Insolvency service has questions for banks
The Insolvency Service of Ireland will meet the State’s banks next month to ask why there has been a sharp increase in objections to personal insolvency arrangements involving mortgage debt write-downs.
Lorcan O’Connor, the director of the insolvency service, has called the meetings with mortgage providers as new figures show the number of arrangements – where insolvent individuals can have debts of up to €3 million written down – have fallen by 39 per cent in a three-month period.
A personal insolvency arrangement allows heavily borrowed debtors to avoid bankruptcy and have mortgage and other secured and unsecured debt restructured or written down over as many as six years. There were 132 personal insolvency arrangements approved between June and September compared with 218 in the previous three-month period, according to the latest quarterly figures.
The service attributed the decline largely to the 433 personal insolvency cases that are subject to a court review known as a section 115A case where a proposed deal or an objection to a deal can be challenged.
“We are meeting the banks over the coming weeks to tease out what those issues were with a view to removing any further logjam,” said Mr O’Connor.He has not ruled out legislation to force banks to engage with debtors and their advisers.