Debt Settlement Arrangement (DSA)
What is a Debt Settlement Arrangement (DSA)?
A DSA is a formal agreement with all your creditors that will write off some of your debt.
Is a DSA right for me?
If you have unsecured debt such as credit cards, loans and overdrafts, a DSA could be the right choice for you.
Benefits
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Protection from your creditors
Your professional advisor (also known as a Personal Insolvency Practitioner) will deal with your creditors on your behalf, putting an end to any demands for unpaid debt – no more phone calls, letters or visits.
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Affordable repayments
Under the DSA you agree to repay a percentage of your overall debt that you can afford in monthly payments over a given period of time.
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No surprise changes
A DSA is a legally binding arrangement between you and your creditors; so it cannot be changed without the agreement of both parties, meaning no surprise changes such as additional interest or charges added along the way.
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Reasonable standard of living guaranteed
While making these repayments you are entitled to a reasonable standard of living. You will not be told how you should spend your allocated reasonable living expenses, so you are still in complete control of your spending.
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Peace of mind
Once your final agreed monthly repayment is made and you have kept to the terms of the arrangement, your creditors will write off your remaining unsecured debt.
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Credit rating
Entering into a DSA should indicate to potential lenders that you are proactively addressing your financial situation, and on completion of the arrangement you will be solvent, which means you could be more eligible to obtain credit. However, the decision on whether or not to give credit is up to the lender and this is always the case.
Costs
Just like any other professional providing a service, a PIP may charge a consultation fee in order to determine if you are eligible to apply. After that, any PIP fees are usually built into the DSA repayment plan.
If you are in arrears on your home mortgage you could be eligible for a free PIP consultation under a new State-funded scheme.
Get Help
How do I get a DSA?
First, arrange to meet with a Personal Insolvency Practitioner (PIP). Part of a network of qualified professional advisors regulated by the ISI, each PIP is an expert in debt advice, so don’t feel embarrassed about your situation; they can and want to help you reach a solution. They will assess your options and prepare a tailored solution that best suits your needs.
PIPs are located around the country and contact details can be found below or by calling the ISI’s information line 01 764 4200.
Frequently asked questions
Start gathering details of your debt—including a list of how much you owe and to whom, details of payments you have missed, as well as details of your income, average spending needs, and any assets you may have. Bring these with you to your meeting, and the PIP will let you know if a DSA is the right solution for your situation.
- DEBTOR: Gets protection from creditors, gets a solution that has certainty, is entitled to a reasonable standard of living, gets a write down and/or write off of debt, and gets back on track financially.
- CREDITOR: Gets engagement with the debtor through their intermediary (the PIP), gets a solution to the backlog of debt, gets certainty of a resolution, and is guaranteed some return on money lent as opposed to if the person went bankrupt. The majority of creditors are agreeing to the proposals.
- PIP: Assists distressed debtors in reaching a long-term debt solution, may charge a consultation fee to advise the debtor, is usually paid out of the overall sum the debtor agrees to pay to the creditor, and deals with all creditors on the person’s behalf.
If your circumstances change during the term of your arrangement, affecting it either positively or negatively, the DSA can be amended by your PIP as necessary.
For example, if you can no longer afford the agreed repayments due to a change in circumstances, your PIP can apply for a change to the arrangement terms. Equally, if your financial situation improves, the terms can be amended. You will have a say in any changes made, and you will also participate in reviews of your DSA at least once a year.
Entering into a DSA should indicate to potential lenders that you are proactively addressing your financial situation. On completion of the arrangement, you will be solvent, which means you could be more eligible to obtain credit in the future. However, the decision on whether or not to give credit is always up to the lender.
A DSA can be put in place to cover any period of time up to 5 years. The length of an arrangement is to be agreed by all parties involved and will depend on your personal circumstances and what is being proposed by your PIP. At the end of the process, you will be free from your unsecured debt.
Related Publications
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PIPs are qualified professionals, regulated by the ISI, with the relevant expertise to help you reach a permanent solution for your debt problems.