Insolvency service branded failure over ‘pathetic figures’

The desperately slow progress of distressed mortgage holders seeking to use the State’s new insolvency regime to resolve their difficulties has been highlighted in new figures.

Only 27 deals were done between banks and defaulting mortgage holders under the auspices of the agency charged with managing the State’s chronic personal debt crisis in the three months to the end of June, according to figures released yesterday.

The average debt write-down agreed between borrowers and lenders as part of these agreements was just 17 per cent, according to the data published by the Insolvency Service of Ireland (ISI). The agency was set up last year to tackle a mortgage debt crisis marked by more than 100,000 homeowners falling behind in their mortgage repayments.

Restructuring

By contrast, the Irish Mortgage Holders’ Organisation (IMHO) said last night it had put in place 268 long-term restructuring agreements over the same period with

AIB

and KBC bank alone.

These agreements included debt write-offs, voluntary property surrenders and split mortgages. IMHO director David Hall said the ISI's "pathetic" figures were proof the new insolvency regime was "not working in a crisis that affects hundreds of thousands of citizens".

Debt crisis

He said the State was “now six years into this personal debt crisis and the main anchor expected to help people is clearly not working. The Government needs to be mature and admit this Act, while well-intentioned, has been a failure.”

Head of the ISI Lorcan O’Connor admitted the number of arrangements put in place was low but he insisted the rate was increasing as distressed borrowers became more familiar with the insolvency options open to them.

When non-secured debt is included, the number of arrangements put in place through the insolvency service rises to 124 for the three months to the end of June, a substantially lesser number than the 200-plus people who have now qualified to act as insolvency specialists.

When it comes to unsecured debt, the amounts being written off are now in excess of 80 per cent.