7 Steps to a Mortgage Arrears Resolution - A Borrowers Journey
17th July 2019
Abhaile is the Free Mortgage Arrears Support Scheme made up of a network of qualified and regulated financial, legal and insolvency professionals. The Money Advice and Budgeting Service (MABS), Insolvency Service of Ireland (ISI) and the Legal Aid Board (LAB) work holistically and collaboratively to provide the necessary supports under Abhaile. Over 90% of borrowers who have engaged with the scheme and reached a solution to their mortgage arrears get to stay in their home.
It’s important to note; when a borrower comes to Abhaile for support, there is no one journey or one solution that applies to all. Each borrower’s circumstance is unique, meaning the journey towards a solution will be dealt with on a case-by-case basis, by experienced and qualified professionals.
The following sets out a typical borrower journey through Abhaile, highlighting each of the seven services available under the Scheme in a step by step order. It can take 9-12 months to put a resolution in place, however borrowers should not be afraid if it takes longer, as already highlighted, every borrower’s situation is different. Non-judgemental professionals are available to guide and support borrowers at every step.
To start, a borrower is in arrears on their home and has been for a long time, perhaps two years or more. They have received a letter from their lender taking them to court to start possession proceedings. This is a typical example. The borrower attends the possession hearing on the date specified and is greeted by a Court Mentor from MABS.
Step 1 – MABS Court Mentor
A Court Mentor is present at all Circuit Court possession hearings to explain to borrowers what is happening in the Court, and what other supports are available. They can refer borrowers to their local MABS office for an appointment.
Still in court, the borrower has a specific legal query about their case, but they do not have legal representation with them.
Step 2 – Duty Solicitor
A Duty Solicitor is present at all possession hearings along with the Court Mentor. The Duty Solicitor can answer limited legal queries regarding the borrower’s repossession. They can also advise the borrower to ask for an adjournment so the borrower can meet with available support services to discuss possible options.
After court, the borrower makes an appointment with a Dedicated Mortgage Arrears (DMA) Adviser in a MABS office that is most convenient to them.
Step 3 – Dedicated Mortgage Arrears (DMA) Adviser
The DMA adviser will complete a Standard Financial Statement (SFS) with the borrower to help identify the best available resolution. The DMA adviser will discuss all options with the borrower and help them decide which option is best for them. The options are based on the borrower’s unique debt situation and then the DMA will advise the borrower of the next steps.
Working with the DMA adviser, the borrower decides that a Personal Insolvency Arrangement (PIA) is the best available option to them. They apply for a PIP voucher through the DMA. They contact and make an appointment to see a PIP.
Step 4 – Personal Insolvency Practitioner (PIP)
Where a borrower decides Personal Insolvency is the best option for them, the DMA will provide the borrower with a voucher for a free consultation with a PIP, who is regulated by the Insolvency Service of Ireland. The borrower will select a PIP from the Abhaile panel A borrower usually requires the services of a PIP if they are looking at a Personal Insolvency Arrangement (PIA).
The PIP will prepare a borrower's Prescribed Financial Statement (PFS), which is a detailed written analysis of a borrower’s financial situation, as required under the personal insolvency legislation. During the time a borrower works with a PIP, a Protective Certificate is issued by the Courts to ensure the borrower’s creditors cannot pursue them for any outstanding debts — this last for 70 days.
While preparing the arrangement, the PIP notices that there is a potential legal issue in the case and decides that the proposed arrangement will require legal review. The PIP applies for a Consultation Solicitor voucher to review.
Step 5 – Consultation Solicitor
Some cases can be more legally complicated than others or raise legal issues. Therefore, a PIP may recommend the borrower receive legal advice from a Consultation Solicitor, who is regulated by the Legal Aid Board (LAB). The PIP will arrange a voucher for the borrower to get legal advice. The Consultation Solicitor will assess and explain a borrower's legal position, will advise on the repossession proceedings and any legal issues relating to a borrower's mortgage arrears.
The PIP compiles a Personal Insolvency Arrangement, which they believe to be fair and reasonable for all parties. This arrangement is presented to all creditors involved; however, the arrangement is rejected by the creditors.
Step 6 – Personal Insolvency Court Review Service (S115A)
If a borrower's PIA has been rejected by the creditors, it can be reviewed by the Courts. The LAB can provide the borrower with legal representation by a solicitor and barrister to seek a Court review of the PIA proposal. If the Court agrees that the proposal is overall fair and reasonable, using the criteria set out in section 115A of the Personal Insolvency Act 2012, it can impose the proposal on the creditors.
Step 7 – Accountants* – If a solution does not involve a PIA
If a borrower’s situation does not require the services of a PIP, the DMA adviser may provide the borrower with a voucher to meet with an Accountant once the Standard Financial Statement (SFS) has been completed. On review of the SFS, the accountant will advise on any complex financial issues (for example, Revenue compliance) relating to the resolution of the mortgage arrears.
As before, the above borrower journey is one example. There are many others, which may be longer or shorter, depending on the unique situation of each borrower. Abhaile has been set up to assess each case on its merits, addressing every stage holistically, so that the best available outcome is achieved for the borrower.
Read our blog on the possible solutions available to a borrower in mortgage arrears on their home here.
Do you need more information on the services listed? Call 0761 07 2000 or email firstname.lastname@example.org to request a call back from an adviser.
Please note: This blog is provided as an aid to highlight a typical borrower journey through Abhaile. It does not constitute a legal interpretation of Abhaile, or legal advice on relevant legislation, and should not be relied on as such.