The Minister for Finance has said that the publicity aspect of the new personal insolvency service may dissuade some applicants, but is still confident of its success.

Michael Noonan was responding to questions about the Insolvency Service of Ireland which has begun taking applications today from people who want to restructure their debts.

The development means that in some cases people will be able to get some of their borrowings written off if creditors agree to deals. However, people who avail of the service will have their names published on a register.

When asked about the publicity aspect associated with the registration of names, Mr Noonan agreed it may put some people off. “It might, but obviously it is not for everybody. Some people will try to make direct arrangements with people they owe money to. Some people will go for full bankruptcy but this is a way of keeping oneself going.

“If somebody is indebted and has a lot of creditors around the city for example, it’s no big secret so there isn’t a huge breach of confidentiality but it is in the interest of protecting the interests of everybody else in business — I hope it works and I think it will,” he said.

Asked about the number of personal insolvency practitioners in Limerick today, Mr Noonan said: “This is the start and it will take time until it gears up to be fully operational and while it is 37 practitioners today, I understand they are training more and there will be several hundred to deal with what is involved in the legislation.

“It’s like an start-up, it starts with enough of people to do a start up and then as it proceeds more people are trained. I understand the numbers are going to climb very quickly on the practitioners’ side.

The new insolvency regime is designed to help address this and offers three debt solutions. Personal debt is a big problem in Ireland, with more than 100,000 people in some form of arrears with their loans.

Those with arrears up to €20,000 and with little or no disposable income can seek a debt relief notice, which will involve dealing with an intermediary such as the Money Advice and Budgeting Service.

Those with unsecured debts need to go to a personal insolvency practitioner (Pip) via a debt settlement arrangement.

Those with secured and unsecured debts up to €3 million can avail of a personal insolvency arrangement, again with the help of a Pip.

While creditors can veto agreements, Lorcan O’Connor director of the ISI writing in The Irish Times today said if a bank, for example, opts to vote down a reasonable proposal, the likely next step for the debtor is to declare bankruptcy

As of this morning there are 37 Pips covering 16 counties for the service. That number is expected to grow this month. To find one, visit the ISI web site on www.isi.gov.ie or call their information line on 076 1064200.

Speaking on RTÉ radio this morning, Mr O’Connor said it was an important day for families who are having difficulties paying their debts .

“As of today there are a number of additional new solutions available to those people that will ultimately return them to solvency... It is important for society that we deal with this problem. When you return someone to solvency they again can contribute to the economy and be productive,” he said.

Asked how much of a problem banks or lenders having a veto on the process would be, Mr O’Connor said all other common law jurisdictions around the world had this voting mechanism and it worked.

“ And the reason why it works is that these kind of arrangements while they are obviously to the benefit of the debtor they are also of benefit to the creditor. The reason why it works is that it is an efficient and effective way to deal with a problem loan. The average return to a creditor through one of these arrangements is far higher than it would be in bankruptcy,” he said.

Mr O’ Connor was adamant strategic defaulters would not get through the system.

“There are almost four safety nets to try and address that kind of issue. Applicants have to sign a statutory declaration that what they are saying is true, fair and reasonable; they have to convince a practitioner through the provision of back up documentation that what they are saying stands up; and the ISI then verifies the application. The court also looks at the application.”

Mr O’Connor said legal action would be taken if a creditor highlighted that an applicant had not been truthful.

Barrister Brian Walker who has trained personal insolvency practitioners said the process would work for some people but warned that there are “a lot of boxes to tick.”

“ It will work for certain people, for people who qualify, but there’s quite a lot you need to do, you need to be up to date with your taxes to Revenue for example”

He said his main worry was that the banks would not engage with the process.

“There’s no great hope that they will have open arms for the Pips… That’s my main worry. It will be challenging for Pips but that’s their job.”

Mr Walker said most people who have trained to become Pips are accountants. He said Pips will require €2,000 - €3,000 up front for the work involved.