Learn more about how our Debt Solutions solutions can help you
Article
Bankruptcy vs personal insolvency arrangements: understanding your options
Compare PIAs, DSAs and bankruptcy in Ireland to choose the right debt solution and protect your home where possible.
Contents
When facing unsustainable debt, understanding your options is crucial. This guide explains the three solutions available under the Personal Insolvency Act 2012: personal insolvency arrangements (PIAs), debt settlement arrangements (DSAs) and bankruptcy. Each offers a route to solvency but differs in process, suitability and impact.
We outline the key features, benefits, drawbacks and eligibility criteria of each to help you make an informed decision.
What is a personal insolvency arrangement?
A PIA is a legally binding agreement between you and your creditors, arranged through a Personal Insolvency Practitioner (PIP). It allows for the restructuring and/or partial settlement of both secured and unsecured debts.
While the legislation allows a term of up to six years, most arrangements are completed in two years. A key feature is that it aims to protect the family home where possible.
What is a debt settlement arrangement?
A DSA is also arranged through a PIP and applies only to unsecured debts such as personal loans, credit cards, overdrafts or Revenue liabilities.
It typically runs for up to five years, although shorter terms (as little as three months) are possible in certain cases. During the arrangement, you may be able to retain some assets.
What is bankruptcy?
Bankruptcy is a formal process through the High Court. Your assets are transferred to the Official Assignee, who manages their sale to repay creditors.
Bankruptcy usually lasts one year, with any surplus income subject to an income payment order for up to three years. This option is typically considered when other solutions are no longer viable.
Comparing key benefits and drawbacks
PIAs suit those who want to protect their home while managing secured and unsecured debts. You retain control of assets and repay what you can afford, but the arrangement requires a longer-term commitment, annual reviews and financial disclosures.
DSAs work well for people with no mortgage who need a structured plan for unsecured debts. They often involve a shorter term than PIAs and allow you to keep certain assets. However, DSAs are limited to unsecured debts and include a public register entry during the arrangement.
Bankruptcy offers the quickest discharge (typically one year) and halts all creditor action. It is most suitable when there are few assets to protect or other options have failed. However, it results in loss of control over your assets, a permanent public record and long-term effects on your credit profile and access to future borrowing.
Summary of key differences
| Feature | PIA | DSA | Bankruptcy |
|---|---|---|---|
|
Debts covered
|
Secured & unsecured (up to €3m secured unless all creditors consent)
|
Unsecured only
|
Primarily unsecured
|
|
Process initiator
|
Debtor via Personal Insolvency Practitioner
|
Debtor via Personal Insolvency Practitioner
|
Debtor or creditor via High Court (typically with assistance from a financial adviser or Personal Insolvency Practitioner)
|
|
Term length
|
Up to 6 years, typically 2 years in duration
|
Up to 5 years
|
Typically 1 year (+3 years income contribution if surplus income available)
|
|
Asset ownership
|
Debtor retains assets under agreed terms
|
Debtor retains assets under agreed terms
|
Assets transferred to Official Assignee
|
|
Principal private residence
|
Typically protected
|
N/A
|
May be sold unless equity is negligible
|
|
Public register
|
Yes – removed 3 months post-completion
|
Yes – removed 3 months post-completion
|
Yes – permanent record
|
|
Income contribution
|
Based on Reasonable Living Expenses; annual review
|
Based on Reasonable Living Expenses; annual review
|
Income Payment Order for 3 years if surplus income exists
|
|
Credit impact
|
Temporary; improves post-completion
|
Temporary; improves post-completion
|
Significant and longer-term. Can be difficult to ever obtain credit in the future.
|
|
Cost
|
Fees included in arrangement; Abhaile support
|
Fees included in arrangement; Abhaile support
|
€200 court fee + fee for process advisor (generally a PIP)
|
Choosing the right debt solution
The most suitable option depends on your circumstances:
- PIA: Ideal if you have secured debts and wish to keep your home.
- DSA: Best for unsecured debts with the ability to retain some assets.
- Bankruptcy: Most appropriate when you have few assets or when other solutions have failed.
At Grant Thornton Debt Solutions, we assess every case on its merits. Our team will help you understand your options and support you at every stage of the journey.
Contact us today to book a consultation and start your path to a fresh financial start.
Learn more
Authors
-
Ken Gannon Ken has over 17 years insolvency experience, both personal and corporate. Ken is a PIP and the lead director on the firm’s personal insolvency service line, Grant Thornton Debt Solutions. Ken is a Committee member of the Association of Personal Insolvency Practitioners.View Profile