Overview of ISI Solutions for Personal Insolvency and Debt Relief
Explore the comprehensive overview of ISI solutions, including Debt Relief Notice, Debt Settlement Arrangement, Personal Insolvency Arrangement, and Bankruptcy. Discover the benefits and options available for individuals dealing with financial challenges.
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Presentation Transcript
Legal Aid Board: Solicitors Panel for Abhaile; Training Day Lorcan O Connor, Director 30 May 2017
CONTENT OF PRESENTATION 1. Overview of ISI Solutions 2. Overview of Abhaile Scheme to date 3. Overview of Personal Insolvency Arrangements
FOUR ISI SOLUTIONS Debt Relief Notice (DRN) A solution for people with: Low income No mortgage Very few assets. Quote from debtor helped by DRN: All I d say is, if you re struggling with debt, take a deep breath and get in touch with those who can help. Debt should never become a worry and if it is, there is light at the end of the tunnel. This solution allows for complete write off of debts up to 35,000 and can be applied for, at no cost, through an Approved Intermediary - many of whom are based in MABS.
FOUR ISI SOLUTIONS Debt Settlement Arrangement (DSA) A solution to problem debts that have built up outside of a mortgage, such as: - credit cards - personal loans - overdrafts. Quote from debtor helped by DSA: There are no more phone calls, letters or worries about knocks to the door. This is a new beginning. I would highly recommend getting in touch with a PIP. This solution features write-down and write-off of debts that cannot be repaid. It can be applied for through a Personal Insolvency Practitioner (PIP), professionals based around the country that are regulated by the ISI.
FOUR ISI SOLUTIONS Personal Insolvency Arrangement (PIA) A similar solution to the Debt Settlement Arrangement but it also includes mortgage debt and, where possible, allows a person to keep their home. Quote from debtor helped by PIA: After talking to our PIP for just half an hour, he was able to fix it, it was going to be sorted. You would think What s the catch? but there is no catch. We are now out of debt. And speaking to the PIP was the answer. Again, this solution is available through a Personal Insolvency Practitioner (PIP).
FOUR ISI SOLUTIONS Bankruptcy The solution for people for which the alternatives above are not suitable. Quote from debtor helped by bankruptcy: Don t leave it til the last minute. Organisations like the ISI are there to help you. The bankruptcy term is now 1 year.
COMMENTARY Benefits of a Statutory Arrangement Popular criticisms of ISI arrangements Negotiated by experienced regulated professionals Protection from creditors No surprise changes / Peace of mind Reasonable standard of living guaranteed Sustainable Returned to solvency Creditors can veto any arrangement proposed Your personal details will be available on public registers PIPs cost money Your credit rating will be damaged
CREDIT RATING James Treacy, CEO Stubbs Gazette has said that we have recently reengineered our own consumer credit scores...so if a debtor enters into a Personal Insolvency Agreement or a Debt Settlement Arrangement and makes all of their payments on time, after 24 months their credit score will begin to repair. Their score will continue to improve over the next 3 to 4 years until at the very end of the arrangement their credit score will have been rehabilitated entirely.
Overview of Abhaile Scheme to date (Based upon period July 16 March 17)
ABHAILE - LEVELS OF DEBT Level of Debt 1,400,000,000 1,200,000,000 1,000,000,000 Negative Equity 175M 800,000,000 600,000,000 400,000,000 200,000,000 0 Overall debt Mortgage on Family Home CMV of Family Home
ABHAILE - REASONS FOR BORROWER ENGAGEMENT Reason for Borrower Engagement Case at Repossession Courts 17% MABS Referral 21% Received MARP "uncooperative" letter 4% 4% Recommendation from friend/family Recommendation from someone who has already availed of insolvency 12% 24% Scheme Supports Advertisement 18% Other
ABHAILE - EXTENT OF ARREARS Length of Mortgage Arrears 2000 1867 1800 1600 1400 1200 1000 800 600 506 400 348 200 0 <1 Year 1 to 2 Years >2 Years
ABHAILE - OUTCOME / RECOMMENDATION OUTCOME/RECOMMENDATION Bankruptcy Application 5% MABS Referral 1% Protective Certificate application 54% Alternative Solution 40%
PIA Case Before High Court CIRCUMSTANCES 22 Year Mortgage 285,000 Value of Property 105,000 Other Debts 77,000 PIP PROPOSAL Write off 165,000 (live mortgage 120,000) Extend mortgage term by 6 years 1 year reduction in int. rate to facilitate dividend of 2% to Unsecured Crs BANK RESPONSE Write off 15,000 Split 135,000 Live Mortgage 135,000 Warehouse, 0%, Lifetime Tenure
OVERVIEW OF PERSONAL INSOLVENCY ARRANGEMENTS Average Duration of Case 13% 0-6 months 6-12 months 12-24 months 24-36 months 36-48 months 48-60 months 60-72 months 41% 30% 2% 1% 7% 6%
OVERVIEW OF PERSONAL INSOLVENCY ARRANGEMENTS Treatment of Principal Private Residence 4% 7% Debtor Remaining in PPR Renting - Does own PPR Voluntary Surrender 89%
OVERVIEW OF PERSONAL INSOLVENCY ARRANGEMENTS Restructured PPR Mortgage by Restructure Type Unchanged Voluntary Surrender Mortgage to Rent Principal Reduction Split Mortgage Treatment of PPR Permanent Interest Rate Reduction Term Extension Arrears Capitalisation Average principal reduction per home where a reduction was proposed: 93,338 Payment Moratorium Temporary Interest Rate Reduction Reduced Payments - Over one year Interest Only 0 5 10 15 20 25 30 35 40 45
