Single mother gets €215,000 debt wiped clean in deal
Separated woman to stay in home after loans and mortgage reduced
A single mother will have almost €215,000 of her debts wiped clean in the largest reported settlement with a lender to date. The woman, who lives in Co Meath, had been threatened with eviction, but will now be allowed remain in her home as a result of the deal.
The Sunday Independent has learnt the woman's huge debt write-down included mortgage and personal loans. It is the third case involving massive debt write-offs to emerge last week.
Yesterday, it was reported that AIB wrote-off €170,000 in mortgage debt owed by a couple in a deal which allowed them to keep their family home. Earlier in the week it emerged that the same bank wrote €150,000 off another Dublin family's home-loan debt.
In the Co Meath case, the woman, fearing she would lose her home, made contact with Drogheda-based debt settlement company Moneybloom through Facebook, and they took on her case.
It asked the bank to supply it with documents so it could assess the woman's situation and formulate a sustainable plan which would allow her to keep her home.
Under the guidance of a qualified financial adviser, the newly designed payment plan was agreed with the woman and then was put to the bank and the other creditors for consideration.
A final settlement was agreed in recent days.
As part of the deal, the EBS – a subsidiary of State-owned AIB, agreed to write off €154,816 from the mortgage debt, leaving her owing a total of €121,375.
The woman, who had separated from her partner, was unable to meet the monthly mortgage payments of €1,544 and the bank had commenced legal proceedings with her late last year. Her life policy had lapsed and she and her child faced the prospect of losing their home next month. Now, because of the deal, her monthly mortgage repayments will be €610. A further €41,000 of the mortgage will be "parked".
This means this amount will be split off and no repayments will be made on this and no interest will accrue. When their circumstances improve, they will resume making payments on the €40,000 debt.
A further €17,500 of unsecured debt will also be written off. Her repayments for her unsecured debt has fallen from €260 a month to just €10.
Moneybloom founder and owner Clare Dooley welcomed the settlement, and urged other distressed mortgage holders not to run away from their financial troubles.
"Anyone in difficulty needs independent help in all areas," she told the Sunday Independent.
"Without addressing all of these areas the client will be unable to regain control of their finances and may ultimately default on the deal being offered by the banks."
The company said it would normally charge up to €250 for its services, but in this case no fee was charged to the woman.
However, the deal can still be torn up if the woman defaults on her payments.
A spokeswoman for EBS said it could not comment on individual cases. Revelations about the huge debt forgiveness deals will give hope to other distressed mortgage-holders who are unable to meet their repayments and fear they will lose their family homes. However, the spectre of home evictions still looms large. On Friday no fewer than 67 repossession applications came before a special sitting of Clare county registrar Pat Wallace.
Nine financial institutions are involved in the applications, which include a mother-of-five who said she "panicked" and hid a bank's repossession letter from her husband when it came through the door of her family home. There are currently 96,000 residential mortgage accounts in arrears of three months or more, while another 40,000 are less than three months in arrears.
Last week's €150,000 deal involving a Dublin family was one of 250 completed by AIB and the Irish Mortgage Holders Organisation (IMHO) following a formal agreement announced last November.
In that deal, the IMHO acts as an independent third party to negotiate between the bank and its mortgage holders in arrears.
Citing Cental Bank figures which showed more than 3,100 repossession applications being launched by banks in the second half of last year, the IMHO's David Hall warned: "This is the year of the repossessions."