Debt-stricken homeowners set to appeal to courts if formal deals are turned down by lender
Published 19/11/2015 | 17:27
DEBT-stricken homeowners will be able to appeal to the courts if a formal deal on their borrowings has been turned down by their lender.
This comes after Minister for Justice and Equality Frances Fitzgerald signed an order bringing into force provisions of the Personal Insolvency (Amendment) Act 2015.
The order allows for a new court review where a mortgage lender rejects the borrower’s proposal for a personal insolvency arrangement (PIA).
Ms Fitzgerald said the change would mean the court can examine the proposal refused by the creditors and if it considers the proposal fair and sustainable will have power to impose the proposal on the creditors who voted against it.
Minister Fitzgerald said: “The courts’ new power to review a Personal Insolvency proposal rejected by creditors is a very significant milestone in the development of Ireland’s insolvency regime.”
The move follows huge criticism that banks had an effective veto over insolvency deals, something rejected at the time by former Justice Minister Alan Shatter when the personal insolvency legislation was introduced.
The Free Legal Advice Centres (FLAC) said the change will only affect those in arrears or in arrangements on January 1 this year.
Director of the Insolvency Service Lorcan O'Connor the change would mean more insolvency deals would be accepted.
“This new legislative provision is good news for people in mortgage difficulty as it strengthens the likelihood of a Personal Insolvency Arrangement (PIA) proposal being accepted.
He said the current acceptance rate of these proposals is almost 80pc.
A key feature of the PIA is that it enables a person to get back on track financially and aims to keep them in their home where possible, Mr O’Connor said.