As the Deputy will be aware, section 115A(18)(b)(i) of the Personal Insolvency Act 2012 as inserted by the Personal Insolvency (Amendment) Act 2015, refers to the scope of the provision for a debtor to seek review by a Court, if his or her debts include mortgage arrears on their home (‘principal private residence’) and their creditors have refused the debtor’s proposal for a Personal Insolvency Arrangement which includes those home mortgage arrears.
Section 115A addresses, in particular, the so-called ‘bank veto’, where the mortgage lender does not engage with a debtor who is trying to restructure their debts in a way which is fair and reasonable to all parties concerned, in accordance with the carefully-balanced requirements of the Personal Insolvency Acts. In such a situation, the debtor’s Personal Insolvency Practitioner can apply to Court under section 115A. The Court will carefully scrutinise the proposal, and the refusal by creditors, in the light of the statutory criteria set out in section 115A. If the Court is satisfied that those criteria are met, it has power to impose the rejected proposal on creditors, allowing the debtor to return to solvency and, wherever possible, to remain in their home.
Abhaile, the national Mortgage Arrears Resolution Service, provides expert financial and legal advice and help to a borrower in this situation, including legal aid for an application made under section 115A. Over the past 3 years, the Courts have built up an important body of case law on the application of section 115A. This has greatly clarified the rights and responsibilities of debtors and creditors regarding the resolution of home mortgage arrears - both in section 115A proceedings, and more broadly for those borrowers seeking to negotiate restructure arrangements directly with their lenders with the help of MABS and other agencies.
Subsection section 115A(18)(b) effectively provides that to avail of section 115A, the borrower must have been in arrears on their home mortgage before 1 January 2015, or have entered into an alternative repayment arrangement with their mortgage lender (or other secured creditor) before that date. Thus, the section is not limited to persons actually in arrears on 1 January 2015, and also covers a borrower who prior to that date had entered into a long-term interest only alternative repayment arrangement to resolve their arrears.
However, I can assure the Deputy that this is among the provisions of the Personal Insolvency Acts which are under review by my Department: that review is near completion, taking careful account of the submissions made during the public consultation held earlier and of the changing profile of home mortgage arrears since the enactment of the 2015 Act. I expect to receive the report early in the New Year and to bring proposals for further legislative reform to Government in early course.