Implications of recent personal insolvency case
A recent decision by Circuit Court Judge Mary O’Malley Costello resulted in significant headlines and publicity as a result of the potential implications for mortgagors struggling to meet their mortgage repayments.
The application before her was to rule on a personal insolvency arrangement which was being presented to her on behalf of a couple who were paying interest repayments of 5.5%. The personal insolvency practitioner who was acting on behalf of the couple brought an application which involved a revised repayment plan with a fixed interest rate of 2.5% over 25 years. The loan had been taken over by Pepper. Pepper does not offer fixed interest rate products.
Pepper objected to the arrangement on the grounds that they would be unfairly prejudiced by such an arrangement. It would appear that Judge O’Malley Costello sought information from Pepper which would have required them to disclose what it had paid to purchase the debtors’ loan or the cost to Pepper of refinancing the loan. Pepper refused to provide this information and while the judgment was not a written judgment it would appear that the Judge took Pepper’s refusal to provide this information into account in that she could not decide that they were unfairly prejudiced if she did not have this information.
This judgment may well be appealed to the High Court and time will tell whether the High Court will come to the same conclusion.
For distressed borrowers who may believe that this is an open door to similar type of arrangements, one has to be aware that every decision is dealt with in its own circumstances.
For any enquiries into personal insolvency/debt matters please do not hesitate to contact Brendan Dillon on 01 296 0666.
