IBF publishes proposals for unsecured debt
DAVY VIEW
According to the Irish Banking Federation (IBF), the new protocol builds on the view that, with the benefit of banks' Mortgage Arrears Resolution Strategies (MARS) and existing solutions, there is a full range of options to help customers remain in their homes 'on a suitable basis'. If an appropriate agreement can be reached by lenders using the new protocol, it would avoid the need for borrowers to go down the official insolvency route using the new personal insolvency legislation. Reports suggest that ALBK, BKIR, Ulster Bank, KBC Bank and PTSB have agreed to the new policy but it remains unclear how non-bank unsecured creditors such as credit card companies and credit unions will react.
IBF has published a new protocol on unsecured credit
The protocol sets out a number of principles designed to cater for borrowers in financial difficulty where they have debt with multiple lenders. The principles include: that the mortgage debt will be prioritised and serviced ahead of other debt; the customer’s financial position will be fully assessed based on the information provided in the Standard Financial Statement (SFS) obtained through the Mortgage Arrears Resolution Process (MARP); a mortgage payment will be made in full where the customer can demonstrate the ability to make a payment to unsecured creditors (to support a payment to unsecured creditors, the mortgage payment may be reduced for a period of up to five years as part of a sustainable long-term treatment); payments made towards all unsecured debt will be apportioned on a pro-rata basis on the balances outstanding; and the arrangements will be reviewed by the mortgage lender after three years.
