MORTGAGE brokers, accountancy firms and lawyers are scrambling for a slice of around €75m in fees from banks for new personal insolvency deals.
Around 15,000 borrowers in financial distress are expected to seek debt relief deals when the new personal insolvency regime is in place later this year.
The new Insolvency Service will replace the bankruptcy system, with some debt written off if a payment agreement is observed over a five-year period.
Personal insolvency practitioners (Pips) are to be approved to negotiate on behalf of borrowers with the banks.
Thousands of mortgage brokers, accountants and lawyers are now expected to apply.
Upfront fees of between €4,000 and €5,000 are set to be charged for putting a new personal insolvency arrangement together, Michael Dowling of Abacus Finance in Dublin said.
If there are 15,000 new arrangements for mortgage debt deals put in place, this would mean initial fees of €75m, he said. "There will be a scramble to get involved.''
The new head of the Insolvency Service, Lorcan O'Connor, has stated that Pips will need professional indemnity insurance and a software system capable of handling client payments.
Fees are likely to be agreed between the bank and the Pip. There are likely to be monthly payments, if the borrower keeps to the repayment schedule.
David Hall, of the Irish Mortgage Holders Organisation, said the fact that large legal and accountancy firms were chasing personal insolvency business meant that smaller residential borrowers would lose out.
"The large accountancy firms and the big legal practices will chase the business from the guys with 10 buy-to-lets,'' he warned.