Irish people are still going to the UK in large numbers to work out their debt difficulties despite the introduction of a similar service in Ireland, new research shows.
According to AJ Debt Solutions, an Irish insolvency firm which specialises in UK insolvency processes, it processed close to 100 individual voluntary agreements (IVAs) in the UK for Irish citizens in the last 18 months. This compares with just 59 debt settlement arrangements (DSAs) in the Irish system agreed since September 2013, although 220 applications have been made.
Damian Heslin of AJ Debt Solutions, said the figures reflect the complexity of the Irish process and signal that the current system needs to be reviewed and simplified.
“About € 1.4 million of Irish debt is being resolved through the UK IVA system every week, simply because it is a far less complex and drawn-out process compared to the Irish DSA,” Mr Heslin said, noting that the vast majority of debt relates to buy-to-let or investment property.
“The IVA is one of the most forgiving insolvency solutions in Europe. Unlike the Irish process, a Court application is not a requirement and creditors have just 14 days to vote on the agreement compared to a 70-day period here. There is far less uncertainty around the whole process.”
IVAs are applicable to all types of unsecured debt over Str£10,000, including bank loans, credit cards, store cards, and overdrafts. The process requires that the applicant establishes a centre of main interest in Northern Ireland, England or Wales, and a lump sum offer must be made towards the debt.
In the last 18 months, AJ debt solutions has processed over 100 IVAs for Irish citizens, with more than € 100 million in debt written off. In 2014, the amount of unsecured debt involved ranged from € 70,000 to € 10 million.
According to Mr Heslin, despite the introduction of a number of debt resolution options in Ireland in 2013 (Debt Relief Notice (DRN), Debt Settlement Arrangement (DSA) and Personal Insolvency Arrangement (PSA)), Irish people are typically opting for bankruptcy rather than the other options. For example, 301 bankruptcy adjudications have been passed since the beginning of 2013.
“The Irish system requires considerable improvement if it is to serve as a viable alternative to bankruptcy. It is inappropriate for us, as a country, to be exporting our debt resolution issues. Irish people should not be forced in to a position of establishing themselves in a foreign country in order to resolve their debt issues,” Mr Heslin said.
