Government Acts on Mortgage Indebtedness:
Many families are trying to cope with serious debt problems. In the Budget Fine Gael fulfilled our election promise and increased Mortgage Interest Relief to 30% for First-Time Buyers who bought between 2004 and 2008.
Other options are being developed for people in serious difficulty:
- Trade-down mortgages, split mortgages and sale by agreement
- A Mortgage-to-Rent scheme
Where people face insolvency, the Minister for Justice has published proposals to rebalance the rights of the borrower and lender in a fairer manner. An Insolvency Service would help people come to agreements with financial institutions using three new instruments:
- Debt forgiveness for unsecured debt up to €20,000 for people with no income and no assets, after a one-year moratorium period
- A Debt Settlement Arrangement where both sides agree to work out over 5 years of unsecured debt of €20,001and over, based on what can be afforded
- A Personal Insolvency Arrangement for the agreed settlement of both secured and unsecured debt, where people can stay in their home and at the end of a 6-year period people would be left with affordable obligations
If there is more than one creditor, 65% (unsecured) or 75% (secured) must agree.
Legal bankruptcy is an option where all assets are surrendered and debts wiped out. This has been rarely used because people were locked out of any bank transactions for 12 years. This has now been shortened to three years.