off via bankruptcy or insolvency.
Brendan