Just over 100 insolvency deals done in three months

Average write-down on secured debt is 17 per cent, agency says

The Director of the Insolvency Service of Ireland, Lorcan O’Connor. File photograph: Eric Luke / THE IRISH TIMES.

The Director of the Insolvency Service of Ireland, Lorcan O’Connor. File photograph: Eric Luke / THE IRISH TIMES.

Mon, Jul 14, 2014, 13:54

Just 124 deals on debt were done under the auspices of the Insolvency Service of Ireland (ISI) in the second quarter of 2014 according to figures published yeserday.

The State agency set up last year to help distressed borrowers admitted the number was low, but it insisted the rate of pick-up was increasing as people became more familiar with the options open to them.

However critics have said that low number of applications being successfully processed proves that the agency has been a “failure”.

Since the ISI began accepting applications from borrowers unable to service their loans last September it has processed over 850 cases involving €330 million in debt of which 45 per cent, or €148 million, was mortgage debt related to a debtor’s principal private residence.

The latest tranche of ISI statistics show that in cases involving secured debt - largely made up of home loans - saw anywhere between 0 and 61 per cent of the residual debt being written off. The average write-down on secured debt - once outlying figures at the top and bottom of the scale have been removed - was at 17 per cent.

When it comes to unsecured debt, the amounts being written of was over 80 per cent.

The head of the ISI Lorcan O’Connor accepted that “the numbers have been low to begin with, they are increasing every month and the trend is moving in the right direction as people become more comfortable with the suite of ISI debt solutions”.

He encouraged anyone with serious debt issues to consult one of the growing network of approved intermediaries and personal insolvency practitioners throughout the country.

According to the ISI, in the three months to the end of June, 98 people were declared bankrupt under new rules which came in to force last year. All told 164 successful bankruptcy actions have been concluded since the start of the year, compared with 58 in 2013. The total debt involved in bankruptcy adjudications in 2014 was €278 million compared with €55 million in 2013.

The ISI says there was also a threefold increase in the number of debt arrangements approved during the past three months compared to the first quarter of this year.

It said its figures showed an overall acceptance rate of 74 per cent by creditors for debt settlement arrangements and personal insolvency arrangements (PIAs).

However when PIAs - which include mortgage debt - are looked at in isolation, one in three potential deals are unsuccessful.

The ISI also published a debt settlement arrangement (DSA) Protocol which will see agreed documentation and standard terms and conditions being used through the application process by debtor representatives, creditors and personal insolvency practitioners.