Helen McEntee

Justice Minister Helen McEntee has secured government approval for priority drafting of the “short but urgent” Personal Insolvency (Amendment) (No. 1) Bill in light of the Covid-19 pandemic and its effect on jobs.

Under the bill, insolvent homeowners will have the right to seek review by a court if their mortgage lender or other creditors refuse a reasonable proposal for a personal insolvency arrangement.

This is already an option under the Personal Insolvency (Amendment) Act 2015 for home mortgage arrears dating from before 1 January 2015. The new bill will remove that cut-off date.

Ms McEntee said: “Post-Covid, that condition would mean that a person who now finds themselves insolvent and in home mortgage arrears, arising from an unforeseeable loss of income, would be shut out from accessing this vital court protection. We want to avoid such a scenario.”

However, insolvency experts have told Irish Legal News that financial institutions will have great difficulty pursuing mortgage arrears over the next few months anyway.

Michael Lavelle, a leading insolvency lawyer and founder of Lavelle Partners, said: “The big difficulty with Covid arrears is that the courts are, in effect, not operating properly, so it’s very, very difficult for banks to pursue arrears in the current pandemic anyway, from a practical point of view.”

Although the bill “will make a difference”, public health restrictions on the number of people in court, as well as the backlog of cases built up earlier in the pandemic, have already “slowed down the process significantly”, he explained.

Mr Lavelle said: “The fact that cases can’t be heard at the speed at which they were previously being heard will make it difficult for financial institutions to pursue cases for the next number of months.”

He added that he had seen many more injunctions brought over the past six months than routine repossession cases.

A second, wider personal insolvency bill is also currently “being finalised” by the Department of Justice and is expected to be brought forward in the coming months.