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Sharp rise in consumer debt deals going through State’s insolvency service

THERE has been a sharp rise in the number of consumer debt deals done through the State’s insolvency office.

But mortgage arrears campaigners warned that the deals were not being done fast enough to cope with the huge numbers of homeowners in financial trouble.A total of 400 debt arrangements were put in place in the first three months of this year, the Insolvency Service of Ireland said. Some 129 of these were personal insolvency arrangements (PIAs), which involve the write off of mortgage debt. But mortgage campaigners were unimpressed. David Hall of the Irish Mortgage Holders Organisation said: “There is nothing dramatic in these figures. More needs to be done to deal with the mortgage crisis.”

He said banks and debtors were still reluctant to use the new service to strike deals with financially distressed consumers. And banks were warned by the Insolvency Service that each rejected deal costs them an average of €100,000. The figures issued by the Insolvency Service show that subprime lender Start rejected eight out of 10 debt arrangements involving mortgages that were put to them. This was followed by Permanent TSB and its offshoot Springboard, which rejected almost half of the deals put to it to restructure mortgage and other debts.

Overall, a quarter of deals formally put to lenders by personal insolvency practitioners are rejected, the Insolvency Service said. There were 66 bankruptcies in the first three months of this year, taking the total to 610 since the bankruptcy term was reduced to three years.

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