High profile or not, personal insolvency works for debtors.
Stephen Kinsella, 46, had taken out a mortgage of €385,000 in 2005 to build a house but lost his security business and a job as a truck driver in 2008 when the recession hit the country. The dad-of-one said he struggled to even heat his house. Desperate, he threatened to burn down his home — but was laughed at by the banks. Stephen said: “I did part-time work on farms and anything I got I would give to them but they hardly wanted to know, just threatened to take the house.” In 2015 a friend told him about the Insolvency Service of Ireland. Stephen said: “I can’t speak highly enough of them.” PIP managed to secure a write-down on his mortgage to current market value and Stephen pays as much as he can.
Mr and Mrs Stokes also retained their €800,000 home in Kilternan, South County Dublin, although the home carries mortgage debt of about €680,000 on which they pay monthly repayments of some €700.
PIAs work exactly the same and on the exact same basis for the ordinary family home borrower with €250,000 worth of debt as they do for a debtor with €14m of debt. The common thread between the Pia Bang Stokes case and the thousands of more modest PIAs being approved is the maths.
If you are unable to meet your financial commitments (including the mortgage on your family home) as and when they fall due, you are insolvent and eligible to make an application for a PIA.
The sooner you contact a Personal Insolvency Practitioner (PIP) the better.
The PIP will advise you of your options and assist you in completing your prescribed financial statement and PIA application form. From here the PIP will arrange for your application to go before a Personal Insolvency Court.
The Court will issue a protective certificate (PC) giving you 70 days protection from your creditors. It is during this period the PIP will engage with the mortgage lender and other creditors and construct a PIA proposal that will be voted on at a creditors’ meeting.
If a 65% majority of the debt owed is voted in favour of the proposal, then the PIA will be put back before the same Court to be approved giving it the force of law, binding all creditors (including the mortgage lender) and the debtor to the terms of the arrangement.
If creditors vote against the proposal, there is now an appeal mechanism whereby the Court may approve the PIA, and override the so-called “bank veto”.
It is now the case that even where your bank rejects the PIA, the Court can approve your PIA proposal that was made to the bank. Both the High Court and Circuit Court have approved PIAs, including PIAs with substantial debt write-down, where creditors have initially vetoed the PIA proposal. In that, the much criticised “bank veto” is gone.