Dealing with problem debt

Debt problems can happen to anyone, for a variety of reasons. When you are in debt it is hard to focus on anything else. You can feel stressed and frightened about the future. But you should not be ashamed of your debt nor be tempted to bury your head in the sand – because the ISI is here to help.

It is common for people not to recognise that they are insolvent; they are too busy coping with the problem and trying to make ends meet.

The word insolvency is often associated with companies but the reality in Ireland at the moment is that many people are also insolvent. Personal insolvency is really just another term used to describe serious financial problems.

You could be insolvent if:

• You are not able to pay your bills in full when they are due.
• You are paying a little off each bill trying to keep creditors (the people you owe money to) at bay.
• You are reluctant to set up direct debits to pay bills in case your money cannot stretch to meet them.
• You are receiving calls and letters from creditors about missed payments and threats of repossession.
• You have made personal sacrifices to pay your debts.

There is a solution to every debt problem and this is where the ISI can help you and give you protection from your creditors.

The ISI has a range of debt solutions to help get you back on track financially, including a Personal Insolvency Arrangement, a Debt Relief Notice, a Debt Settlement Arrangement or Bankruptcy. Following a consultation, your PIP will advise you which solution best suits your situation.

When you are worrying about debt problems it can be tempting to ignore bills and letters from creditors and hope that the issue will go away. But the sooner you take action, the sooner you will be free of your debt burdens and can move on with your life.

Reasonable standard of living

The ISI believes that you are entitled to a reasonable standard of living while you address your debt problem. If you tackle your debt using one of the ISI’s solutions, there is a minimum standard of living that you are entitled to which allows for expenses such as food, clothing, health, household goods and services, communications, socialising, education, transport, household energy, childcare, insurance and modest allowances for savings and contingencies.

You will not be told how you should spend your allocated reasonable living expenses, and it will be managed by you so you are still in control of your spending. Under the ISI model, a ‘reasonable standard of living’ does not mean that a person should live at a luxury level but neither does it mean that a person should only live at a subsistence level – which many people are existing on when they are in debt. The reasonable living expenses figure is often higher than the amount people in serious debt live on before seeking an insolvency solution.

Debt written off

The ISI believes that all debtors should be able to participate in the community, as others do. Unlike other informal solutions that are on the market, the ISI solutions are legally binding, cannot change unexpectedly and offer you protection from your creditors who will no longer be able to contact you once you are in an arrangement – no more unwanted phone calls, letters or visits. You will pay an agreed amount for the duration of an arrangement – and during that time you will have a reasonable standard of living. The outcome is that you may have some debt written off and any remaining debt will be manageable.