Banks No Longer Have Final Word under New Insolvency Measures

The Government (Ministers for Justice Frances Fitzgerald, Finance Michael Noonan and Environment Alan Kelly) has announced new personal insolvency measures following a Cabinet meeting today.  The Association of Personal Insolvency Practitioners (APIP) has welcomed the beginning of long-anticipated reform.

One of the key changes introduced by the government is the removal of the bank’s veto in insolvency arrangements.  “A new examinership-style process will allow the debtor to challenge the bank’s rejection of an arrangement.  The Circuit Court judges can ensure debtors are not unfairly prejudiced and judges will have the power to approve personal insolvency arrangements that are rejected by the banks.  This is a significant measure for debtors and homeowners as banks will no longer have the final word.” said Eric Hendy, Chairman of APIP.

APIP Committee Member, Mitchell O’Brien added; “We (APIP) explained to Government the issues PIPs faced and, as a result, they have given us the tools we need perform as professionals in this distressed sector.  With the new changes, APIP members can help insolvent debtors to return to solvency in a fair, transparent, and equitable manner.  We can now protect a debtor’s family home and reasonable living expenses certain in the knowledge that the Courts will be the ultimate arbiter of PIA proposals, without fear or favour.”

The market value threshold for the mortgage-to-rent scheme in Dublin has been extended from €220,000 to €350,000 and will be reviewed in other counties; the current threshold is €180,000.  “The repayment costs for many families who face repossession would be lower through the scheme than the cost of renting another house, which most borrowers can’t afford.  Under the scheme, they can remain in the family home at an affordable cost.”  commented Tara Cheevers, APIP Secretary.

The introduction of UK-based Stepchange, to act as an intermediary between banks and borrowers, is not confirmed.  The arrangement would be between Stepchange and the banking federation, not the government.  A statement was issued by the organisation (Stepchange) this morning; “Talks between StepChange Debt Charity and the Irish Banks are still very much ongoing and we are not in a position to disclose any details regarding any potential service.”  Eric Hendy, Chairman of APIP said; “As stated previously, it would not be in the interests of Irish debtors to engage with a UK-charity that is not familiar with Irish insolvency issues and funded by the banks.”

Commenting on the proposed reduction of the bankruptcy period from three years to one year, Eric Hendy, APIP Chairman, said; “A letter has been sent to the Chair of the Oireachtas Joint Committee for Finance, Public Expenditure and Reform, Dr. Liam Twomey, Fine Gael T.D. requesting a review of the term before the summer recess.  APIP has and continues to support the Penrose Bankruptcy Bill.”

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For further information and/or to arrange an interview(s) with Eric Hendy, Chairman of APIP, or Tara Cheevers, Secretary of APIP, contact Orla Clancy, Media Consultant, at orla@ocpr.ie or telephone 087 938 8882.