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 it’s
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
