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25% - 60% of Mortgage Balance Written-off for Insolvents by Limerick APIP Member

Date added: 05 Jun 2015

Maurice Lenihan, ‎Personal Insolvency Practitioner at Moore Stephens Debt Solutions in Limerick, is one of 81 APIP members in Ireland who is helping people in financial distress to return solvency.

Commenting on recent debt write-off arrangements, APIP member, Maurice Lenihan said; “We (Moore Stephens Debt Solutions) have concluded twelve cases, to date, where the proposed arrangements have been accepted by the creditors.  The write-offs have ranged from 25% to 60% of the mortgage balance.  Three of our cases have involved voluntary surrender of homes and buy-to-let properties with unsustainable mortgages and significant negative equity.”

“Where debtors have remained in the home the level of write-off tends to be more modest.   However, where a bank is prepared to write-down debt, as part of a PIA, it can significantly change the overall debt position, particularly if the mortgage equals or exceeds other unsecured debt.  With one client’s mortgage, the loan was written-down by 15% and a further 15% was warehoused at zero interest for 28 years.  The mortgage write-down meant that the unsecured debt was written-off immediately so the client was left only with a mortgage she could afford and no other personal debt.” continued Maurice Lenihan. 

Maurice Lenihan went on to say that arrangements are dealt with on a case-by-case basis; “For family homes, we have found that banks have been more willing to offer split mortgages and term extensions instead of write-off.  We also had a case where a couple, who are no longer together, agreed a deal with the bank.  The mortgage was restructured on a sustainable basis for the person living in the house and the former partner was released from the mortgage loan.”

Commenting on the number of home repossessions, Mr Lenihan said; “We are working with ten clients at the moment that are in difficulty with mortgage debt and are either in arrears with forbearance or at repossession stage.  Sometimes, losing their home through surrender or bankruptcy may be the only way that debtors will become debt-free.  Three of our clients have returned to solvency through lump sum PIAs.  Three more clients have been brought through bankruptcy and returned to solvency.” 

In terms of unsecured debt, Maurice Lenihan continued; “We have completed three DSAs, so far, and, typically, the settlement ranges from ten to twenty percent over the term of the arrangement.  The level of unsecured debt write-off can be significant in PIAs, particularly if the bank will agree to a write-down.  We have settled cases where unsecured debt has been written-down by as much as 99%.”

Eric Hendy, Chairman of APIP, commented; “APIP members, such as Maurice Lenihan, throughout Ireland are helping debtors.  We want people who are in financial distress to know that there are 81 members of APIP who can help them and have already assisted people in similar situations.”