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'Deal with your debt problems': The number of people seeking insolvency is on the rise

€588 million worth of insolvency applications were made between April and June this year.

Nearly 44% of insolvency applications have been on people’s homes since the Insolvency Service of Ireland was set up.
Nearly 44% of insolvency applications have been on people’s homes since the Insolvency Service of Ireland was set up.
Image: Shutterstock

THE INSOLVENCY SERVICE of Ireland (ISI) has issued a reminder of the damaging effect financial issues can have on mental health as a report reveals that more than 1,200 people applied for insolvency between April and June this year.

Figures released in the ISI’s statistical report for quarter two of the fiscal year show that the number of people seeking debt solutions in Ireland continues to rise.

“Each quarter, ISI statistics show that our solutions are getting more and more people back on track financially,” Lorcan O’Connor, the director of the ISI, said.

While it is understandable that the effects of debt on mental health can prevent people seeking the help they need, my message to anyone still experiencing unmanageable debt is to consult with one of our regulated professional advisors.

“Those with mortgage arrears can also avail of a free consultation with a Personal Insolvency Practitioner under the Abhaile service,” O’Connor concluded.

The data shows that there were 1,259 new applications for debt solutions between April and June. This represents an increase of 71% on the same period last year.

There was a 26% increase in the number of people being issued protective certificates, the first stage in the insolvency process, while there was a 22% increase in approved arrangements, which is the final stage.

The total debt involved in the 1,259 new cases is approximately €588 million.

screen-ISI Source: Insolvency Service of Ireland

The report notes that the high level of new applications has been maintained largely due to Abhaile, the Government’s free mortgage arrears support scheme, which includes free Personal Insolvency Practitioner consultations for insolvent debtors.

Options

The ISI offers three different options for people seeking insolvency.

  • The Debt Relief Notice (DRN) provides for the write-off of up to €35,000 subject to a three-year supervision period.
  • The Debt Settlement Arrangement (DSA) provides for the agreed settlement of unsecured debt, with no limits, over a period of up to five years.
  • The Personal Insolvency Arrangement (PIA) provides for the restructuring or settlement of secured debt up to €3 million, and the settlement of unsecured debt, over a period of up to six years.

The figures reveal that nearly 59% of people have had their protective certificates approved between the end of 2013 and the end of June this year.

Applications have been denied in 17% of cases while in 24% of cases the certificate has expired. The cert can expire for various reasons, such as when an alternative arrangement has been reached or if the application was certain to be declined.

Bankruptcy

The total debt involved in bankruptcy adjudications over the three-month period was approximately €178 million. This is made up of approximately 36% secured debt and 64% unsecured debt.

Bankruptcy is down 24% compared with the first quarter of the year and it’s down nearly 40% compared with the same quarter last year.

Despite this apparent downward trend the ISI estimates that by the end of the year the outcome will be broadly similar to 2016.

History of applications

The report also provides statistical breakdowns of the ISI’s work since it started accepting applications from debtors in September 2013.

Nearly 44% of applications were on people’s homes, over 30% were on buy-to-let mortgages and just shy of 20% were on loans from financial institutions.

Regarding the people behind the applications 39% of them were working in the private sector, 25% were unemployed, 13% self-employed and 10% worked in the public sector.

Roughly a third of the applicants were aged between 35-44, while another third were in the 45-54 bracket. 19% were between 55-64, 8.5% were aged between 18-34 and the remaining 4.3% were over 65.

Waterford had the highest proportion of debt solutions with 317 cases. This represents a rate of 36.5 solutions for every 10,000 adults.

READ: Over 4,000 borrowers flock to voucher scheme in bid to save their homes>

READ: Women being ‘forced into homelessness’ as former partners refuse to sign arrears deals>

READ: These sectors have seen the most businesses fail since the start of the year>

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