Thursday 19 July 2018

Big jump in number of people seeking deals on debt

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Stock photo
Charlie Weston

Charlie Weston

THERE has been a surge in the number of heavily indebted people applying for an official debt deal.

There were 1,259 new applications in the second quarter of this year for arrangements, according to the Insolvency Service. 

This is an increase of 71pc on the same period last year.

Most were to deal with mortgages. They are seeking a personal insolvency arrangement (PIA), which provides for the restructuring or settlement of mortgage debts up to €3m.

This rise comes about following the introduction of Abhaile, the State scheme that provides free financial and legal advice for those in debt distress.

Between April and June there was a 26pc rise in protective certificates issued. This was an increase of more 617.

The issuing of a protective certificate is the first stage of the debt solution process.

And there was a 22pc rise in approved arrangements to 323. This is the final stage in the process.

This brings the total number of approved arrangements above 3,500 since 2013.

A total of 9,361 debt-solution applications have been submitted to the Insolvency Service since its inception in 2013.

During the first year just 112 applications were made.

There was a fall in the numbers being declared bankrupt. The numbers were down from 526 last year to 243 last year.

Head of the Insolvency Service Lorcan O’Connor said that each quarter the statistics show that the solutions are getting more people back on track financially. 

“While it is understandable that the effects of debt on mental health can prevent people seeking the help they need, my message to anyone still experiencing unmanageable debt is to consult with one of our regulated professional advisers.

“Those with mortgage arrears can also avail of a free consultation with a personal insolvency practitioner (PIP) under the Abhaile service.”

Mortgage debt campaigner David Hall said there were still too few people availing of the official debt deals.

The head of the Irish Mortgage Holders Organisation said: “Despite the positivity of the Insolvency Service it can’t get away from the fact that the insolvency legislation and process is not fit for purpose.”

He said this was despite the fact the Government had pumped millions of euro into the system via the Abhaile scheme.

People often look at doing a debt deal, but pulled away from it because they were afraid of becoming homeless, he said.

 Since the Abhaile scheme began there have been 600 personal insolvency arrangements, but over 6,000 Abhaile vouchers were issued, Mr Hall said.

“So debtors have a one-in-10 chance of achieving an insolvency arrangement."

He said many of those applying are deeply insolvent and require housing solutions as their first risk is homelessness and debt solutions alone are not sufficient.

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