Ask The Expert: Week 2 Show Notes - Best Bits

Personal Insolvency Practitioner’s and MABS staff cover a variety of topics on week 2 of our Ask the Expert series. Listed below are questions taken from each interview. If you’d like to hear more of a specific interview, scroll to the bottom of the page where the full recordings are listed as information sources.

MABS stands for the Money Advice and Budgeting Service. Abhaile does what then?

Brian MacGabhan (MABS) on GBFM:

“They've three options, they can phone our National Helpline, that's 0761 07 2000 and they can discuss their case with them. The Helpline can refer them on to the local office, or they can just continue to deal with the Helpline if they prefer that. Alternatively, if they wish they can just drop into their local office. Phone the National Helpline, drop into their local office or phone their local office”.

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What about people who have received letters? This can be extremely distressing. We've had one caller who said that she received a letter to go to court. Now, what does she do in that situation?

James Morgan (MABS) on LM FM:

“Okay, the first thing you should know is that you should not panic and I can't stress that enough. I know it's not easy. It's your home and maybe there are family members involved. Obviously, there are children in many cases, it's an extraordinary stressful thing to go through. But you must also know that going into court is absolutely not the end of the line, there is hope, there is still plenty of time to engage and find the solution and many lenders will put arrangements in place, even during the court process.

Stay as calm as possible. Gather as much information as you can, come into your MABS office at whichever one is most convenient to you or call the helpline and get help. You don't have to do this on your own. There are a team of professionals from a variety of backgrounds who can help you free of charge.

Even in court, there are further services provided by members such as the Court Mentor who is a member of the MABS staff. And as part of the Abhaile scheme, there's also a Duty Solicitor at every repossession court sitting who will make representations on your behalf to the court and explain your case to the county registrar. This should make the process somewhat easier for clients. These services as with all the services that we've discussed today provided by MABS are free of charge”.

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What about personal insolvency legislation, briefly what is insolvency?

Louise O’Brien (MABS) on WLR FM:

“The insolvency legislation was introduced in Ireland in December 2012. Up until then, we were way behind the rest of Europe, we had no formal way of dealing with debt in Ireland. What previously happened is somebody in debt and unable to pay their debts, they would make a voluntary arrangement with their creditors. While this was great, it stopped letters coming through the door and give a bit of peace of mind. But the debts could go on forever.

At the end of 2012 we had the mortgage crisis and the rest, they introduced the insolvency legislation. For the first time, people can now avail of an arrangement. There are three different arrangements that were introduced. Therefore people in different level of debt, I suppose we should say, its bad debt. Most of us are in debt, there can be good debt, you know, we pay our mortgage. For the first time, people can avail of three different arrangements, and they're called a Debt Relief Notice (DRN), and that's mainly for people who are on the low end of the scale.

They have debts below €35,000, they're unsecured, and they have very little assets. Then they have introduced a Debt Settlement Arrangement (DSA) . That’s for people who have unsecured debt, but for whatever reason, they don't fit into the debt relief notice category, and they are insolvent. Then they have the Personal Insolvency Arrangement (PIA), and that deals with secure debt as well as unsecured debt. Again, that person must be insolvent”.

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If there is still hostility between a couple after a relationship breakdown and the arrears are growing, what's the solution then?

Maurice Lenihan (PIP) on LIVE 95:

“That is difficult, because very often, one person is going to be living in the house and the other maybe has gone off the scene completely, and they're not communicated with. The person is left there while repossession proceedings are in train, and they don't know what to do or where to go or how to solve it.

There are solutions for people within Family Law, where they can effectively get the court to agree or to force the situation where the person who's left the house is removed from the title. We have had that on a number of cases that we're working on or have worked on over the last couple of years, where a family law court order has already been issued by the court, providing for one party to be removed from the title, it makes it very straightforward for us because we can then restructure the mortgage whereby it's simply the person who remains behind.

Sometimes it’s restructured on what we call a sustainable basis where it's repaid. In other times, the person may not have any income or sufficient income to sustain it so we would look at Mortgage to Rent as the solution”.

What is the Mortgage to Rent scheme?

Rosaleen Ward (MABS) on C103:

Mortgage to Rent is essentially for someone who has completed the mortgage arrears resolution process (MARP), but their lender and their mortgage has been deemed unsustainable. What the actual scheme means is that the mortgage holder would voluntarily surrender their property back to the lender, and they would rent back the property from a third party.

The beauty of this scheme is that it all happens behind closed doors. Anyone listening who maybe thinks that the scheme by the end of the segment is for them; nobody actually knows it takes place. It happens between the mortgage holder, the lender, and the approved housing body (AHB) who will rent the property back. The key piece to this is to engage with the lender to complete the standard financial statement (SFS) with the lender.

If anyone would have difficulty in doing that, the MABS service will help them to complete the paperwork for submission. The service MABS provide is 100% free. The service is one to one which something that can be lost is. If borrowers are in mortgage arrears and feeling vulnerable, the MABS service can help with getting you to the stage of Mortgage to Rent being offered.

If the client is eligible for the scheme, the lender will highlight that to them. At that point, the person needs to apply for social housing support with the local authority. For that to happen, another form must be completed. That would be the social housing support form. That would be standard across local authorities”.

What about success rates? Do we see more success rates when it comes to repossessions now than perhaps before?

Kerrie O’Neil (PIP) on Q102:

“Definitely, on average at the moment, the Abhaile scheme was saying there’s 90% of households get to achieve an arrangement to stay in their home. That's a huge success rate of people who engage. So if you contact your local MABS office, they will sit you down and go through everything. If they feel you need to go an insolvency practitioner , they will move you on to the insolvency practitioners.

As a practitioner, we have an 80% - 90% success rate in keeping people in their family homes and restructuring their debts. Our priority is to keep you at home but, it's also to deal with the credit card, the credit union, all of those loans. We bundle it all into one package of what you can afford to pay and then we deal with that. There is a huge success rate at the moment”.

Information Sources:

Limerick’s Live 95 FM - Limerick Today with Joe Nash Episode 2 (7th May 2019)

Galway Bay FM - Galway Talks with Keith Finnegan Episode 2 (8th May 2019)

Dublin’s Q102 – Mornings with Liam and Venetia Episode 2 (8th May 2019)

LMFM - The 11 – 1 Show with Sinead Brassil Episode 2 (8th May 2019)

C103 - Cork Today with Patricia Messenger Episode 2 (13th May 2019)

WLR FM - Déise Today with Damien Tiernan Episode 2 (14th May 2019)

If you or someone you know is affected by some of the topics raised in the above discussion, call the MABS dedicated Helpline on 0761 07 2000, or visit mabs.ie/contact to find your local office and to learn more about how Abhaile may help.