Court Directs Debt Write Down on Family Home Mortgage

Earlier this month a case came before the Courts in Dublin involving a borrower who had significant arrears on her home mortgage with Permanent TSB. The borrower had other unsecured debts as well.

The full mortgage was €333,785 and the value of the borrower’s home was €160,000. The interest rate on the loan was 3.25%.

The borrower had met with our Personal Insolvency Practitioner who had proposed the following arrangement:
• Write down of mortgage by €173,000 from €333,000 to €160,000
• Continuation of interest rate and term
• Write down of unsecured debt by 92%

PTSB objected to this proposed arrangement and the matter came before the Courts where judgement was delivered early this month.

PTSB raised several objections.

The primary objection was around an alternative offer they made which involved ‘parking’ €97,000 of the debt at 0% for the duration of the loan. The monthly payments under the PTSB proposal were €1121 while the monthly payments under our proposal were €924.

The Judge expressed concern as to how the borrower was going to afford to pay €97,000 at the end of the mortgage period when she would be 71 years of age and her working life would be over.

Balancing both positions, and taking account of PTSB’s argument that it was being unfairly prejudiced, the Judge directed that the proposal made by the Personal Insolvency Practitioner should come into force.

The position for the borrower now is as follows:
• Her home mortgage is sustainable and will be fully cleared at the end of the term
• Affordable payments will be made to unsecured creditors for a period after which the balance (92%) will be written off in full.

The position for PTSB is as follows:
• It has a long term, sustainable, secured and performing loan at an attractive interest rate which is an excellent asset on its balance sheet. Furthermore, it no longer needs to spend resources on arrears support or on enforcement.

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