Solution to personal insolvency lies in bankruptcy’s shadow

It is clear many insolvent people will not be in a position to enter debt settlement arrangements (DSA) or personal insolvency arrangements (PIA) under new legislation.

This is because these arrangements involve the creditor bringing something to the table and this means being in a position to pay part of the debt. If the borrower is unable to do this, an arrangement becomes impossible.

Take somebody with an unmanageable debt of €100,000. In a DSA they would pay something over a period of five years after which the residual debt is written off. The amount might be €500 per month meaning a payment of €30,000 over five years. This involves a write-off of over €70,000 plus interest.