If you are dealing with unmanageable debt, such as credit cards, loans or mortgage arrears, and can’t see a way of regaining control over the situation, then Personal Insolvency might be a suitable option.
Personal insolvency offers a legal, affordable and structured way to deal with debt in Ireland, but like any formal solution, it’s important to weigh up the benefits and drawbacks, to ensure it’s the right option for you.
A Personal Insolvency Practitioner (PIP) is the professional who will help you explore your Insolvency options, but we’ve also created this article to help explain the advantages and disadvantages of the two main Insolvency Solutions that we offer at McCambridge Duffy. These are:
- Personal Insolvency Arrangement (PIA)
A formal debt solution that might be suitable if you are having difficulty repaying your mortgage, arrears and other debts. The main purpose of a PIA is to help you remain in your home. - Debt Settlement Arrangement (DSA)
A formal agreement that can help you deal with your unaffordable unsecured debts, such as credit card debt, loans, overdrafts, store cards etc…
✅ Advantages of Personal Insolvency
You get legal protection from creditors
When your PIP submits an application to court for your Protective Certificate (PC), creditors must stop all legal action against you for at least 70 days, while they work with you and your creditors to secure an Insolvency solution. This means no more threats, sheriff letters, visits, or court hearings.
If your insolvency arrangement is accepted, you will also be protected as creditors will be bound by it’s terms.
Your debts are restructured into an affordable plan
Your household income is assessed, reasonable living expenses (RLEs) are deducted, and whatever remains becomes your monthly contribution towards your debts. You only pay what you can reasonably afford towards your debts, whilst being entitled to a reasonable standard of living.
Interest and charges are frozen
All interest, penalties, and added charges on qualifying debts are typically frozen from the moment your arrangement begins.
You can protect your family home (especially in a PIA)
In many cases, mortgage arrears are restructured rather than forcing a sale. Your PIP will work to keep you in your home where possible.
A fresh start after completion
Once your arrangement finishes (usually 5–6 years for a PIA, 5 years for a DSA), any remaining unsecured debt is written off, allowing you to start over with a clean financial slate.
Debts included can be wide-ranging
Depending on the solution you opt for, it may cover:
- PPR Loans
- Investment Property Loans
- Buy to let mortgages / loans
- Personal Guarantees
- Personal Loans
- Credit Union Loans
- Business / Commercial loans
- Unsecured debts, such as Credit cards, store cards, overdrafts etc…
⚠️ Disadvantages of Personal Insolvency
It impacts your credit rating
Your credit rating will be affected during the plan and further credit cannot be obtained while the arrangement is active. Your insolvency will be listed on the ISI Public Register. You can begin to work on rebuilding your credit rating on completion of the arrangement.
There is a cost in personal insolvency
Unlike some Insolvency providers, we do not charge for our advice and we do not charge upfront fees. If your plan isn’t accepted by creditors you pay nothing. We also participate in the Abhaile Scheme, which entitles you to free professional advice from a PIP.
If your PIA is accepted, there are fees and costs associated with the management of the plan. These are agreed by creditors and deducted from your affordable repayments.
All of this is clearly explained when you chat to us. It is your creditors who determine what we get paid and we cannot draw fees from your affordable repayments, without their approval and you will never receive any additional bill from us outside of this.
You must fully disclose your finances
All assets, income, savings, pensions, and properties must be declared. Hiding information can be seen as dishonest and lead to the arrangement being rejected or terminated.
Creditors must agree to the Insolvency Proposal
For a PIA or DSA to be approved, a majority of creditors by debt value must vote in favour. If the proposal is rejected, you may need to modify, revise and resubmit, or appeal the rejection through the court (if applicable) or consider bankruptcy.
You must commit to the full duration of your arrangement
- DSA: usually 5 years but can be shorter depending on the situation
- PIA: usually 6 years but can be shorter depending on the situation
- Bankruptcy (alternative): Usually 1 year but with potential asset loss
It’s important to liaise with your PIP should any change in circumstances arise during the term of your arrangement, that might affect your ability to keep up with repayments. Your PIP may be able to negotiate a variation with your creditors in order to keep the arrangement active. Insolvency can be a long-term commitment and missing payments could cause it to fail.
6. Certain debts cannot be written off
The following are not usually included:
- Court fines in respect of criminal offences
- Family maintenance payments under court orders
- Liabilities arising out of injury or wrongful death claims awarded by the Court
- Liabilities arising from loans obtained by Fraud
💬 Frequently Asked Questions
Can I keep my home?
Often yes under a PIA. A PIA is designed to help make your mortgage repayments affordable and sustainable and protect your home.
Can I keep my car?
If it is reasonably priced and necessary for work, school, or family commitments, it is normally allowed.
Will I lose my job?
Personal insolvency does not automatically affect employment, although some professions may require disclosure (e.g. financial services, company directors).
What if my income changes?
Your PIP can request a review with creditors, so that your arrangement can be adjusted if your circumstances change.
🧭 Is Personal Insolvency Worth It?
Personal insolvency might be the right choice if:
✔ You can no longer manage debt repayments
✔ You want to avoid bankruptcy or repossession
✔ You need legal protection and a structured plan
✔ You’re willing to commit to a fresh start financially
📞 Need Help or Advice about unaffordable debts?
If you’re unsure whether personal insolvency is right for you, we can help you:
✅ Work out your Reasonable Living Expenses (RLEs)
✅ Understand how much you can realistically afford to pay towards your debts
✅ Explore all options so that you can make an informed decision on your next steps
📩 Contact us today for a free and confidential consultation.
