Legal Aid Board: Solicitors Panel for Abhaile; Training Day
Lorcan O’Connor, Director
30 May 2017
CONTENT OF PRESENTATION
1.
Overview of ISI Solutions
2.
Overview of Abhaile Scheme to date
3.
Overview of Personal Insolvency Arrangements
Overview of ISI Solutions
FOUR ISI SOLUTIONS
Debt Relief Notice (DRN)
A solution for people with:
• Low income
• No mortgage
• Very few assets.
Quote from debtor helped by
DRN:
“All I’d say is, if you’re
struggling with debt, take a
This solution allows for complete
write off of debts up to €35,000 and
deep breath and get in touch
can be applied for, at no cost, through with those who can help. Debt
an Approved Intermediary - many of
should never become a worry
whom are based in MABS.
and if it is, there is light at the
end of the tunnel.”
FOUR ISI SOLUTIONS
Debt Settlement Arrangement (DSA)
A solution to problem debts that have
built up outside of a mortgage, such
as:
- credit cards
- personal loans
- overdrafts.
Quote from debtor helped by
DSA:
“There are no more phone
calls, letters or worries about
knocks to the door. This is a
This solution features write-down and new beginning. I would highly
write-off of debts that cannot be
recommend getting in touch
repaid. It can be applied for through
with a PIP.”
a Personal Insolvency Practitioner
(PIP), professionals based around the
country that are regulated by the ISI.
FOUR ISI SOLUTIONS
Personal Insolvency Arrangement (PIA)
A similar solution to the Debt
Settlement Arrangement but it
also includes mortgage debt
and, where possible, allows a
person to keep their home.
Again, this solution is available
through a Personal Insolvency
Practitioner (PIP).
Quote from debtor helped by
PIA:
“After talking to our PIP for just
half an hour, he was able to fix
it, it was going to be sorted.
You would think “What’s the
catch?” but there is no catch.
We are now out of debt. And
speaking to the PIP was the
answer.”
FOUR ISI SOLUTIONS
Bankruptcy
The solution for people for
which the alternatives above
are not suitable.
The bankruptcy term is now 1
year.
Quote from debtor helped by
bankruptcy:
“Don’t leave it ‘til the last
minute. Organisations like the
ISI are there to help you.”
COMMENTARY
Benefits of a Statutory
Arrangement
• Negotiated by experienced
regulated professionals
• Protection from creditors
• No surprise changes / Peace
of mind
• Reasonable standard of
living guaranteed
• Sustainable
• Returned to solvency
Popular criticisms of ISI
arrangements
• Creditors can veto any
arrangement proposed
• Your personal details will be
available on public registers
• PIPs cost money
• Your credit rating will be
damaged
CREDIT RATING
James Treacy, CEO Stubbs Gazette has said that
“ we have recently reengineered our own consumer credit
scores...so if a debtor enters into a Personal Insolvency
Agreement or a Debt Settlement Arrangement and makes all
of their payments on time, after 24 months their credit score
will begin to repair. Their score will continue to improve over
the next 3 to 4 years until at the very end of the arrangement
their credit score will have been rehabilitated entirely.”
Overview of Abhaile Scheme to date
(Based upon period July ‘16 – March ’17)
ABHAILE - LEVELS OF DEBT
Level of Debt
€1,400,000,000
€1,200,000,000
€1,000,000,000
Negative Equity €175M
€800,000,000
€600,000,000
€400,000,000
€200,000,000
€0
Overall debt
Mortgage on Family Home
CMV of Family Home
ABHAILE - REASONS FOR BORROWER ENGAGEMENT
Reason for Borrower Engagement
Case at Repossession Courts
17%
MABS Referral
21%
Received MARP "uncooperative" letter
4%
4%
Recommendation from friend/family
12%
24%
Recommendation from someone who has
already availed of insolvency
Scheme Supports Advertisement
18%
Other
ABHAILE - EXTENT OF ARREARS
Length of Mortgage Arrears
2000
1867
1800
1600
1400
1200
1000
800
600
506
400
348
200
0
<1 Year
1 to 2 Years
>2 Years
ABHAILE - OUTCOME / RECOMMENDATION
OUTCOME/RECOMMENDATION
Bankruptcy
Application
5%
Alternative
Solution
40%
MABS Referral
1%
Protective
Certificate
application
54%
Overview of Personal Insolvency Arrangements
PIA Case Before High Court
CIRCUMSTANCES
22 Year Mortgage €285,000
Value of Property €105,000
Other Debts €77,000
PIP PROPOSAL
Write off €165,000 (live mortgage €120,000)
Extend mortgage term by 6 years
1 year reduction in int. rate to facilitate dividend of 2% to Unsecured Crs
BANK RESPONSE
Write off €15,000
Split €135,000 – Live Mortgage
€135,000 – Warehouse, 0%, Lifetime Tenure
OVERVIEW OF PERSONAL INSOLVENCY ARRANGEMENTS
Average Duration of Case
13%
41%
30%
2%
1%
6%
7%
0-6 months
6-12 months
12-24 months
24-36 months
36-48 months
48-60 months
60-72 months
OVERVIEW OF PERSONAL INSOLVENCY ARRANGEMENTS
Treatment of Principal Private Residence
4%
7%
Debtor Remaining
in PPR
Renting - Does
own PPR
Voluntary
Surrender
89%
OVERVIEW OF PERSONAL INSOLVENCY ARRANGEMENTS
Restructured PPR Mortgage by Restructure Type
Unchanged
Voluntary Surrender
Mortgage to Rent
Principal Reduction
Treatment of PPR
Split Mortgage
Permanent Interest Rate Reduction
Term Extension
Arrears Capitalisation
Average principal
reduction per home
where a reduction
was proposed:
€93,338
Payment Moratorium
Temporary Interest Rate Reduction
Reduced Payments - Over one year
Interest Only
0
5
10
15
20
25
30
35
40
45