Debt Relief Notice Used For Wedding Loan

25th February 2014

A currently unemployed man (from Castletroy) has used a Debt Relief Notice (DRN) to obtain protection from Bank of Ireland. To fund his wedding costs he had taken out a €20,000 loan which he subsequently became unable to pay.

He is now protected from Bank of Ireland who cannot seek direct repayment of the €17,480 that remained outstanding to them. Provided that he sticks to the rules applicable to Debt Relief Notices the remainder of this debt will cease to exist after a term of three years.

To qualify for a DRN your “disposable income” must be less than €60 per month, your total debt owed must be less than €20,000 and you must own only limited amounts of assets.

This is an important development for the new Irish personal insolvency system. Thus far there has been only limited take-up of the three new debt solutions that have been created as alternatives to bankruptcy. Debt Relief Notices in particular had been held up as a result of some technical teething problems which now appear to have been resolved. The numbers of Debt Settlement Arrangements and Personal Insolvency Arrangements have also been lower than expected thus far.

In our view this particular case is interesting due to the nature of the debt’s origin. Many people worry that they’ll be criticised by debt professionals, or by the courts, as a result of the type or scale of their borrowing.

In fact the process is geared up to avoid this in almost all instances. Apparent fraud would naturally create a concern, but building up debts as a result of financial mistakes or subsequently regretted decisions isn’t. The system is designed to help people (and their banks) to move on from unaffordable debt rather than to question precisely how it arose and make judgments accordingly.

Indeed the majority of debt problems typically arise as a result of changing circumstances. Examples might include a period of unemployment or sickness, separation from a partner or becoming unwell. Even a loss of overtime or bonus payments can lead to previously affordable debts becoming unaffordable.  In such circumstances it’s almost entirely irrelevant whether money was borrowed to fund a wedding, a holiday, a car or the purchase of a home. It was borrowed with a genuine intent to repay, but it just hasn’t worked out as expected.

If you’re struggling with debt you may find that a Debt Relief Notice, Debt Settlement Arrangement, Personal Insolvency Arrangement or even bankruptcy will offer you a route towards a more prosperous financial future. Seeking advice from a debt professional is the starting point from which progress can be made.