Debt jargon buster

Abhaile

Abhaile is a State funded service which is provided free of charge to insolvent borrowers who are in danger of losing their homes due to mortgage arrears.

Approved Intermediaries

Approved Intermediaries (AIs) are certain people who have been approved by the ISI to act on the debtor’s behalf as intermediaries in the DRN process. A list of AIs is available on the website.

Asset

A possession that has some monetary value or can produce a cash flow. An asset can therefore be used to discharge debts.

Bankruptcy

Bankruptcy is ‘an option of last resort’. It is a personal insolvency process available under the Bankruptcy Act 1988, as amended, where a person cannot pay his/her debts. In most cases, once a person has been made bankrupt, an official (the “Official Assignee”) takes control of the person’s property and sells that property to pay off debts of the bankrupt.

Creditor

A person or company who is owed money.

Debt

Debt is a sum of money that a person owes.

Debtor

A person who owes money.

Debt Relief Notice (DRN)

A DRN is a personal insolvency solution which covers debts up to €35,000 but certain restrictions apply.

Debt Settlement Arrangement (DSA)

A DSA is a personal insolvency solution which does not cover secured debts.

Insolvency Service of Ireland (ISI)

The ISI is an independent government body set up to help tackle debt problems.

Insolvent

A person is insolvent if they are unable to pay their debts in full as they fall due

Personal Insolvency Arrangement (PIA)

A PIA is a personal insolvency measure provided for under the Act which covers both unsecured and secured debts.

Personal Insolvency Practitioner (PIP)

A PIP is a qualified professional regulated by the Insolvency Service of Ireland (ISI). PIPs have the relevant expertise to help a person reach a permanent solution to their debt problems.

Protective Certificate

A protective certificate is a document issued by the Court which offers the debtor and their assets protection from legal proceedings by creditors while they are applying for a DSA or PIA.

In general, a Protective Certificate remains in force for 70 days but it may be extended in limited circumstances.

Reasonable Living Expenses (RLEs)

Guidelines to help ensure that a borrower in mortgage arrears maintains a reasonable standard of living while they try to resolve their debt problems.  RLEs cover the borrower’s day-to-day expenses, which are necessary to have a reasonable standard of living.

They allow for expenses for food, clothing, health, household goods and services, communications, socialising, education, transport, household energy, childcare, insurance and allowances for savings and contingencies.

Secured creditor

A creditor who holds a specific claim (usually a property interest) over one or more of a debtor’s assets as security for a secured debt. An example would be a mortgage or charge over a house.

Secured debt

A debt backed or secured by an asset to reduce the risk associated with the debt by use of arrangements which make the asset available to the secured creditor to discharge the debt before general/unsecured creditors (e.g. a mortgage or charge over a house used as security for a housing loan. If the debtor defaults or fails to meet one of the terms of repayment, the bank may seize his/her house to sell, using the proceeds towards the settlement of outstanding debts).

Unsecured creditor

A creditor who does not have a specific claim (usually a property interest) over the debtor’s assets.

Unsecured debt

A debt where the unsecured creditor would not be entitled to seize specific assets if the debtor fails to make repayments because that creditor does not hold security over those assets.