No quick-fix solution to mortgage arrears

The difference in the figures speaks for itself: 27,792 cases of mortgage arrears where a payment has not been paid for two years or more, and 3,841 personal insolvency arrangements since 2013 where in many cases banks and other creditors agree to debt write-down deals.

Michael McNaughton, the new director of the Insolvency Service of Ireland, which overseas the State's still-nascent insolvency regime, has called for more collaborative, imaginative engagement between debtors and personal insolvency practitioners on one side, and creditors on the other.

Too few cases have been resolved through legislation that is now seven years old and which should provide the right set of tools to address the thousands of long-standing mortgage arrears cases that have been hanging around in the system since the financial crisis.

Lack of trust

The challenge for McNaughton is, as one personal insolvency practitioner said, not the battle between banks/creditors and personal insolvency practitioners/debtors but the conflict between investment funds, or so-called vulture funds, and the personal insolvency Acts themselves.

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The practitioner described McNaughton’s remarks to The Irish Times – in which he said there was a lack of trust between the opposing sides - as naive and one-dimensional. He noted that half of all approved personal insolvency agreements are negotiated by just five personal insolvency practitioners so trust should really not be an issue when dealing with those debt advisers.

McNaughton, to be fair, appears to be pushing a greater emphasis on the creditor side, saying the banks and funds need to be “less defensive” about the personal insolvency remedies and see other solutions where repossessions are “very hard”. He also acknowledged creditors throwing up technical objections in the courts where proposed write-downs are being opposed.

Given the volume of appeals cases still before the courts – some 754 in the Circuit and High Courts – statutory insolvency fixes being applied across the 27,792 cases will ultimately come down to how quickly the courts can rule and those rulings trickling down into the system. This will take some time.