Distressed mortgage holders may be tied to banks for an extra 14 years

Distressed mortgage holders may have to rethink plans to enter personal insolvency arrangements next week following the realisation they will be chained to their banks for 14 years longer than envisaged.

Campaigners for debt relief have admitted they failed to notice a provision in the Personal Insolvency Act, due to come into practice next Monday, that allows banks claw back additional money from debtors who sell their homes at a gain any time up to 20 years after they enter an arrangement.

David Hall, of the Irish Mortgage Holders Organisation, said the provision in Section 103 of the Act was at odds with the ideology behind the legislation, which had been presented as a clean break for debtors.