The case Re JD (a debtor) has provided clarity in this area and a secured creditor’s position in relation to the non – engaging spouse. JD succeeded in her appeal to the High Court to overturn a decision of EBS to reject her PIA proposal. JD had 2 young children and together with her husband owed EBS €300,000 on the family home mortgage. The loan fell into arrears in 2013 after the marriage breakdown. The husband had failed to make any contributions towards the mortgage repayments since the couple had separated. The secured creditors EBS had sought the written consent of the estranged husband to the proposed treatment of the secured debt but this was not forthcoming.  EBS argued that the proposed PIA contained an inherent unfairness in relation to the position of the husband as co-borrower. The husband was not a party to the proposed PIA and EBS argued that the personal insolvency legislation did not import any preservation of the rights of a creditor against a debtor who is severally liable for a debt.

Judge Baker held that the PIA did not contain a term which would have shown an intention for EBS to forgive the husband as a co-debtor.  Thus EBS was free to pursue the husband as co-borrower. Given that the proposal offered a better outcome than bankruptcy to the secured creditor and with the aim of keeping JD in her family home, the High Court held that the proposed PIA should be upheld. Judge Baker found that the proposal was not unfairly prejudicial. Therefore, this ruling confirms that a PIA involving one debtor does not, unless expressly agreed, give protection to a co-debtor, whether jointly or severally liable, who does not fall under the PIA. Judge Baker also noted that a joint debtor is not prevented from appealing a secured creditors decision just because the debtor doesn’t own the entire interest in the property or isn’t the sole borrower.

This is a link to an article from the Irish Times in regard to the Judge Baker ruling – Click here.

Free Consultation

Do you wish to make a proposal for a PIA or do you wish to learn more about the personal insolvency process? Or are you a home owner and in mortgage arrears and want to know whether you would be eligible for a MABS voucher to meet and obtain free initial advice from Mark Ryan, PIP, setting your options, then contact the Personal Insolvency Department at Quintas.

Yours sincerely:

Mark Ryan, CPA,

Personal Insolvency Practitioner (PIP),

Director, Quintas

Mark Ryan is authorised by the Insolvency Service of Ireland to carry on practice as a personal insolvency practitioner.

Mark Ryan has been operating as a PIP since the inception of the Personal Insolvency legislation in 2012. With years of experience in negotiating debt restructures, personal insolvency arrangements and dealing with bankruptcy applications our team can advise you on the best course of action.