Personal Insolvency Update
Since the insolvency service of Ireland was established in 2013 approximately 8,000 insolvent persons have been returned to solvency according to figures released from the ISI this amounts to the restructure of approximately €10billion in debt.
In addition to this it is clear that the insolvency legislation has acted as the catalyst for financial institutions to enter into approximately €120,000 in former or alternative repayment arrangements with debtors.
It is very welcome that approximately 95% of personal insolvency arrangements have resulted in borrowers staying in their Family Home with an average write-down o €120,000.
It is important to note that Borrowers are entitled to the same protection from the insolvency legislation irrespective of the type of loan company that they are dealing with i.e. where loans may have been bought by a vulture fund their rights are protected.
At present all proposals have to go to Court for approval and there is currently a proposal with government supported by all stakeholders that debt relief notices, debt settlement arrangements and personal insolvency arrangements should be capable of being approved by the insolvency service of Ireland without the need for Court approval provided these have been agreed.
Since the insolvency legislation was initially enacted the three year period for bankruptcy has been reduced to one year .A very important introduction was Section 115A review which prevents the Banks having an exclusive veto.
Approximately 1,100 Section 115A cases have been dealt with in the Circuit in the High Court with approximate figures indicating that 40% of the outcomes have been in favour of debtors.
A free debt advisory service “Abhaile” has been set up which gives distressed borrowers access to a personal insolvency practitioner.
As economic conditions improve however, this may encourage Banks to seek more orders for sales of properties in circumstances where improved financial economic conditions may result in the greater equity in houses and the Section 115A review process may be more necessary.
All in all it is very clear that the insolvency legislation has a huge benefit to many distressed borrowers who come in the absence of this legislation would have been left in a very vulnerable position or with the option of going bankrupt which prior to the legislation would have lasted for a period of 12 years.
For any further information please don’t hesitate to contact us on 01-2960666