One of the first things to suffer when people are struggling financially is their relationship. Marital breakdown or separation plays a huge role in mortgage arrears. Currently, separated or divorced people account for over 20 per cent of those with long-term mortgage arrears.

Where a couple are separated and one or other is trying to deal with their arrears, that stress multiplies, particularly when there are children involved.  There are huge emotional ties to the family home. 

It is important to note that under the Central Bank’s Code of Conduct on Mortgage Arrears (CCMA) a borrower can request to be assessed separately in circumstances where they are separated or divorced from the joint borrower. The Code obliges the lender to extend the protections of the CCMA to separated borrowers where a request is received in writing from a borrower.   

 Personal Insolvency Practitioner (PIP) Daragh Duffy from Donegal, has dealt with a range of cases where couples have separated and one of them is actively looking to find a solution to their debt problems.

“Separation plays a massive role in insolvency,” he says. “It makes the situation a bit more complex, because suddenly you go from having one house to run to two houses, both with individual debts.  Sometimes both people will agree to work toward the same solution, but it doesn’t always work like that.” 

Regardless of the state of the couple’s relationship, the PIPs role is to act on behalf of the person that has appointed them to act as their debt advisor, to work out what amount they can realistically repay to creditors and find the best solution for them.  The aim is always to keep them in the family home where possible. 

A landmark case in which a separated couple was at risk of being “tied together for life” by their mortgage, because the lender was originally unwilling to allow one partner to remain in the original family home with a restructured repayment plan, has made a big difference for those in mortgage arrears whose relationship has broken down.

The High Court ruled that regardless of the fact that the couple were separated, the bank must deal with each borrower individually where they have enlisted a PIP.  

The reality of that ruling for the person involved meant that she – a separated mother of two young children, who had originally fallen behind on her mortgage repayments primarily due to illness and marital breakdown – got a six-figure sum written off her mortgage with remaining mortgage repayments at a manageable level. She gets to keep her family home and becomes solvent again.   

Daragh says “That Court ruling has had huge implications for other people in similar situations.  Here we had one parent doing everything she could to hold on to a home for her family and the other parent was not contributing financially and was unsupportive of the proposed arrangement.  Up until that ruling, banks were unwilling to deal with individual borrowers but that has now changed.”

 Anne and David’s Experience

 A more recent case involving a couple with 2 children had an equally positive outcome. Anne and David*  were in long-standing mortgage arrears, originally as a result of loss of employment. The total mortgage outstanding was c. €220,000 and legal proceedings had commenced in early 2017.

The solution identified reasonable living expenses of €2,251 a month, a sustainable mortgage of €120,000, and resulted in a write-down of over €166,000, while also dealing with their other debts. The family home was retained under the arrangement.

They had been in negotiations with their lender to put an alternative repayment arrangement in place, however during this process the couple separated and David was no longer engaging in the process.  As a result Anne was unable to meet the proposed repayments. 

While attending court Anne spoke with an Abhaile Court Mentor and an appointment with a Dedicated Mortgage Advisor (DMA) was arranged at her local MABS office, where a full assessment of her financial situation was completed. Having considered all of the options Mortgage to Rent (MTR) presented the only chance for Anne and the kids to stay in her home.   

The DMA wrote to the Bank advising of Anne’s change in status (she had separated) and requested that she be treated as a single borrower. The initial application seeking MTR was declined by the Bank as David was not engaging and would not provide consent.   

As Anne was eligible for the Abhaile scheme, a legal voucher was issued, which allowed her meet with a solicitor. Anne’s solicitor engaged with David’s solicitor advising of the position regarding MTR.  David’s solicitor provided a signed agreement from his client. Legal documentation was furnished to the bank which allowed the Bank to let the property go forward for MTR, and for the case to progress. 

If you are in mortgage arrears or fear you are at risk of losing your home, you may be eligible for free face-to-face consultation with a PIP under the Abhaile service. For information, click here or call the MABS dedicated helpline on 0761 07 2000.