Thursday 29 September 2016

Courts Service to be given powers to overrule banks which reject debt deals

Published 13/05/2015 | 16:18

Courts Service to be given powers to overrule banks which reject debt deals
Courts Service to be given powers to overrule banks which reject debt deals

The Courts Service is to be given the powers to overrule banks which pull the plug on debt deals.

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The Government's long-awaited mortgage arrears package will also expand the role of the Money Advice and Budgeting Service (MABS) in assisting borrowers in arrears.

The proposals will also introduce changes to the Mortgage to Rent Scheme in a bid to make the scheme more accessible to homeowners.

The package of mortgage relief measures was finally agreed by Cabinet today after months of negotiations.

Central to the package is the establishment of an appeals process for homeowners whose debt deals have fallen through.

It is hoped the so-called ‘examinership type’ model will represent a major step towards ending the banks’ stranglehold on the personal insolvency service.

Under the Government’s plans, banks will be forced to accept deals proposed by Personal Insolvency Practitioners (PIPs) if the courts deem them reasonable.

The legislation underpinning the new process will be enacted by the Dail's Summer recess.

Speaking at Government Buildings today, Justice Minister Frances Fitzgerald said the examinership model is significant.

"If he (the judge) thought the deal was fair and reasonable, the court would be in a position to impose the solution," said Justice Minister Frances Fitzgerald.

"We would hope in fact that cases wouldn't have to go to court. But this would serve as a strong motivation for everyone to reach a deal without the court process. But the court process is now there and clearly can be used to impose a settlement," she said.

Environment Alan Kelly said the package will "change the relationship between mortgage holders and banks and rebalance it somewhat."

On the issue of reducing the maximum bankruptcy term from three years to one, Mr Kelly suggested strongly that such a move will be agreed.

The Oireachtas Finance Committee is due to examine the proposal, put forward by Labour TD Willie Penrose, and report back before the Summer recess.

Meanwhile, Finance Minister Michael Noonan said he has the option of increasing the levy on banks that refuse to pass on interest rate reductions to variable rate customers.

In a report to the Department of Finance, the Central Bank is understood to have said it should not interfere with the setting of rates.

Tanaiste Joan Burton has previously suggested hiking the levies on banks should be considered as a Government response.

Asked about such a move today, Mr Noonan said:

"We'll see. The question of a levy is an open question but it's not particularly applied to mortgage arrears."

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