Some 570 people applied for debt relief during the first quarter of the year, an increase of 16 per cent on 2015, according to figures from the Insolvency Service of Ireland, as experts suggest a "deluge of deals" will now be done.
There were 570 applications, representing total debt of €303 million, for debt relief in the first quarter of the year, with personal insolvency arrangements (PIAs), which are solutions designed to keep people in their family homes, accounting for some 71 per cent of applications. Mortgage debt accounted for two thirds of applications, split evenly between buy-to-let and residential mortgages, with other debt owed to financial institutions accounting for a further third.
Three hundred and seventy-five protective certificates were granted, and again, PIAs accounted for the vast majority of these (80%). On the arrangements side, 300 such deals were struck in the quarter, with PIAs accounting for 50 per cent of these, followed by DRNs (24%) and DSAs (20%).
Lorcan O’Connor, director of the ISI, said that the increase in PIA applications is likely due to the newly introduced court review process, “sometimes referred to as the removal of the ‘bank veto’”. Since late 2015 this has allowed for a review of PIA proposals involving the family home which have been rejected by creditors.
As a result of this review, and given the reduction in the bankruptcy term to one year, Mr O’Connor says he expects “activity levels in all areas to grow in the coming months”.
Debt management firm New Beginning welcomed the figures, calling it the beginning of what it believes will be a “deluge of deals”.
"While still only dealing with the tip of the iceberg it is very encouraging to see more people using the system," Ross Maguire said, adding "Under the new laws the banks have lost their control and a court can and will enforce a proposal where the proposal is fair and equitable. This is a huge change in the dynamic between borrowers and banks. It can help tens of thousands of families – but the first step is for the borrower to take advice. We are seeing deals being done that we could only have dreamt of a few years back."
Numbers adjudicated as being bankrupt dropped from 162 in the first quarter of 2015 to 111 in the same period in 2016. However, given the new one year bankruptcy term, which was introduced on January 29th 2016, the expectation is that activity levels will take off once again.
Since the ISI opened in 2013, it has dealt with debt of almost €5 billion, and helped over 3,000 people (a third of these were bankruptcy cases). Slightly more males (52.5 per cent) have applied for debt relief than females, while those in the 35-44 age group account for the greatest number of applicants at 37.2 per cent.
Mr. O’Connor encouraged anyone with serious debt issues to consult a personal insolvency practitioner or an approved intermediary, details of which are available on www.backontrack.ie.