Many of those in mortgage arrears, when trying to make payments, build up debt in other areas, be it with credit card companies or utilities. This can lead to further stress. In these circumstances a Personal Insolvency Arrangement (PIA) may be the best solution.

 The Personal Insolvency Arrangement (PIA) provides for the restructuring or settlement of secured debt and unsecured debt, over a period of up to six years. A Personal Insolvency Arrangement can be negotiated by a Personal Insolvency Practitioner, or PIP, whose services (subject to qualification) can be obtained free under the Abhaile Scheme.

A PIP voucher from Abhaile will entitle you to a free face-to-face consultation with a PIP. The PIP will carry out a full assessment of your financial situation, explain all the available options and the best option for you to deal with your mortgage arrears, and confirm that advice to you in writing. The PIP will also prepare a Prescribed Financial Statement (PFS) with you. This is a detailed written analysis of your financial situation, as required under the personal insolvency legislation.

If the PIP advises that your best option is personal insolvency, they will help you in taking the next steps. Your PIP will then apply to the court for a protective certificate on your behalf. You are not required to go to court. Once you get this you will have court protection against your creditors while your PIA is being put in place. This means that creditors cannot contact you during this time – no more phone calls, letters or visits.

Your PIP will put forward the proposed PIA to your creditors. If they agree to it, and the court is happy with your application, your PIA is formally agreed. Of the thousands of cases that have already gone through the ISI’s system, the majority of creditors are accepting proposals. In some cases, where a creditor rejects a PIA, the decision can be reviewed and reversed by the Court if the rejection is deemed unfair.

If you tackle your debt using a PIA, you are entitled to reasonable living expenses which allows for expenses such as food, clothing, health, education, transport, childcare etc.  The figure is often higher than the amount people in debt live on before seeking an insolvency solution.  You will not be told how you should spend your allocated reasonable living expenses, so you are still in complete control of your spending.  You can try calculating your reasonable living expenses here. 

Alternatively, or where a borrower does not qualify for a statutory PIA, a MABS adviser can negotiate with a borrower’s creditors to put an affordable and sustainable payment plan in place to deal with all secondary debts such as credit card debt.

 Maria and Conor’s story is a typical example

Marie and Conor**, a couple with three children under 12 years, had fallen into arrears. Marie receives an Invalidity Pension, and before that, she was out of work for two years without pay. During which, they relied on Conor’s income until he lost his job. He was unemployed for 16 months receiving Job Seekers Allowance. Consequently, they were unable to meet their mortgage repayments and arrears accrued. 

Marie and Conor met with a PIP, who assessed their situation and advised them that a Personal Insolvency Arrangement (PIA) was the best solution. Their Mortgage balance was €286,000. The current market value of the property was €105,000 (€181,000 negative equity). They also had other debts (unsecured) of €266,835. 

The free professional advice from Abhaile through the DMA, the Court Mentor, the Duty Solicitor and the Consultation Solicitor, allowed Anne to remain in her home with her children. 

If you or somebody you know is in mortgage arrears, or you fear you are at risk of losing your home, you may be eligible for free face-to-face financial or legal advice under the Abhaile scheme. For information, call the MABS dedicated helpline on 0761 07 2000, or visit www.mabs.ie/abhaile 

**Names have been changed to protect their identity.