Monday, 23rd July 2018

Making The Most Of A Voluntary Surrender

No matter what your current financial position is you should not surrender your property to the bank without first discussing your situation with one of the ten or so active PIPs in Ireland.

If you simply surrender a property you are throwing away a valuable trump card in relation to debt settlement – perhaps the only trump card you currently have. It is a substantial negotiating tool that can potentially be used to clear down all or most of your debts.

Voluntary Surrender Has A Tangible Value

You may believe your situation is so hopeless that it makes no difference.

Perhaps the property is a buy-to-let with substantial negative equity and potential rental income that won’t even cover the interest on your mortgage.

Many people in this type of situation just want to get the bank off their back and to get rid of the property.

There are many different seemingly hopeless scenarios like this but no matter what your situation you should understand that from a banks point of view there is a tangible value to a voluntary surrender.

This is because the alternative for the bank is potentially having to go through the legal process of repossession which is expensive and time consuming, often taking two years or more.

Calculating The Value Of A Voluntary Surrender

Exactly how much is the value of a voluntary surrender and how is this value calculated?

From our experience in insolvency negotiations with banks to date the average value to the mortgage lender of a voluntary property surrender can be up to €30,000.

This is calculated very roughly by multiplying potential lost rental income by twenty four months and adding the cost of legal fees. So for example:

24 months x €1,000 rent is €24,000 + legal fees of €6,000 = €30,000

This “value” can be used like cash along with a contribution of whatever you can afford to pay to settle all or part of whatever debts you owe. And we are not just talking about your debts with the lender but all other debts such as credit cards or personal loans as part of an overall solution to your debt problems.

How Do You Realise The Value?

This does not mean that you can ring the bank up and say “I know if I surrender my property this is worth €30,000 to you.”

In order to realise this value you need to enter a Personal Insolvency Arrangement (PIA) but this can be done at no cost to you.

You will need to approach one of the ten or so active Personal Insolvency Practitioners in Ireland (PIPs) such as GT Debt Solutions and we will get the process going. (Unlike most PIPs we do not charge upfront fees so you have nothing to lose in consulting with us.)

As with all PIA’s there is a straightforward process and you can learn more about this in our recent post about accelerated PIAs.

How Does an Accelerated PIA Work?

We will come up with a proposal to settle all your debts. The key to it being that the mortgage lender holds the majority vote of over 65% of the creditors voting rights and therefore under the legislation it is only they who have to approve of the arrangement and all the other creditors will be brought along. A majority of 50% secured and over 50% unsecured creditors will also be required and quite often this will be the same secured provider particularly if there is significant negative equity.

So for example, let’s say the value of the property is €200,000 with negative equity on the property of €150,000 and the total of the other unsecured debts, such as credit card and credit union loads, are €50,000. In this case we only need to negotiate and agree with your biggest creditor, the mortgage holder who in this case holds 75% of the debt. Once they support the proposal it is approved.

The whole process should take from 3 to 6 months in order to be court approved.

Call and arrange to speak with one of our client managers for a more detailed understanding of how this process can work in your particular situation.

Why Would A Bank Agree To This?

When people have been dealing directly with their mortgage lender for quite some time but feel they have been making no progress they find it hard to understand how we can do so much better.

The key is that we do a robust review that includes sworn affidavits. The banks trust our intensive due diligence which ensures the debtor is fully transparent to the bank. This in turn allows them to make a decision based on the facts. In the absence of a trusted third party in the middle there often seems no way to easily resolve the impasse and eventually the bank will see no alternative but to go down the legal route.

In this type of situation the bank often see that a voluntary surrender is better than a legal repossession where returns would be less favourable for the creditor.

Offering a PIA as a resolution is seen as a kind of accelerated bankruptcy but is generally far cheaper and faster for the bank than firstly having to issue legal proceedings to repossess the property and then having to force the debtor into bankruptcy to attempt to realise further funds against the remaining amount of the mortgage which then becomes unsecured debt.


We can help even if you are at the point of surrendering your property or having a property repossessed. You may be surprised at how much bargaining power you have at that point and just how much debt can be written down.

If you are going to lose your property it makes sense to try to ensure that all your other debt is written off at the same time so that you can have a fresh start in life.

Call us now and see how we can help.

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What Is An Accelerated PIA?

A Personal Insolvency Arrangement (PIA) can last anywhere from 1 day to 72 months. (84 months in certain circumstances.)

Any PIA that is closed out ahead of the 84 month period is called an Accelerated Personal Insolvency Arrangement.

Personal Insolvency Practitioners (PIPs) who have been working with the personal insolvency regime have realised that there is no restriction on a PIA having to last 72 months. Once you can get the majority of creditors to agree to a proposal you can close out that arrangement. For many this is an effective option that means an accelerated PIA can be the fastest route back to solvency. Better and faster than even the quickest UK Bankruptcy.

Average Completion Time 3 to 6 Months

AT GT Debt Solutions our average Accelerated Personal Insolvency Arrangement lasts 6 months although many complete within 3 months.

In these cases there is a requirement for the debtor to pay a lump sum. Some debtors will have that lump sum to hand, whereas others might need six months or more to get that lump sum from family and friends.

Some banks want you to surrender the property and others are happy for you to sell it and this can also effect completion times.

With a sale involved the generally closing out time is within 6 months and then it takes another 3 months to finalise the paperwork and close out the arrangement by issuing a you with a completion statement.

Accellerated PIAs & Lump Sum Arrangements

Over 30% of the solutions GT Debt Solutions have facilitated to date have included a one-off payment from a relative or friend.

This type of solution can clear all your debts immediately and leave you with a completely fresh start within one year or less.

Lump sum arrangements are probably the most effective ways to clear all debt in the shortest time and have the least amount of “side effects”.

In particular they are very efficient for the large volume of debtors who fall under the official Reasonable Living Expenses (RLE’s). Read more about this here.

You might be surprised at how small a lump sum is needed for this type of settlement. Everything is relative to your personal situation.

Believe it or not the Irish lending institutions have moved on from a few years ago and now they want a speedy resolution just like you do. However, what is required is a credible, trusted third party to negotiate a final arrangement.

Accelerated PIA versus Banktuptcy

A large proportion of people in the bankruptcy queue would do substantially better from an Accelerated Personal Insolvency Arrangement.

It seems that very few people are aware of this and are being badly advised. Here is why:

3 to 5 Years Vesus Immediate Completion

In an Irish bankruptcy you will be in it for 3 years plus potentially have a bankruptcy payment order for 5 years. If your circumstances change positively within that period you will have to contribute more based on your improved financial situation. In an accelerated PIA you are completely finished once it is approved and the completion statement issued. If you win the lotto the next day you get to keep it all!

Sometimes a creditor will try to keep a PIA open because perhaps they see the debtor has been a good earner in the past and hope they can get more of a contribution down the line. However, if they do then they have to pay the PIP annual fees and for example our minimum annual fees are €600 plus VAT (paid by the creditors not you) and this is a real cost to the lender so generally we find this is an incentive for them to agree to close it out sooner if appropriate. It is all often down to good negotiating which is why using the services of an active PIP like GT Debt Solutions makes sense.

Credit Rating

With any bankruptcy your credit rating will be permanently affected since you will always be asked on loan applications if you have ever been a bankrupt.

With an accelerated PIA your name will be taken off the insolvency register inside six months.

Even though you may still be asked about your PIA in the future, lenders consider it far better that you entered into a consensual arrangement and completed that arrangement rather than just walking away through a bankruptcy. It actually demonstrates financial responsibility. Yes like many, you got into trouble but you dealt with it through negotiation and completed the arrangement to the satisfaction of all parties.

Remember the day you enter into a PIA you are rebuilding your credit rating.

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What is an Appropriate Family Home?

Staying In Your Family Home

The appropriate family home was brought in as part of the personal insolvency act 2012 and essentially said that an overriding cornerstone of the legislation was that a debtor should be allowed stay in their home but that it had to be an appropriate sized dwelling.

What is an Appropriate Family Home?

This is as you would expect it to be, so that a single person living in a four bedroom house would be seen as disproportionately large.

An appropriate family home for two adults and two kids might be a two or three bedroom semi detached house not a mansion.

Perhaps surprisingly the valuation of the home doesn’t really come into it so whether you live in Foxrock or Clondalkin it is the appropriate size that counts.

It is a grey area, however. Creditors can vary in their approach to this although we have rarely had any significant pushback.

It is normally a case of being able to make a compelling argument. So for example if you live in an inherited family home that has been in the family for several generation then even if it is deemed to be too large you can still make a case to stay there and the creditors will listen.

How Is This Used For Your RLE?

If we are trying to establish your Reasonable Living Expenses (RLE’s) we will generally look at what the rent in the area is and this is then used to establish what is reasonable for the mortgage costs.

So if you are living in a house where the monthly mortgage payment is €3,000 a month, but you can rent a similar house for €1,800 a month then it is the rental figure that is used in your RLE figures.


Appropriate Family Home, RLE & Your Debt Repayments

In our example where the mortgage is €3,000 a month. Let us say you are just about managing to pay this but cannot then afford to pay anything more to any of your other unsecured creditors. Many people are in this situation where they continue to pay their full mortgage because they are afraid they could be put out of their home.

The rental figure of €1,800 for the area is used to determine what your RLE’s should be. Depending on where you live (what part of the country or what suburb of the city) your RLE’s will vary quite considerably.

The rule is that we must go with what is reasonable in order to be fair to all the creditors. Therefore, once this rental figure has been established we will look at whether the mortgage can be sustained on €1,800 a month.

If so, this then leaves an additional figure of €1,200 a month for distribution to your other creditors.

This is the parity that is required.

How Does A Reduced Mortgage Payment Work?

In the above case our proposal to the creditors will ask the mortgage lender to agree to park 40% of the mortgage for you while 60% is serviced for the duration of the Personal Insolvency Arrangement (PIA). Hence a reduced payment from €3,000 to €1,800.

At the end of the PIA you will again have the additional €1,200 available to start servicing the mortgage again, but all the other unsecured debts will be written off.

The advantage here is that you get to stay in your home while the unsecured debts are written off. These could include the negative equity on a buy-to-let that you surrendered plus credit card and credit union debt.

But by this time circumstances may have also improved and you can look again at the situation and whether you want to stay in the home. For example perhaps your children will have left home by this time so you don’t need such a large house.

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Low Income Solutions

If you are unemployed or have a very low income most Personal Insolvency Practitioners (PIP’s)  or Debt Solution companies will tell you they can’t help you because you are below the Reasonable Living Standards (RLE) as set by the Insolvency Service of Ireland.

Hundreds of people in this situation are left in a zombie like limbo where they still have a large amount of debt hanging over them with no way to change anything.

Low Income Solutions Exist

However, there is a way out of this situation. We have potential insolvency solutions for you even if your income is below the official “reasonable living expenses” level.

This is a bad situation for you but it is also a bad situation for your creditors too and they want to conclude matters just as you do.

We make that possible as a trusted third party who can negotiate for both sides in a way that is just not possible for an individual to do on their own.

Modest Lump Sum

The best way is if you can somehow get a lump sum gift from an agreeable relative or friend.

With a relatively low amount you can potentially clear all your debts and begin again with a completely fresh start.

Sometimes this can be done via an Accelerated Personal Insolvency Arrangement. You can read more about this here.

With your debts off your back you will be feeling psychologically and emotionally far better and in a position to take control of your future.

Why Would Your Creditors Agree To This?

When people have been dealing directly with their creditors for quite some time but feel they have been making no progress they find it hard to understand how we can do so much better.

The key is that we do a robust review that includes sworn affidavits. The creditors and in particular lending institutions trust our intensive due diligence which ensures the debtor is fully transparent to them. This in turn allows them to make a decision based on the facts. Without us as a trusted third party in the middle there often seems no way to easily resolve the impasse and eventually your creditors will see no alternative but to go down the legal route.

Offering a lump sum PIA as a resolution is generally far cheaper and faster for the creditors than having to issue legal proceedings.

The sad irony is that if you are truly desolate with no income and no assets then we can often find it easier to negotiate with the creditors as there are less variables at play.

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Negotiating With Banks

When you have been negotiating with banks directly for quite some time and seem to have made little progress it easy to believe there is no solution available to you.

However, that is often not the case. In some situations you just need the right firm representing you who understand the best strategy to get you a fresh start.

In this article we explain why how a firm like GT Debt Solutions can do better negotiating with banks on your behalf.

Why You Should Never Negotiate Directly

Personal Insolvency Practitioners (PIPs) are there for a reason.

1. An active PIP will be able to advise you of all your options based on the facts provided.  A PIP’s job is to serve your best interests, whereas like any commercial enterprise a bank must serve it’s shareholders. Obviously a bank will only suggest the options that suit the agenda of the bank. That is why the banks prefer it when you deal directly or with one of their appointed representatives rather than an independent PIP. When you talk to a client manager at GT Debt Solutions all your options will be explained to you.

2. When we put a proposal to your lenders it is always based upon a robust investigation which ensures the debtor is fully transparent to the creditors. The bank knows they can trust our intensive due diligence, which often includes sworn affidavits. The structure provided by the personal insolvency process allows the banks credit committees to make decisions based on the facts.

3. Without a firm such as ourselves as a trusted third party there often seems no way to easily resolve any impasse, and eventually the bank will see no alternative but to go down the legal route.

Remember that your creditors  pay our fees from the available funds so the work we do on your behalf costs you nothing extra.

Banks Do Make Compassionate Decisions

Contrary to public opinion banks will make humane, compassionate decisions that are not simply based on profitability. We see this time and again. However, as stated above they cannot make decisions without facts and sworn declarations from debtors.

A typical example of this is where a bank has agreed to an Accelerated Personal Insolvency Arrangement (PIA) where they would have received more money in a forced sale scenario.

We had a recent example in Munster where an elderly couple had €300,000 of equity in their home but had commercial debts even greater than this amount. One of the couple had a long term illness and they really needed to stay in their home. The couple’s two sons were able to raise €120,000 between them and the bank accepted this amount in an Accelerated PIA as full and final settlement in order to facilitate the couple to continue to live in their home.

The bank could have gone down a bankruptcy route and received a far higher amount but they made a sensible humane decision. Obviously they also avoided a situation that could have been quite dirty and potentially generated negative publicity.

This is typical of situations where there is a cashflow issue but also equity in the family home. Generally the banks have been quite good in that regard. Once the bank have a trusted third party to negotiate with them they are able to make these type of compassionate decisions.

Pre-Engagement Decisions

Having had visability of over 3,000 cases since the introduction of the personal insolvency legislation our experience is very strong .

We can generally tell how any particular lender will feel about a proposal we make on your behalf. If we feel that a case is not clear cut we look for a pre-engagement decision from your key creditor. We put an informal proposal to the bank to find out whether it is likely to be acceptable. This saves a lot of time and effort being wasted down the line.

Again there is no upfront fees for this as it is all part of the service we offer.

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John Murray on Personal Debt

A very informative programme of interviews with Tom, who found a way out of his debt problems, Gareth Neil, a Partner in GT Debt Solutions and Amanda McLoughlin, a case manager with the Insolvency Service of Ireland.

Click Here To Listen

Book a Free Debt Consultation

If you are experiencing problems with debt then please book a Free Debt Consultation with one of our experienced personal insolvency experts.

Learn about All your options with no obligation or pressure to proceed with any particular solution.

Please use Booking Form  or call us now on 01-902 0478. We will be happy to meet you at a time and place that is most convenient to you.

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Personal Insolvency Interview

Pat Kenny on Personal Insolvency

A highly informative interview where Tom explains to Pat how his family got into problems with debt, what happened, and how GT Debt Solutions helped him find a personal insolvency solution which included a debt writedown of 80%.

Click Here To Listen

Book a Free Debt Consultation

If you are experiencing problems with debt then please book a Free Debt Consultation with one of our experienced personal insolvency experts.

Learn about All your options with no obligation or pressure to proceed with any particular solution.

Please use Booking Form  or call us now on 01-902 0478. We will be happy to meet you at a time and place that is most convenient to you.

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Irish Mortgage Holders Organisation launch strategic alliance

Tuesday 1st April, 2014 – The Irish Mortgage Holders Organisation (IMHO) and Grant Thornton Debt Solutions Limited (GTDS) today announced that they have agreed a ground breaking strategic alliance to assist those in financial difficulty requiring insolvency services. This alliance will provide a ‘one stop shop’ for individuals currently experiencing debt problems.

Under this agreement any existing or future client of IMHO requiring insolvency services through the Insolvency Service of Ireland (ISI) will be provided with access to an authorised officer of GTDS who will work in conjunction with the IMHO.

The service will be provided from a dedicated IMHO office and will be funded and staffed by GTDS. IMHO will, where requested, refer clients to a designated point of contact where they will be assisted and advised on the completion of a Debt Settlement Arrangement (DSA) or Personal Insolvency Arrangement (PIA).

This service is an addition to the existing informal activity undertaken by IMHO assisting those in mortgage difficulty. Specifically IMHO’s successful initiatives with AIB and KBC continue as normal as will activities with all other lenders. In the event a client requires bankruptcy services the IMHO will progress this free of charge (excluding court fees). GTDS are providing additional funding to IMHO in order to facilitate additional volumes of suitable bankruptcy candidates.

“We are delighted, on behalf of those in financial distress, that GTDS is entering into this agreement which we expect will be a successful initiative in finding sustainable solutions for people who have found themselves in difficulty,” said David Hall, Director of IMHO.

“GTDS will fund and staff the service with experienced personnel ensuring that IMHO clients obtain the best possible service and advice. We are confident that the initiative will be a success and look forward to working with GTDS and warmly welcome their agreement to enter this new arrangement.”

“Since November 2013 the IMHO has received over 1,000 completed Standard Financial Statements’ for those in mortgage difficulty. Many of these clients are already being provided with assistance in relation to their mortgage by the IMHO, a large proportion however have on average have 4 other creditors and thus may require a formal arrangement to bring finality to their debt problems. This initiative will ensure that all clients have all their debt dealt with in a holistic manner that leaves no issue unresolved.”

“Our track record in developing and negotiating long-term sustainable solutions for dealing with debt problems, while focusing on the needs of the borrowers, distinguishes IMHO as the leading provider of such independent services,” said Dr Constantin Gurdgiev, Director of IMHO.

Stephen Tennant, Personal Insolvency Practitioner and Partner at Grant Thornton Debt Solutions said:  “We are delighted to be announcing this alliance with IMHO, who have been to the forefront in providing informal solutions and advice for those in financial distress over recent times. For those distressed individuals that require progression under the recently enacted Personal Insolvency legislation, GTDS is looking forward to providing a formal solution.”

The service to all those in financial distress will operate from Tuesday April 1st, 2014.

About Grant Thornton Debt Solutions

Grant Thornton Debt Solutions offers a comprehensive range of transparent debt solution products and services to support the Irish personal insolvency legislation. Call our helpline now on 01-902 0478

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The Psychology & Emotion of Debt

Tuesday 18th November, 2014 – Grant Thornton Debt Solutions announced that it is holding a new four part seminar series, the first of which gets underway today in Dublin.

Today’s event was attended by key community based money advisors and professionals, who wished to enhance their understanding of practical and emotional elements of the new Personal Insolvency legislation.

Michael McAteer, Partner at the Grant Thornton Recovery and Reorganisation practice in Ireland, said. “We are delighted to be once again holding this popular seminar series. The personal insolvency space in Ireland is firmly up and running now. We are encouraged to see clients coming to us, taking the first steps to debt recovery, with a sense of hope that their debt problems will come to an end.”

He added: “Our objective is to find the right solution for someone in debt which will work for them. We give non-judgemental advice, help and reassurance to help individuals realise that there is a solution to make their financial concerns more manageable and then we are able to provide a structure which can make it happen.”

Following the success of the Psychology of Debt research project, Grant Thornton Debt Solutions commissioned a new research project last year based on “Emotion and Debt”. This was completed in association with Queens University, Belfast. The fascinating topic ‘Navigating through the emotion of debt’  was presented by Gareth Neill, a leading Personal Insolvency expert and Partner of Grant Thornton UK. Gareth Neill stated:

The original Psychology of debt research opened up a new perspective helping advisors to consider the mental impact and stress of debt on the debtor. The new research aims to look at the emotions, particularly shame and guilt, behind debt and how it affects those who are suffering from unmanageable debts.

“Our research identified that time spent helping people address their debt problems can also help their overall health and wellbeing. Grant Thornton Debt Solutions aim is to help people to realise the extent of their debt problem, and to help them to find solutions which enable them to move forward into good financial and mental health. This help can potentially lead to reduced demand upon social and medical services on the part of the debtor and their family.”

He added: “Keeping debt problems secret won’t cure them and our aim is to help people to strip away the shame around financial struggles and find a solutions for their needs. There is always a solution for people in debt.”

Debt research has previously focused on how ‘objective’ factors such as debt size, but our emotions and personal finances are often intricately linked and this is especially true where debt is concerned. Grant Thornton Debt Solution’s latest research has shone a new light on the emotional factors associated with poor psychological well-being in those with problem debt. Debt problems are commonly associated with anxiety and depression. Anyone who is tackling debt can also benefit from taking positive action to support their emotional health at the same time.

About the Seminars

The seminar timetable is as follows: Dublin on Tuesday 18th of February at the Clarion Hotel Liffey Valley; Galway on the 26th February at the Hotel Meyrick; Limerick on 27th at the Clarion Hotel, Steamboat Quay; and Cork on the 7th March at the Clarion Hotel, Lapps Quay.

About the ‘Navigating Psychology of Debt’ research

Emotion and the Psychology of Debt research was commissioned by Grant Thornton and completed by Professor Aidan Feeney & Simon McNair of the School of Psychology at Queens University Belfast. Those surveyed were clients that Grant Thornton had advised in UK.

Book a Free Debt Consultation

If you are experiencing problems with debt then please book a Free Debt Consultation with one of our experienced personal insolvency experts.

Learn about All your options with no obligation or pressure to proceed with any particular solution.

Please use Booking Form  or call us now on 01-902 0478. We will be happy to meet you at a time and place that is most convenient to you.

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Gareth Neill speaks to TV3’s Morning Show about the psychology of debt

Please click on the image to access the video.

Book a Free Debt Consultation

If you are experiencing problems with debt then please book a Free Debt Consultation with one of our experienced personal insolvency experts.

Learn about All your options with no obligation or pressure to proceed with any particular solution.

Please use Booking Form  or call us now on 01-902 0478. We will be happy to meet you at a time and place that is most convenient to you.

Continue reading

RTE Drive Time Coverage of Personal Insolvency Seminars – RTE – 16th January, 2013

RTE’s David Murphy talks to Lorcan O’Connor about personal insolvency.  Skip to 1:16 mins on the RTE player for interview.  Click here to listen

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Dawn of the Deal-Makers – RTE Business Blog – 16th January 2013

By David Murphy, Business Editor

This week came an insight into how the new Insolvency Service of Ireland will operate: it hinges on deal-makers.

When Ireland’s financial crisis first began to detonate, the then Government quickly established Nama to filter out the large property and development loans from the banks.

That was in 2009. In 2013, attention is finally turning to ordinary borrowers.

This week the director-designate of the new Insolvency Service of Ireland, Lorcan O’Connor, made his first public appearance to a gathering of accountants and other professionals. Mr O’Connor is a former director of restructuring at accountancy group Deloitte.

At present he has no permanent offices, no corporate governance guidelines, no IT system, and has only a skeleton staff. He doesn’t even have business cards, he admitted, when I asked for one.

Despite all that, Mr O’Connor appears to be no slouch, and is determined to hit the ground running. He has youth on his side, having graduated from UCD in 1998.

He is working with a small team on a public information campaign which will begin before the end of March. Mr O’Connor hopes to accept applications from over-indebted borrowers in the second quarter of the year.

Before the system of debt settlement arrangements can be put in place, he needs to license his lynchpins: Personal Insolvency Practitioners or PIPs. These are individuals who will propose deals between borrowers and lenders.

Their job will be to advise debtors on their options, and to convince lenders that their suggested proposals are in the best interests of both parties. Mr O’Connor said the PIPs will need “a level of legal background”, they must have commercial acumen and will have to pass fitness and probity tests. But above all, he stressed: “They need to be deal-makers.”

One significant criticism of the new insolvency regime is that the banks will hold all the cards: they will be in a position to veto proposed schemes. Initially, this was the case in Britain when a similar system was established; after a period, however, financial institutions decided it was financially advantageous to co-operate.

But there are other concerns for borrowers hoping to avail of the new service. Firstly, anyone deciding to apply will have their name published on a register, although it won’t contain details of their financial situation.

Secondly, there will be tough rules. In the case of applicants for a Debt Relief Note, which allows a write-off of unsecured debt under €20,000, a borrower cannot be left with disposable income above €60 at the end of each month.

The next six months will be important, and much work needs to be done quickly. It will take longer than this time-frame before it becomes clear whether the new service is working, however.

Crucially for mortgage borrowers hoping for a fresh start, the banks need to co-operate from the beginning. But will they? Read full article

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Insolvency Service to accept debt relief applications within months – Irish Times – 17th January 2013

Ireland’s new Insolvency Service hopes to begin accepting applications from borrowers seeking debt relief in the second quarter of this year, its head Lorcan O’Connor said yesterday.

While there is a “large backlog” of potential cases “it may be a number of months down the road” before the bulk emerges, he told a Grant Thornton-organised seminar on the new personal insolvency legislation.

Mr O’Connor said there would be a public register which would show who applied to the new service.

“There are consequences to availing of one of these schemes, including information being made available to the public and creditors,” he added. While people’s names would be on the public register, their financial situation would not be publicly revealed, he said.

He encouraged members of the public experiencing debt or arrears problems to engage with creditors immediately.

The call came as “psychology of debt” research unveiled yesterday by Grant Thornton showed half of all debtors experience mental health problems, including depression and anxiety. Read full article.

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Video: Thousands who avail of new debt-relief regime ‘will face consequences’ – Irish Independent – 17th January, 2013

Thousands of debtors who are waiting to avail of debt relief under the Government’s new personal insolvency regime will face “consequences”, including being placed on public registers, according to Ireland’s new debt tsar.

In one of his first public appearances, Lorcan O’Connor – Director Designate of the Insolvency Service of Ireland (ISI) – said the Personal Insolvency Act is a “very important step” for Irish society.

But the restructuring and insolvency expert warned that there would be consequences for the large number of debtors lining up to avail of the various debt relief schemes under the new legal regime designed to take debt settlement away from the courts.  Access video and full article

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Understanding the insolvency legislation – Newstalk – 16th January, 2013

Dublin seminars help to explain measures – A chartered accountants and business advisory group have held personal insolvency training seminars to help people understand the new legislation.

Grant Thornton held the first of 5 in Dublin today.

They are set to deal with the issue of personal insolvency – with the passage of legislation through The Oireachtas just before Christmas.  Stephen Tennant is a partner in Grant Thornton Ireland and he explains what it all means.  Click here to listen to the interview

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Grant Thornton kicks off series of seminars on personal insolvency – Business and Leadership – 16th January, 2013

Grant Thornton has held the first of five seminars on the topic ‘Debt is a problem, sorting it out shouldn’t be’ in Dublin today.

The seminar saw delegates discuss the personal insolvency bill, the implications for Ireland and also the results of some ‘Psychology of Debt’ research undertaken by Grant Thornton.

Following the enactment of the Personal Insolvency Bill, Grant Thornton will offer a debt solution service in Ireland, Insolvency Service of Ireland (ISI), building on the work done by voluntary organisations such as Money Advice and Budgeting Service and the Free Legal Advice Centres.  Read full article

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Debtors wracked by depression and anxiety, study shows – Irish Independent – 16th January, 2013

Half of all debtors experience mental health problems such as depression and anxiety,    according to new research conducted by Grant Thornton.

The “psychology of debt” research was unveiled at a seminar outlining the potential impact of Ireland’s new personal insolvency regime.

Lorcan O’Connor, Director Designate of the Insolvency Service of Ireland (ISI), told a GT debt solution seminar that the new law was a “very important step” for Irish society.

But the restructuring and insolvency expert warned that there will be consequences for the large number of debtors lining up to avail of the various debt relief schemes.  Access video and full article

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Facing up to Financial Woes – Business & Finance – 16th November, 2012

Sean Kelly examines the personal insolvency bill to see if it can deal effectively with long-term and unsustainable debt.

The new Personal Insolvency Bill published in June, is a vitally important and complex piece of legislation which is designed to tackle the problem of personal over indebtedness, particularly in relation to unsustainable mortgages debt which represent 70% of the overall personal debt problem.  Read full article

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Personal Insolvency bill to be enacted by Christmas – The Sunday Business Post – 8th November, 2012

The Government’s new personal insolvency bill will pass through both Houses of the Oireachtas and be enacted before Christmas, Minister for Justice Alan Shatter said today. Read full article

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New insolvency legislation fits the Bill – The Independent – 4th November 2012

Mortgage misery will be eased for thousands next month, but only if the banks play ball, writes Stephen Donnelly

This week, the most important piece of legislation to come from this Government reaches report stage in Dail Eireann. It will then do one more lap of the Oireachtas before being passed into law next month. Minister Shatter’s intention for the Personal Insolvency Bill is admirable, but its success requires a fundamental shift from the banks in how they deal with borrowers.

The Bill provides three legal mechanisms. The first is a Debt Relief Notice, allowing for the write-off of unsecured debts up to €20,000 after a three-year period. The borrower must have no assets, no disposable income and no realistic chance of paying off their debts.

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Reform assists the indebted and blows the dust off antiquated bankruptcy law

Analysis: Minister for Justice Alan Shatter has described the Personal Insolvency Bill as the “most radical reform [in this area] since the foundation of the State”. Politicians are prone to exaggeration but he is not far off the mark.HARRY McGEE

The legislation runs to 145 sections and there were well over 200 amendments debated before it passed the final hurdle in the Oireachtas last night.

It has been three years in the making and Shatter is confident it will be up and running by March 1st.

The new law replaces Ireland’s antiquated and inflexible bankruptcy procedure with a court-backed system of mechanisms designed to help individuals who find themselves hopelessly in debt.

It deals with sums ranging from less than €20,000 to debts totalling €3 million. Given the scale of the property crash and the crisis, there are plenty of such individuals. And for many, their family home – especially if in negative equity – has become an albatross.

Secure homestead
Shatter told The Irish Times yesterday his aim was to ensure that people were not forced to vacate their homes because they were in mortgage debt. The solutions all involve a “degree of forbearance over a period of time” to debtors, he said. In reality, that will mean debt write-off.

The mechanisms are detailed but the principles are pretty straightforward.

“This is not a magical mystery tour,” is how Shatter puts it. At its essence, a portion of the debt is written off. If that fails, there is the nuclear option of bankruptcy. That too, however, has changed, reduced from a punitive 12 years to a more manageable three, even though that period can be extended to up to eight years.

Shatter argues that three years is close to the EU norm, although not as facilitative as the UK, where it is one year.

Opposition parties and interest groups have expressed some deep and fundamental concerns. Most of the critical focus has been on a claimed concession to financial institutions and an assertion that banks can exercise a veto on any proposal. Those critics say that the banks will not accede to proposals involving debt-forgiveness. Shatter has argued that they will.

The scheme involves the setting up of a new body, the Insolvency Service of Ireland, which will manage the scheme.

There are three different arrangements. The first is a personal insolvency arrangement (PIA), mainly aimed at those with secured assets including mortgage debt. They must have debts over €20,000 and up to €3 million and must be in a position where there is no possibility of full repayment.

The application must be made and approved by the Circuit Court (eight specialist judges will be assigned), while a “personal insolvency practitioner” will try to broker an agreement between debtor and institution.

Families will be allowed to live in their home unless it is disproportionately expensive compared to their means.

A combination of lenders with 65 per cent of the debt must agree to the PIA, which lasts about six years, by which stage non-mortgage debt is discharged.

Debt settlement
The scheme for a debt-settlement arrangement is broadly the same, but it deals with amounts of more than €20,000 in unsecured debt.

The third solution is a debt- relief notice which deals with debt less than €20,000, where people have low disposable incomes and few assets and have no prospect of paying the debts.

If a person opts for bankruptcy, the period has been reduced from 12 years to three. One of the upshots is that those who have been bankrupted under the old legislation, including businessman Seán Quinn, will be in a position to discharge their debts after three years.

However, the legislation has been harshly criticised.

Hypothetical and untested
David Hall of the Irish Mortgage Holders Organisation says it is hypothetical and untested and reliant on the banks to co-operate – he insists they won’t.

“The Minister wants to say this piece of legislation will have a hypnotic effect on the bank. It won’t,” says Hall. “Any process that is controlled by the lender can only fail.”

Independent TD Stephen Donnelly said he would vote against the Bill “with reluctance” because of the inclusion of provision of a bankruptcy payment order, which he said had the effect of extending the bankruptcy from three to eight years.

“The Bill introduces a credible threat for the borrower to say that if the lender did not compromise in a reasonable manner, the lender would declare himself bankrupt.”

Ross Maguire SC, a founder of New Beginning, said he broadly welcomed the legislation. “It is very innovative but it does take the banks to co-operate. If banks co-operate, it will be a huge success. If they don’t, they will break it.”

by Harry McGee

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Grant Thornton Supports Personal Insolvency Bill with New Debt Solutions Platform

Grant Thornton announced today that in anticipation of the pending enactment of the Personal Insolvency Bill, the company will be offering a personal debt solution service in Ireland. Grant Thornton is in full support of this bill, which is designed to give people more constructive ways of resolving their debt problems and to get back in control of their finances and futures.

Grant Thornton Debt Solutions, which will launch in early 2013, aims to offer a range of transparent debt solutions, and tailored debt advice to ensure people are offered the right options suitable to their own needs to help reduce their financial worries and get them on a journey of recovery from debt.

Grant Thornton has offered customers a similar intermediary service in the UK for the last 15 years, where it has achieved a market leading success rate of ensuring that the solutions they offer are approved by creditors. Grant Thornton UK is one of the top personal insolvency practitioners in the market, with 250 employees and 44 000 active cases. Grant Thornton is confident that it will be able to help those in financial difficulty in Ireland to navigate the waters of personal insolvency.

Michael McAteer, Partner in Recovery and Reorganisation said: “We believe the implications of financial difficulties are far reaching and time spent helping people address their unique and individual debt problems can help their overall health and wellbeing. Our aim is to work to understand each individual situation, to provide options and to create a solution to suit their needs. We firmly believe that the enactment of the Personal Insolvency Bill will present a solution for the thousands of people suffering with the burden of unmanageable debts. Grant Thornton has a strong track record of finding debt solutions for people in the UK through our market leading Belfast office.”

He added: “It is important to offer people in Ireland detailed information and honest advice to help them start on the journey to debt recovery. The Draft Bill proposes the introduction of three non-judicial debt settlement arrangements and a reform of the existing bankruptcy regime. The non-judicial processes are a Debt Settlement Arrangement (DSA), Debt Relief Notice (DRN) and Personal Insolvency Arrangement (PIA). We want to find the right options for people as Bankruptcy may be the right solution for one person whilst a PIA may work for another.”

In January, Grant Thornton Debt Solutions will be running a series of seminars which will discuss the implications of the new Personal Insolvency Bill whilst also providing an insight into the issues surrounding the ‘Psychology of debt’. The seminars will be held in Dublin on 16th January, Cork on 17th January, Dundalk on 21st January, Galway on 23rd January and finish in Limerick on 24th January.

The seminars will be open to money advisors, volunteers and professionals who are looking to improve their knowledge on debt solutions. Gareth Neill, Partner of Grant Thornton UK will present on the ‘Psychology of Debt’, Michael McAteer and Stephen Tennant, Partners of Grant Thornton Ireland will present on how the Personal Insolvency Bill will help people in Ireland.

We are pleased to confirm leading guest speakers will be joining us on the seminar road show to share their opinions and expertise. Lorcan O’Connor, Director Designate of the Insolvency Service of Ireland (ISI) will be the guest speaker at the Dublin and Cork seminars. Paul Joyce, senior policy researcher for the Free Legal Advice Centres (FLAC) will speak at the Dundalk event. Michael Norris will be speaking about his experience of the personal insolvency process in the UK at the Galway and Limerick seminars.

Stephen Tennant, Partner in Recovery and Reorganisation at Grant Thornton said: “The enactment of this bill will begin a new era for personal insolvency in Ireland. Our objective will be to find solutions which will work for people. We will look to provide a service which enables creditors to manage recovery of debts whilst ensuring the insolvent debtor can afford to repay in an orderly and rational manner. Transparency and honesty are key to the success of this new phase for Ireland.”


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Bill will alleviate pressure of indebtedness – Irish Examiner – 30th June, 2012

The new Personal Insolvency Bill offers mortgage holders and others struggling with debt recourse to remedies to manage those loans in a more humane and sustainable way, writes, Frank Conway.

IT was the middle of Dec 2010 when the Law Reform Commission presented its recommendations for reform of the legal system in relation to how our society manages and deals with the problem of indebtedness.

The LRC had long advocated for the reform. Yesterday, the Government finally presented the Personal Insolvency Bill 2012. It is a welcome break from the past. It provides for a range of options that will become available to citizens when the bill finally becomes law. Read full article 

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Personal Insolvency Bill published – Irish Times – 29th June, 2012

Minister for Justice Alan Shatter today published the long-awaited Personal Insolvency Bill aimed at reforming insolvency laws, some of which have been in place for over a century.

The Personal Insolvency Bill 2012, approved at last Tuesday’s Cabinet meeting, provides new and more flexible options to address the circumstances of insolvent debtors.

Mr Shatter said it was in line with the commitments in the Programme for Government and the EU-IMF Programme of Financial Support for Ireland.  Read full article

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Personal Insolvency Bill ‘on the way’ – Irish Times – 18th June, 2012

The Personal Insolvency Bill, which at the moment runs to 200 pages, will be published by the end of the month, the Minister for Justice said today.

Alan Shatter was speaking at the publication of the Free Legal Advice Centre (Flac) annual report, which revealed an increase in the number of people seeking legal assistance from the legal rights organisation, particularly relating to personal debt.

Mr Shatter also said he hoped the Legal Services Regulation Bill would be enacted by the end of the year and acknowledged Flac’s submission on it.

The Minister said Flac had made a significant input into the Personal Insolvency Bill, including a very detailed submission. He also said its conference – Legislating for Personal Insolvency in Ireland, last April – which had been attended by one of his officials dealing with the Bill, had provided very valuable insights.  Read full article

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Personal Insolvency Bill ‘on the way’ – Irish Times – June 18th 2012

The Personal Insolvency Bill, which at the moment runs to 200 pages, will be published by the end of the month, the Minister for Justice said today.

Alan Shatter was speaking at the publication of the Free Legal Advice Centre (Flac) annual report, which revealed an increase in the number of people seeking legal assistance from the legal rights organisation, particularly relating to personal debt. Read full article.

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Bill will alleviate pressure of indebtedness – Irish Examiner – June 30th 2012

The new Personal Insolvency Bill offers mortgage holders and others struggling with debt recourse to remedies to manage those loans in a more humane and sustainable way, writes, Frank Conway. Read full article.

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