State-backed debt deals will bear fruit... just give them time.

James Treacy, Irish Independent, 3 August 2014.

The State's personal insolvency regime has come under fire recently.

Last month, the ISI (the Insolvency Service of Ireland - the body set up to administer debt deals for over-stretched borrowers) released its second set of quarterly figures.

The total number of applications for debt deals since the launch of the ISI last summer now stands at 850.

While this figure seems at best modest (set in the context of some 132,000 private dwelling houses and 39,000 buy-to-let properties in arrears at the end of March), the increase in the number of people applying for these deals is encouraging.

There was a threefold increase in the number of insolvency deals and protective certificates agreed in the second quarter of this year compared to the first three months. (Protective certificates are certs which protect debtors and their assets from legal proceedings by creditors while the debtor applies for a personal insolvency arrangement.)

Many creditors are now accepting the debt deals arranged through the ISI.

However, everybody with an interest in the regime has had to exercise extraordinary patience thus far.
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Personal insolvency practitioners (PIPS) are the professionals charged with negotiating debt deals on behalf of a struggling borrower. PIPs in particular, who have invested considerable time and resources in meeting the exacting standards of the ISI, have expressed huge frustration.

The relatively low take up of the schemes on offer to date is a fact. However, there is something else of which we are equally certain: there is a vast and hitherto untapped demand for the schemes that, given the right circumstances, will inevitably be realised.

Specifically, our experience as a debt collection agency and credit bureau gives us a unique insight into the financial DNA of struggling households. While headline economic figures may give some grounds for optimism, these have little or no relevance for the vast amount of over-indebted households who have exhausted every avenue in attempting to stay afloat.

In the realm of debt collection, StubbsGazette's mission to act in the best interests of creditors remains resolute. However, there comes a point when even the most tenacious creditor recognises that the best solution for all parties lies in a realistic approach to resolving the debtor's difficulties that reflects and compromises in the interest of all concerned parties.

It is here where the insolvency legislation provides the answers, and, as put by the Director of the ISI, Lorcan O'Connor, there is a solution for everybody within the legislation.

Our contention is that to date many PIPs have failed to show the understanding or imagination necessary to apply the provisions of the legislation to arrive at appropriate solutions. There are many reasons for that but chief among these is that many PIPs see personal insolvency as a mere adjunct to their existing business - and not as the dedicated profession it should be.

But there are exceptions. Some PIPs have been extraordinarily generous with their time and expertise, even to their would-be competitors. Some have made remarkable progress not just in terms of the numbers of cases processed but in their ability to interpret and apply the legislation.

We have seen the results first hand. Debtors who struck deals through the ISI have got financial and psychological relief and are now able to resume their productive lives free from the debt millstone. They can also contribute to the economy as the legislation was intended.

The ISI has also proved useful to creditors, who realise a fair and sustainable dividend and who can now draw a line under the case and move ahead.