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News : Property Last Updated: Jul 15, 2014 - 12:10 PM

Insolvency Service of Ireland supervises 27 mortgage debt deals in Q2 2014
By Michael Hennigan, Finfacts founder and editor
Jul 15, 2014 - 7:56 AM

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Insolvency Service of Ireland, the public agency for supervising deals between defaulting mortgage holders and Irish banks, appears to be "on a slow boat to China" with a process where only 27 deals were agreed in Q2 2014.

The agency reported Monday [pdf] that personal insolvency arrangements (PIA) which provide for the restructuring or settlement of secured debt of up to €3m and the settlement of unsecured debt over a period, normally expected to be 6 years, were at 27 with the average agreed debt writedown at only 17%.

Over 80% of unsecured debt can be written off.

The Irish Mortgage Holders Organisation (IMHO), said that the insolvency system is not fit for purpose and it had agreed 268 restructuring deals with AIB and KBC banks alone in the same period.

"There are well over 100,000 people in mortgage distress with their family home in Ireland and each having other unsecured debt.  Families are crippled with debt, many are seeking a way to resolve their debt, the insolvency service was to be a game changer and to date this has failed to materialise”, said David Hall CEO, IMHO.

“These figures show, no matter how attractively they are presented, that its not working in a crisis that affects hundreds of thousands of citizens.  The insolvency service last quarter completed a pathetic 27 Personal Insolvency Arrangements (PIA) and 30 Debt Settlement Arrangements (DSA).”

“In addition there is a concern where with such small numbers, 26% of arrangements fail after the protective certs have been issued at a cost to debtors,” added Hall.

“We are now six years into this personal debt crisis and the main anchor expected to help people is clearly not working.  The Government needs to be mature and admit this act, while well intentioned, has been a failure.” said David Hall.

The IMHO asks that The Minister for Justice establish a review group immediately which must include non-commercial debtor advocates. The following areas need urgent attention;

  • Why it takes so long to get a protective certificate;

  • Why the process is so difficult compared to examinership;

  • The cost of the application process;

  • Why 26% of the successful arrangements have failed;

  • The VAT charge levied on insolvency services which is a significant cost and a disincentive.

Irish Mortgages: 35,314 home mortgages in arrears 720 days+; 39,250 BTL accounts in arrears

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