What does it mean to be Over-indebted?
Most individuals will be indebted in some manner, whether it be for a car loan or a holiday. These borrowing commitments are a natural part of everyday life. For the most part, debts are repaid as they fall due. Indebtedness only becomes a problem when an individual is no longer able to meet their borrowing repayments. This is when the individual moves from a state of indebtedness to one of over-indebtedness.
What are the effects of over-indebtedness?
Over-indebtedness can have negative effects on a person’s overall well-being. Research has shown that it not only affects a person’s mental health, but it can also impact their physical health. As well as the negative effects on health, over-indebtedness can cause poverty and deprivation as all an individual’s money is being used to pay the debts off.
Is there any help for those that are over-indebted?
Up until the introduction of the Personal Insolvency Act 2012, bankruptcy was the only formal option available to an individual struggling with debt in Ireland. This act introduced three new debt remedies, in addition to making amendments to the bankruptcy solution. You can find out more information on the various personal insolvency options at Backontrack.ie.
While we now have policies to help people manage the problem of over-indebtedness, it is important these policies are reviewed regularly for their effectiveness. They should also be examined for any negative impacts they may have on the people they were intended to support.
The Debt Relief Notice (DRN) is one of the solutions introduced with the Personal Insolvency Act 2012. I undertook research on this debt solution to examine its effectiveness in improving the financial well-being of over-indebted individuals. This research has now been published in The Social Policy and Society Journal. If you would like to learn more about my research and findings, click on the link below to read the published article.