Applications to insolvency service more than double since 2015

The number of people applying for debt relief during the third quarter of the year has more than doubled on last year, according to figures from the Insolvency Service of Ireland (ISI).

According to the ISI, there were 899 new applications in the third quarter of the year, more than twice the number received in 2015, and up by 22 per cent on the second quarter. More than three-quarters (78 per cent) of applications are for Personal Insolvency Arrangements (PIAs). These allow a person to return to solvency while staying in their home. Some 417 protective certificates were issued, with 337 arrangements approved. Mortgage debt accounted for slightly less than two-thirds of applications (64.5 per cent), split between buy-to-let and residential mortgages, with other debt owed to financial institutions accounting for a further 29 per cent.

“This quarter saw continued growth in new applications, with protective certificates and approved arrangements at similar levels to last quarter. When compared to the same period last year, there is significant growth in all categories,” said Lorcan O’Connor, director of ISI.

‘Devastation’

However, Rachel McGovern, chief operations officer with broker group PIBA, said that while over 70 per cent of cases are being dealt with successfully, there are still more than one in four with an unsuccessful outcome.

“All in all, eight years on from the start of the financial crisis, there is a great deal of the devastation felt by individuals and families still unresolved,” she said.

Numbers adjudicated as being bankrupt came to 61, down from 173 cases in the second quarter, and 111 in the first. It brings the year-to-date total to 345, compared with 479 for full-year 2015. The total debt involved in bankruptcy adjudications for Q3 is approximately € 104 million, with about three-quarters of this accounted for by unsecured debt. Given the new one-year bankruptcy term, which was introduced on January 29th this year, the expectation is that activity levels will remain high into year end.

So far, some 4,000 people have gone through the process with ISI to return to solvency.

Earlier this month the Government launched its Abhaile plan to tackle the problem of mortgage arrears. It will provide "free, independent expert advice and support on financial and legal issues" via the Money Advice and Budgeting Service (MABS), working closely with the ISI, the Legal Aid Board and professional accountancy bodies.

According to Mr O’Connor, this new initiative is “expected to drive further growth in the coming months”.