Judge rejects bank's objections to man's personal insolvency deal

The bank would also do better than if the man was made bankrupt or if the bank tried to enforce a possession order it previously obtained against the man’s ex wife, he said.

Under the PIA, the bank will get €220,000 over the 33-year extended mortgage period, plus a dividend of €6,724 over the two-year lifetime of the PIA, he noted.

The current market value of the house is €160,000 and, allowing for 10% to cover sale costs in a bankruptcy, the bank would recover no more than €144,000, he added.

The PIA provides the mortgage balance of €283,665 will be reduced to €220,000.

The €63,665 balance will be treated as an unsecured debt, in respect of which the bank will get €6,724 over a two year period.

The man was in low paid employment but is now self-employed running a car valeting business earning about €1,548 monthly.

The PIA provides he will make monthly interest-only payments of €229 for two years towards the €220,000 restructured balance. Then he will make monthly repayments of €678 and the mortgage term will be extended to 33 years when he will be aged 70.

Business income

Out of his business income of €1,548, he will pay €104 towards Revenue debts and €200 for child maintenance, leaving about €1,244 monthly for living expenses, mortgage and other debt repayments.

After those payments, he would have a monthly deficit of about €374 but he proposed that would be made up by a contribution from his live in girlfriend who earns €43,000 a year.

The man’s wife, a discharged bankrupt, has not lived since 2014 in the home the couple had shared between 2004-2011. The man moved out into rented accommodation when the marriage broke down in 2011. He moved back in in 2015 when the property was effectively vacant, the woman having left the previous year.

After the bank took proceedings in 2017 for possession of the property, the man’s personal insolvency practitioner sought approval of a PIA. The bank, his main creditor, opposed the PIA but his other creditor, the Revenue Commissioners, owed some €2,500, supported it.

The Circuit Court refused to approve the PIA after accepting the bank’s argument the man had failed to meet a requirement of the Personal Insolvency Acts to exhibit a written declaration he had co-operated with the bank for at least six months in relation to the principal private residence.

The bank, which maintained the man was not a co-operating debtor, opposed his appeal over the Circuit Court decision on a range of grounds, including the declaration point.

In his judgment on Monday, Mr Justice McDonald said the declaration had now been exhibited and he was satisfied it was in the interests of justice to admit it into evidence in this appeal.

There may be costs consequences over the failure to put the declaration before the Circuit Court, he warned.

The man said he had decided to move back because he had a personal liability to the bank under the mortgage loan and he has paid €700 a month since to the bank, the judge noted.

Rejecting the bank’s arguments the PIA was not sustainable, he said, while the bank complained there was insufficient evidence about the means of the man’s girlfriend, there was no reason to suppose information from her employer was not correct.

Even if that relationship broke down in the future, the man could rent out one of the bedrooms in the house, he said. “Ironically” his experience dealing with such cases of is that secured creditors frequently complain debtors could make more extensive payments if they rented out rooms.

While the bank also complained the PIA is envisaged to continue until the man is 70, many people, including judges, do not retire until they are aged 70, he said.

The judge also rejected a number of other objections to the PIA.