‘Glimmer of hope’ for struggling householders

WITH the new personal insolvency regime still months away, solutions for those in mortgage arrears still remain somewhat patchy. These issues were addressed at a seminar organised by the Citizens’ Information Service and Money Advice and Budgeting Service (MABS) in Ennis last week.

Among the speakers at the event was Free Legal Advice Centres (FLAC) senior policy researcher Paul Joyce, who commented that for a large number of families in the county struggling with debt, the Personal Insolvency Bill provides “a glimmer of hope”. He is eager that the bill be pushed through before the end of the year in order to give families a way out of financial limbo.

 

Mr Joyce also expressed relief that the long-promised and very badly needed Personal Insolvency Bill has finally been published. Speaking at the seminar, he said, “This proposed law addresses issues on which FLAC has been campaigning for the last 10 years”.

However, he stressed the new bill must prove its effectiveness in the face of the urgent societal problem of people unable to deal with their debts.

“That means the State must offer a suite of effective solutions that people can understand and negotiate themselves or offer proper supports to guide them where appropriate,” he said.

FLAC broadly welcomed the bill as providing a structure for people to start dealing with unsustainable debts in a structured manner but Mr Joyce added, “The proposed law, as it stands, still does not impose a legally binding obligation on lenders to accept reasonable applications from customers in arrears and neither does the new bill provide a right for debtors to appeal a creditor’s decision in any of its options”.

He pointed out that where debtor applications are refused by creditors, the only options open to debtors under the legislation may be to apply for bankruptcy.

FLAC remains concerned that all four elements of Government action on the mortgage debt plan – new legislation, bank cooperation, debtor information and support and social housing – must have monitors and checks built-in to ensure the plan is working for debtors.

The bill has improved provision for reviewing the effectiveness of the Personal Insolvency Arrangement option, down to five years from the 10 years proposed in January. However, FLAC argues this is still too long and reviews should be annual and applied across all options.

FLAC acknowledges that the bill provides for some measure of family home protection. A personal insolvency practitioner proposing either a debt settlement arrangement or a personal insolvency arrangement must try to ensure that a debtor can maintain the family home, unless the mortgage is unsustainable or unsuitable.
Paul Woulfe, manager of the Citizens’ Information Service in Ennis, said, “The coming months will pose major challenges for everyone grappling with the new legislation. In particular, debtors will need comprehensive money and legal advice about the legislation, the options it presents and associated measures. The last thing indebted people need is a confused picture as to what and where State supports can be sought.”

The Citizens’ Information Service in Clare has welcomed the announcement by the Minister for Social Protection, Joan Burton that free, independent, professional financial advice will be provided to borrowers in mortgage distress. The initiative, which is being funded by the banks and other lending institutions, will involve the provision of advice to distressed mortgage holders by accountants from independent accountancy institutes.

“Borrowers will be able to select an accountant from the panel of participating accountants, which will be available on a county-by-county basis on the Citizens’ Information Board website, www.keepingyourhome.ie.
“This measure is an integral part of the extensive measures in place through the Citizens’ Information Board, MABS and other providers to better inform at-risk mortgage holders,” Mr Woulfe said.

He added that the Mortgage Arrears Information Helpline, 0761 074050, which has been operational since July, provides general mortgage arrears information and guidance to mortgage holders, in particular those borrowers who are in arrears or pre-arrears on their residential property. It also refers calls to other services such as MABS, Free Legal Aid Centres and other relevant services.

The event also marked the launch of keepingyourhome.ie and the Mortgage Arrears Information Helpline 0761 074050.

Peter Moylan of Fergus Housing Association spoke about the current mortgage to rent scheme, which is being piloted by the banks in conjunction with the Government. This is where a customer’s house is sold to an approved body and then rented back to the customer.

Other speakers at the event included Dennis Corbett, co-coordinator Clare MABS, who spoke about their role in administering the Debt Relief Order and David Williams, JW Williams and Co, spoke on the UK experience of personal insolvency. The event was closed by Marie Keane, president of the Clare Law Association and FLAC solicitor at Ennis Citizens’ Information Centre.