If you are you struggling with loan repayments and don’t know how to become financially solvent again you should consider professional help.

The Insolvency Service of Ireland (ISI) is the Government department with responsibility for implementing the Personal Insolvency Act 2012 to 2015. The Act created a new profession Personal Insolvency Practitioners (PIP’s) who have the knowledge and skill to create effective alternative repayment solutions for your loan repayments.

  • PIP’s are here to guide you on the best route to solvency, for example; you could be eligible for a substantial write down of your mortgage.
  • PIP’s Use the Insolvency Act to secure a sound financial future for you and your family.
  • PIP’s can negotiate with your creditors because we know the secrets they do not want you to know.
  • PIP fees are not expensive, and the main fee is paid by your creditors.

 

For Example:

  • Couple with no children and use one car
  • Net income from employment €2,700 per month
  • House Value €200,000
  • Outstanding Mortgage €285,000 with 23 years remaining owed to Helpless Bank
  • Rate of interest 3.5%
  • Other unsecured debts (Credit Card €5,000 and Credit Union net debt of €10,000)

Following a meeting with their PIP it is agreed that the best route to ‘Solvency’ is a PIA. This is a 6 year alternative repayment plan.

Summary:

One commonly misunderstood fact is that the ‘Secured’ portion of debt is not the total mortgage balance outstanding; it is the ‘Current Market Value’ of the property. In this example, that is €200,000. The excess amount outstanding on the mortgage, €85,000, is then classified as unsecured and is treated as such, combined with the other unsecured debts of €5,000 and€10,000 giving a total unsecured debt of €100,000.

This is how a PIA plan works:

  • Net household income €2,700
  • LESS reasonable living expenses €1,486
  • LESS reduced mortgage repayment €1,056
  • EQUALS Amount available for other repayments € 158

The term of a PIA is 6 years (72 payments)

  • 158 X 72 payments = €11,376.
  • LESS PIP fees of €8,610 (includes Vat at 23%)
  • EQUALS Total funds available for the unsecured creditors € 2,766

Again, remember that this figure for unsecured creditors includes €85,000 of the previously secured debt which became unsecured as at the date of issue of the Protective Certificate, and so long as the property is not sold within 20 years, this amount is written off. The other unsecured debts, the unpaid balance of the Credit Card and the Credit union debts, are also written off at the end of the PIA agreement.

The new financial position of the debtor at the end on 6 years assuming income remains as is:

  • Net household income €2,700
  • LESS reduced mortgage repayment €1,056
  • EQUALS Money available for personal spending €1,644

Notice, this is an increase of 10.63% compared to the reasonable living expenses allowance provided during the term of the arrangement, and the ongoing loan repayment of the reduced secured loan of €200,000 as at the beginning of the arrangement over the remaining term of 17 years at 3.5%.

By discussing your case with a PIP you have nothing to lose but the stress brought on by high debt repayments and everything to gain from a court approved Alternative Repayment Arrangement, one that is sustainable and affordable. PIP’s understand it is not easy to make sense of your finances when you are under stress and can’t think. Let us Negotiate!

You can find out all about it on the Insolvency Service of Ireland website by checking out www.backontrack.ie or calling their information line at 076 1064200, or give us a call here at Negotiators on 086 8333 333.

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