Insolvency service ‘not fit for purpose’

David Hall

Irish Mortgage Holders Organisation chief executive David Hall has described the Insolvency Service of Ireland (ISI) as "not fit for purpose" following the release of the latest bankruptcy figures.

According to the ISI, there has been a threefold increase in the number of bankruptcies over the course of this year.

For the first six months of this year, there have been 164 bankruptcy adjudications with an aggregate value of €278m. This compares with a total of 58 bankruptcy cases over 2013.

Since the ISI was launched, it has dealt with a total of 850 cases with an aggregate value of €330m.

However, Mr Hall said the scale of the ISI’s interventions is inadequate in view of the level of indebtedness across the economy.

“There are well over 100,000 people in mortgage distress with their family home in Ireland and each having other unsecured debt.

“Families are crippled with debt, many are seeking a way to resolve their debt, the insolvency service was to be a game changer and to date this has failed to materialise,” he said.

“These figures show, no matter how attractively they are presented, that it’s not working in a crisis that affects hundreds of thousands of citizens.

“The insolvency service last quarter completed a pathetic 27 personal insolvency arrangements and 30 debt-settlement arrangements.”

The ISI was set up following the Government’s reform of the bankruptcy laws. The agency handles three types of restructuring.

Debt settlement arrangements provide for a restructuring of unsecured debt, normally over a five-year period.

Personal insolvency arrangements provide for a restructuring of secured debt of up to €3m as well as unsecured debt over a period of up to six years.

If a candidate is not deemed eligible for either of these solutions, then there is the option of bankruptcy.

In a statement, the ISI said: “Given the extent of personal over-indebtedness that exists in Ireland, the ISI is of the view that the level of activity so far this year represents only a fraction of the likely level of demand for the ISI’s services in the medium term.

“By combining all cases before the ISI this year, the level of debt exceeds €500m,” it added.

“The ISI expects the number of cases to increase steadily over the coming months, based on the number of draft cases on the ISI system, feedback from personal insolvency practitioners, and the publication of a debt-settlement arrangement protocol which is designed to make the overall debt settlement arrangements process more efficient and to give greater clarity to all stakeholders including debtors and creditors.”


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