New insolvency laws not 'rescue package for professional classes'

The head of the new Insolvency Service of Ireland says those engaging with the service won't be allowed to keep so called "trophy homes".

It follows comments by an accountant that 'professionals' such as lawyers, doctors and accountants should be allowed to keep larger homes and cars as befits their status, even if they are living beyond their means.

Personal Insolvency Practitioner (PIP) Jim Stafford told Mary Wilson on RTÉ's Drivetime yesterday that a PIP would "have to assess the existing mortgage on the family home" once a person had entered into a Personal Insolvency Arrangement (PIA) under the new legislation.

The purpose of that, Mr Stafford indicated, would be to determine if it’s a "modest house" or a "trophy house".

"In practice, the PIP will also have to assess the type of house that might be needed for a professional person such as a solicitor, accountant or a hospital consultant as opposed to a house that’s needed by someone who is in the PAYE sector for example," Mr Stafford added.

"As a PIP, I would be making a very strong case... that a solicitor should have a bigger house that accords with his professional status in society."

Mr Stafford has since apologised for the remarks.

"It was not my intention to create a distinction between so called professional classes and PAYE workers nor appear to further the causes of a particular debtor type," he said.

"I believe that every person has a passionate concern to retain their family home.

"I fully and unreservedly apologise for my comments."

Director of the Insolvency Service of Ireland Lorcan O'Connor today denied that the new insolvency laws amount to a rescue package for the professional classes.

"The legislation does provide for protections (for the family home)," Mr O'Connor said.

"Unless the costs of running that family home are disproportionately large.

"I don't like the term 'trophy home'," he added. "But let's for argument's sake say that somebody had a very large home with numerous bedrooms and a small family.

"That, to my mind, would fall within the category of disproportionately large running costs, and in that situation they may not get to keep the home."