More than €100m of Irish debt has been written off in the UK over the past 18 months, using a system that is simpler to use for those in financial difficulties.

Ireland’s insolvency system needs to be improved if it is to become a real alternative to bankruptcy, according to one of the country’s leading insolvency experts.

More Irish people are processing debt through the UK’s Individual Voluntary Agreement (IVA) process than through the Irish Debt Settlement Arrangement (DSA) system.

AJ Debt Solutions, an Irish insolvency firm with special expertise in UK insolvency processes, says it has processed close to 100 IVAs for Irish citizens in the last 18 months. The figures compare to a total of just 59 DSAs agreed through the Irish DSA process since September 2013.

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.

“AJ Debt Solutions is handling about six IVA cases per month and the number is increasing. We have processed over 100 cases in the last 18 months.

“About €1.4m 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.

Applicants must establish a centre of main interest in the North, 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 €100m in debt written off.

In 2014, the amount of unsecured debt involved ranged from €70,000 to €10m.

The Personal Insolvency Act introduced three new debt resolution processes — Debt Relief Notice (DRN), Debt Settlement Arrangement (DSA) and Personal Insolvency Arrangement (PSA) — which are intended to offer an alternative to bankruptcy.

The Insolvency Service of Ireland has struggled to deliver the number of DRNs, DSAs and PIAs expected, with Irish people continuing to choose bankruptcy.

Mr Heslin said the situation is a direct reflection of the complex, lengthy, arduous process required for the non-bankruptcy options.

Official figures from the Insolvency Service of Ireland show that since the options became available in early 2013, 1,152 applications have been received but only 311 have been approved to date.

In relation to DSAs, which are most similar to IVAs, only 220 applications have been received and just 59 have been approved.

In comparison, 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 into a position of establishing themselves in a foreign country in order to resolve their debt issues,” Mr Heslin said.

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