independent

Friday 18 April 2014

People who deliberately don't pay mortgages will be prosecuted

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PEOPLE who deliberately do not pay their mortgages in the hope of securing debt deals will be prosecuted, the head of the new insolvency service said.

So-called strategic defaulters face fines of up to €10,000 or could end up being jailed for five years, head of the Insolvency Service Lorcan O’Connor said.

Some estimates has put the numbers who are not paying their mortgages, even though they have the funds, as high as one of third of the numbers in arrears on residential and buy-to-let arrears.

There are almost 100,000 residential mortgages in arrears of three months or more and 28,400 investor mortgages where payments are not up to date.

Mr O’Connor said that if some of these people are choosing not to pay in the hope that they can avail of one of the new insolvency deals he will pursue them.

He told the Bloomberg news service: “There is anecdotal evidence that in some cases people have been either preferring certain creditors over others or adopting a strategic default.

“It’s incumbent on the service to ensure we are strict and protect the integrity of the 99pc of cases that are genuine.”

The insolvency service is due to get up and running next month when people will be able to apply for debt write-off deals. But these people will face a clampdown on their spending, if they are to get a deal.

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