Thursday 15 November 2018

Insolvency Service admits families struggling to find experts to do deals

Director of the Insolvency Service Lorcan O'Connor
Director of the Insolvency Service Lorcan O'Connor
Charlie Weston

Charlie Weston

THE Insolvency Service has admitted that over-borrowed families are finding it difficult to get a financial expert to take on their cases.

Now it is set to launch an information campaign to promote its services because the take-up of the new debt deals has been very low.

In a communication seen by the Irish Independent, the service has revealed for the first time that over-borrowed families are finding it hard to get personal insolvency practitioners to act for them.

There are 142 financial advisers registered as personal insolvency practitioners (PIPs).

However, it is understood that a large number of these are not active, making it very difficult for families to get a PIP to help them secure a debt write-down.

These are the experts who advise people who are unable to meet their repayments and help them to put a deal together to resolve the debts.

Debt deals are then administered by the Insolvency Service and approved by the courts, if they are approved by the bank.

But one year into the operation of the ISI very few deals have been done.

Fewer than 40 personal insolvency arrangements (PIAs) which are for dealing with mortgage and other borrowers, were in place by June this year.

Head of regulation at the Insolvency Service Cathy Clarke has written to PIPs outlining plans for an information campaign next month.

"Since the ISI commenced accepting applications for the debt solutions on September 9, 2013 the number of debtors coming forward have been relatively low when compared with the large number of debtors who are in arrears and who are struggling with their problem debt on a day-to-day basis," the letter states.

Ms Clarke admitted that heavily indebted people were struggling to engage a PIP.

"I am aware that debtors may often find it difficult to obtain a meeting with a PIP on the ISI register and may have to make a number of phone calls before they find a PIP who is willing to have an initial discussion with them and as you can appreciate this is resulting in referral fatigue for these debtors."

It is understood that around a third of those approved as PIPs are not active because they do not feel they will not make money out of negotiating deals.

Others have had difficulty getting software programs for managing insolvency deals.

Now the Insolvency Service, which is headed by Lorcan O'Connor, is to launch a publicity campaign next month to encourage greater take-up of the deals.

It will have adverts on TV and radio, and in newspapers, and is asking representative bodies like trade unions and the Irish Farmers Association to inform their members about how the new systems work.

Community groups, St Vincent de Paul and TDs are to be asked to spread the work about the debt-busting service works.

Revised and simplified guidebooks, outlining how the insolvency deals work, have been produced.

There are 93,000 residential mortgage accounts in arrears, with 60,500 of these behind on their repayments for a year or more.

But a year into the operation of the Insolvency Service it is understood that new figures will show that no more than 100 debt deals involving mortgages have been done.

Banks are reluctant to agree to insolvency deals for stricken householders because they fear a loss of control.

Irish Independent

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