Her mortgage balance was €323,626.
This arrangement was originally turned down by the lender, but the court reviewed the arrangement and deemed that it was a fair and equitable on all parties. It resulted in the mortgage rate being fixed for 27 years and Ann continuing to live in the family home.
Ann is a young separated woman of 43 with two children under ten (10) years of age. Her main income is from a part-time job, and she is also in receipt of child maintenance from her ex-spouse. The breakdown in the marriage and ill-health meant that she was unable to meet her mortgage repayments and arrears quickly mounted.
“The stress was too much; I had two young children to think about – putting food on the table and keeping a roof over their heads was causing me a lot of anxiety. I was afraid we were going to lose our home”.
Ann continued to live in the family home with her children following the breakdown of her marriage. However, she received no contributions towards the mortgage repayments from her ex-spouse who was jointly liable for the mortgage – this made the arrears situation even worse.
Ann met with a Personal Insolvency Practitioner (PIP) through the Abhaile scheme. The PIP assessed her situation and advised her that a Personal Insolvency Arrangement (PIA) was the best solution for her. The following is a summary of the outcome achieved for Ann.
Summary:
Mortgage Balance: €323,626
Current market value of property: €190,000
Negative equity €133,626
Other debts (unsecured, credit card, etc) €33,529
Monthly ISI reasonable living expenses €1,836
Special circumstances allowance €106
Solution:
Review of Ann’s situation identified a sustainable mortgage of €190,000, which represented the current market value of the property. This resulted in a write-down of €133,626. The unsecured lenders received a dividend of 2.56%.
Ann was returned to solvency, meaning that her monthly outgoings were sustainable and within her means, matching the reasonable living expenses as determined by the Insolvency Service of Ireland.
The family home was retained under the arrangement, which included an extension of the mortgage term to 27 years and the fixing of the interest rate for that period. This meant that Ann knew how much she was going to pay each month for the length of the arrangement.
This arrangement was court-enforced on the lender as a result of the Personal Insolvency Arrangement review process, also known as a Section 115A. This process, if eligible, is funded by the Abhaile scheme.
If you are in mortgage arrears and fear you are at risk of losing your home, you may be eligible for assistance under the Abhaile service. For information, click here or call the MABS dedicated helpline on 0761 07 2000.
^The Insolvency Service of Ireland regulates Personal Insolvency Practitioners
*Names and identifying details have been changed to protect the privacy of individuals.
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