Sinn Féin president and Louth TD, Gerry Adams, has warned that the government’s Personal Insolvency Service is deeply flawed and not fit for purpose and that consequently many families in mortgage distress will be barred from using the service.
The Sinn Féin leader raised the issue during Leaders’ Questions in the Dáil. Speaking afterward Gerry Adams said:
“There are 185,201 residential mortgages in distress. In the two and a half years of the Fine Gael/Labour government the number of families falling into distress has doubled.
“Parents are stressed and harassed trying to decide whether to put food on the table or pay their mortgage. They were promised that there would be light at the end of the tunnel and the personal insolvency service would help them. But now we learn that many of these families will not get the help that was promised.
“Grant Thornton Debt Solutions, which is one of the largest personal insolvency practitioners (PIPs), has carried out a study of 1,057 real life cases of mortgage distress. They concluded that only one in seven or 14% of those in mortgage distress would be able to avail of a personal insolvency arrangement (PIA) or a debt settlement arrangement (DIA).
“That means that 86% of families are earning less than the reasonable living expenses set by the Insolvency Service and this raises serious concerns about the feasibility of the service.
“These families will have nothing left that will allow them to pay down their mortgage debt. They will also have no nothing left to pay the up-front fees of more than €5,000 required by personal insolvency practitioners.
“Grant Thornton is not alone in raising doubts about the viability of the personal insolvency service. Other similar agencies have voiced similar concerns.
It is clear that the government’s personal insolvency strategy is deeply flawed and for many families will not work. The government also appears to have no contingency plans in place if the Grant Thornton analysis proves correct.
Sinn Fein has called for the government to provide in legislation for the independent adjudication and enforcement on mortgage distress cases, through a new category of agreement to be known as ‘independent agreement on mortgage distress’.
This would be adjudicated by a ‘mortgage restructuring panel’ appointed by the Minister, who would have the statutory power to agree and impose agreements on lending institutions where the panel believes that such agreements would enable the mortgage holders to holders to remain in the family home.”