Minister for Justice Frances Fitzgerald has signed an order that introduces a court review where a mortgage lender rejects a borrower’s personal insolvency proposal.
Under the new provisions, a borrower can apply for review by the courts, if creditors such as a mortgage lender refuse a borrower’s proposal for a Personal Insolvency Arrangement (PIA) to deal with unsustainable debts that include a home mortgage.
The court can examine the refused proposal and, if it considers it to be fair and sustainable, will have power to impose the proposal on creditors.
In reaching a decision, the court will take into account a series of factors, including the interests of both parties and the likelihood of the debtor being able to comply with the terms of the proposed arrangement.
Review cases will be heard by the specialist Circuit Court judges assigned to deal with personal insolvency cases.
The order, which comes into force tomorrow, enacts the remaining provisions of the Personal Insolvency Act 2015, which was signed by President Higgins in July.
Minister Fitzgerald described the order as “a very significant milestone in the development of Ireland’s insolvency regime.
She added that the Government would like to see “a substantial increase in the overall number of PIAs reached under the Personal Insolvency legislation, with the full cooperation of all lenders”.
The Insolvency Service of Ireland (ISI) has welcomed the commencement of the legislation.
ISI Director Lorcan O'Connor said new order “is good news for people in mortgage difficulty as it strengthens the likelihood of a PIA proposal being accepted.
“The current acceptance rate of these proposals is almost 80%. A key feature of the PIA is that it enables a person to get back on track financially and aims to keep them in their home where possible.
“There is now no reason for a person to put off visiting www.backontrack.ie for more information and consulting with a Personal Insolvency Practitioner to solve their mortgage problems once and for all,” he added.
Meanwhile, Chairman of the Association of Personal Insolvency Practitioners Eric Hendy described the announcement as "the final piece of the puzzle".