The Government has today published the Mortgage Restructuring Arrangement Bill 2013 which provides for inter alia the restructuring and disposal of certain mortgage arrears, the retention where practicable of the principal private residence in instances of certain mortgage arrears and the removal of significant negative equity debt in the case of eligible persons and to provide for related matters.
The draft text of the Bill is located at this link. Amongst the key provisions of the Bill including criteria for eligibility are:
- Section 3 of the Bill provides that subject to the provisions of the Personal Insolvency Act 2012, a debtor may request or a personal insolvency practitioner may propose the establishment of a Mortgage Restructuring Arrangement (defined under Section 1 as “an arrangement to restructure the terms and or payment schedule of a secured debt held in respect of the principle private residence of the debtor or debtors involved”) subject to the satisfaction of eligibility criteria.
- Section 4 provides that a debtor may only enter into a Mortgage Restructuring Arrangement once.
- In order to enter into a Mortgage Restructuring Arrangement, a debtor must satisfy the criteria outlined in Section 6 namely;
(a) the debtor is indebted to a secured creditor as respects the debtors principal private residence, or as respects a property which is not the principal private residence of the debtor provided that
(1) the property can be shown to have been used by the debtor as his or her principal private residence for a period of not less than six months, and
(2) the property is the sole property in which the debtor holds a financial interest and
(3) in the case of a property which is substantially larger and or more costly than is required to sustain a reasonable standard of living for the debtor and his or her dependents, the debtor can provide evidence of why he or she is unable to lessen the debt owed by selling the property and purchasing a smaller property in a location and of a size appropriate to meet his or her needs and those of his or her dependents in maintaining a reasonable standard of living;
(b) the debtor has completed a Prescribed Financial Statement (defined in Section 1 as “a statement provided to the Personal Insolvency Practitioner” and a statutory declaration confirming that the statement is a complete and accurate account of his or her assets, liabilities, income and expenditure;
(c) the Personal Insolvency Practitioner has issued a certificate stating that having reviewed the prescribed Financial Statement of the debtor, that in his/her opinion there is no likelihood of the debtor becoming solvent within the period of five years, commencing on the date of the making of the declaration;
(d) the debtor has co-operated in good faith with the secured creditor in connection with any process relating to arrears in connection with any process operated in accordance with a requirement of the Central Bank of Ireland.
(e) the debtor has made a statutory declaration that he or she has not been able to agree an alternative repayment arrangement with the secured creditor, or that the secured creditor has confirmed to the debtor in writing their unwillingness to enter into an alternative repayment arrangement.
(f) the debtor is not an undischarged bankrupt, a discharged bankrupt subject to a bankruptcy payment order, a person who is a specified debtor as respects a Debt Relief Notice (as defined under the Personal Insolvency Act), a person who as a debtor is subject to a Debt Settlement Arrangement or a Personal Insolvency Arrangement which is in force or a person who as a debtor is subject to an arrangement under the control of the court under Part VI of the Bankruptcy Act 1988.
(g) the debtor has not had their debts discharged pursuant to the Personal Insolvency Act 2012 less than three years prior to the date of the application or has not had their debts discharged pursuant to a Debt Settlement Arrangement or a Personal Insolvency Arrangement less than 5 years prior to the date of the application or has not been discharged from bankruptcy less than 5 years prior to the date of the application.
(h) is domiciled in the State, or within one year before the application date, has ordinarily resided in the State;
(i) is insolvent as has no likelihood of becoming solvent within the period of 5 years commencing on the application date while also maintaining a reasonable standard of living for himself or herself
(j) has not in the preceding two years entered into a transaction with any person at any undervalue or given a preference to any person.
As highlighted the criteria for eligibility are certainly onerous and it remains to be seen what is meant by the criteria outlined in a(3) in the case of a property which is substantially larger and/or more costly than is required to sustain a reasonable standard of living.
In our next blog post we will look at the situation where two or more debtors are jointly party to secured debt covered by a Mortgage Restructuring Arrangement, the documentation required to initiate the establishment of a Mortgage Restructuring Arrangement and the process involved.