HEAVILY indebted householders may have to wait until autumn before a new personal insolvency service is up and running, it has emerged.
The new process opens up the prospect of banks coming to deals with stricken mortgage holders. Agreements would last up to five years and be rubber- stamped by judges.
If householders stick to a new reduced payments plan the banks are set to write off large chunks of what they owe on their mortgages and any buy-to-let loans.
But it has emerged that the new state insolvency service is in a race against time to establish itself.
Head of the new body, Lorcan O'Connor, still has no office, no IT system to process applications for personal insolvency debt deals, and has yet to put rules together on precisely how the service will operate.
Mr O'Connor told a conference last month he hopes to have it operating by June.
But mortgage expert Michael Dowling, of Abacus Finance in Dublin, said it was more likely the new service would not be able to agree structured debt deals until September.
He said the insolvency service, which is still awaiting Justice Minister Alan Shatter's (pictured) signature, has been asked to do six months' work in 18 months. "It will be September before the new service is in place," Mr Dowling said.
There are some 230,000 mortgage accounts in trouble. This includes all the residential accounts that are in arrears, residential accounts that have had the repayments altered and buy-to-let mortgages where full repayments are not being made.
Mr Dowling said it was likely that 9pc, or 21,000, of these mortgages, will end up being restructured.