Tipp FM Legal Slot – 19th March 2013
John M. Lynch on Personal Insolvency and Central Bank Mortgage Arrears [soundcloud id=’166931698′]
Download our Personal Insolvency Act Seminar & Central Bank Mortgage Arrears Announcement notes
Personal Insolvency Act Seminar
The Personal Insolvency Act 2012 was signed into law on St. Stephen’s day. Approximately how many mortgages are in arrears in Ireland and how can people who are burdened with debt benefit from the Personal Insolvency Act?
Recent reports from the Central Bank indicate that 112,916 mortgage accounts were in arrears of 90 days or more at the end of September 2012 with many thousands more struggling to make their monthly payments. These accounts amount to €24.7 billion of debt which people are simply unable to service. The Personal Insolvency Act 2012, which was signed into law by President Higgins on 26th December 2012, contains a number of mechanisms to deal with varying debt levels for those who simply cannot afford to meet repayments while having a reasonable standard of living. It is hoped that this Act will come into operation in May of this year
The Act gives struggling homeowners the opportunity to write down the debt on their mortgages by spreading it over a six year period. The Act also reforms the Bankruptcy Act 1988 and a significant new measure under the Act is to reduce the bankruptcy period from 12 years to 3 years (8 years in some cases).
Personal Insolvency Act Seminar
Clonmel Chamber of Commerce are having a Personal Insolvency Act Seminar in Raheen House next Tuesday, 26th March at 6.15pm. The Personal Insolvency Act 2012 contains a number of mechanisms to deal with varying debt levels for those who simply cannot afford to meet repayments while having a reasonable standard of living. It is hoped that this Act will come into operation in May of this year.
Listeners may have read article headlines over the past few months such as “Mortgage arrears ‘extraordinary’”, “Central Bank urges more proactive approach to mortgage arrears” and “Insolvency law allows banks to go after pensions” and not fully understood the implications of the Personal Insolvency Act and how it may benefit you. At the seminar the guest speakers will explain the Act, its various parts and how they may apply to and benefit you.
Guest Speakers
John M. Lynch, Principal, Lynch Solicitors, Tom Pollard, CEO, Tom Pollard Properties and Freddie Hatton, Financial Services Consultant, FP Consulting Ltd. will be the guest speakers at the Personal Insolvency Act seminar on Tuesday.
John M. Lynch, Principal, Lynch Solicitors
I will discuss how the Personal Insolvency Act will work in practice, new arrangements under the Act: Debt Settlement Arrangements (DSAs), Personal Insolvency Arrangements (PIAs), the Insolvency Service, the role of the Personal Insolvency Practitioner (PIP) and the steps people can take before the Insolvency Service comes into operation in May.
I have been providing legal services in Clonmel, Tipperary, and Ireland since 1983. As a country practitioner I am involved in all areas of law. My new and current area of interest is Debt Management and Insolvency. We, at Lynch Solicitors, have added new services to help clients deal with insolvency issues as it is an area which, unfortunately, affects a considerable number of people daily. As a team, we have continued to improve our expertise and I recently completed a Diploma in Insolvency and Corporate Restructuring and Andrea Gleasure completed a Certificate in Banking Law.
Tom Pollard, CEO, Tom Pollard Properties
At Tuesday’s seminar, Tom Pollard will discuss the effect of the Act on the Property market.
Tom established Tom Pollard Properties in 1988 and has over 40 years’ experience in Sales, Negotiating and Facility Management and Maintenance. The business has grown from its initial focus on the residential sector to become one of the foremost Real Estate agencies in the region in the commercial, industrial and large-scale integrated development projects sector supporting and consulting on schemes of the order of €70 – €90 million. The company also manages significant projects in the public sector working with local and regional government bodies and other institutions in the area of public/private partnership.
The business is recognised as the largest estate agency in Clonmel and has grown rapidly over the past 3 years and counts the EBS agency in its expanding portfolio of services.
Freddie Hatton, Financial Services Consultant, FP Consulting Ltd.
At Tuesday’s seminar Freddie Hatton will discuss dealing with the banks in light of developments since the introduction of the Personal Insolvency Act.
Freddie has over 33 years’ experience in Financial Services, all of which was with Bank of Ireland. During his time in Retail Banking Freddie held positions in Branch, Regional and Credit Management and was also HR Manager for the South of Ireland. His final position was that of Regional Manager for the South East.
Following his Banking career Freddie worked in Horticulture for a number of years as CEO of SAP Group. Freddie is holder of a Masters of Business Administration & Applied Finance Diploma. His Thesis, as part of the MBA, was “Turnaround Strategies – Back from the Brink” (Companies who nearly fail but manage to survive) is highly relevant and topical in the current economic climate. Freddie holds a Fellowship of the Institute of Bankers in Ireland and is a Chartered Fellow of Chartered Institute of Personnel & Development and a Certificate in Health & Safety.
Freddie established FP Consulting Ltd in 2004 with Patricia Mathews.
Register for the Seminar
We welcome readers to join us at the seminar where they will have the opportunity to learn more about the Act and how it can benefit them. To register for the seminar visit the Clonmel Chamber of Commerce website at:
https://www.clonmelchamber.com/events_inline.php?getnews=269
Central Bank –Mortgage Arrears Resolution Process
While the level of new mortgage arrears is reducing the existing level of person
al debt needs to be addressed and the Central Bank recently announced that it expects the six main banks to tackle 50% of arrears by the end of December 2013 with the balance finished by 2014.
The Central Bank’s statutory Code of Conduct on Mortgage Arrears (CCMA) outlines a framework that lenders must use when dealing with borrowers who are in mortgage arrears or at risk of falling into arrears. The Central Bank is in the process of amending this code to allow the earlier sale of distressed assets and to force the Banks to make long terms arrangements for arrears customers. Under the CCMA the Central Bank introduced a Mortgage Arrears Resolution Process (MARP) and there are five steps lenders must take under this process: communication; financial information; assessment; resolution and appeals.
Communication
If you, as a mortgage holder, miss a mortgage repayment, in part or full, on the date it is due, the lender is obliged to contact you in writing if the repayment is outstanding for 31 days. The lender should detail the full amount of arrears, let you know that it is being dealt with under MARP, the importance of liaising with your lender, and the impact it will have on your credit rating. The lender must keep you updated on existing and future arrears.
Financial Information
Lenders must provide you with a standard financial statement (SFS) so that they can obtain financial information from you and assess your situation. The lender then sends your completed financial statement to an Arrears Support Unit.
Assessment
The Arrears Support Unit will assess the standard financial statement taking into account your personal circumstances such as the level of indebtedness, the information in the SFS, your capacity to repay and your payment history.
Resolution
The lender must look into alternative repayments such as an interest-only arrangement, deferring payment, extending your mortgage and so on. Schemes have been put in place such as the national mortgage-to-rent scheme and Deferred Interest Schemes. “Trade-down” or “split” mortgages may also be an option for some people.
Appeals
You may appeal a decision of the Appeals Support Unit within 20 working days to the independent lender’s Appeals Board, which would review the ASU’s decision, the lenders treatment of your case under MARP and whether the lender complied with CCMA.
A recent High Court decision ruled that because the lender had not complied with the Code of Conduct they were not entitled to take possession of a house.
It would be hoped that a similar approach would be taken by the Courts when dealing with Personal Insolvency Arrangements under the new Insolvency Act.
In recent articles we have discussed the Personal Insolvency Act 2012, which has a number of mechanisms to deal with varying debt levels for those who simply cannot afford to meet repayments while having a reasonable standard of living.
New arrangements include:
A Debt Settlement Arrangement (DSA) will cover loans with two or more creditors in the amount of €20,000 or more. The borrower will have to pay off a certain amount for up to 5 years and the balance will then be written off.
A Personal Insolvency Arrangement (PIA) will apply specifically to mortgage holders for secured and unsecured debts of €20,000 to €3million. 65% of the lenders must be in agreement for some of the debt to be written down.
Personal Insolvency Practitioner
A key enabler in the system, the personal insolvency practitioner (PIP), will make the proposal on behalf of the borrower provided the borrower themselves satisfy a number of criteria – such as they must be living in the State for a year before the date of application or domiciled here. The PIP will also verify and certify a financial statement prepared by the borrower confirming their financial position.
The Insolvency Service
The body set up to manage the system, the ISI (Insolvency Service of Ireland) will licence the Personal insolvency practitioners, maintain a register of debtors, and manage the various arrangements. The PIP will form the link between the debtor, the Insolvency Service, the creditors and the Courts. The critical element that will have to be assessed in coming to an agreement will be the management of the 65% vote to secure agreement for the debt settlement or personal insolvency arrangement.
The new Insolvency Service hopes to begin accepting applications from borrowers seeking debt relief in June of this year.
Now is the time to prepare the necessary paperwork to be ready for the start-up of this new Regime.
