An 81-year-old retired solicitor with €485,000 debts can remain in his family home in Blackrock, Co Dublin, under a lifetime personal insolvency arrangement (PIA) approved by the High Court.
The €700,000 Mount Merrion Avenue residence of Vivian Matthews will be sold if he and his co-borrower wife die before the end of the 15-year restructured mortgage term, when he would be aged 96, the court heard.
In such eventuality, the outstanding amount, currently about €325,000, will be recouped from the estate.
Mr Matthews and his wife Dorothy (81) primarily rely on their State contributory pensions, as well as a smaller private pension and assistance from family.
According to court documents, Mr Matthews’s debts arose mainly from the purchase of his family home in 2003, when he was aged 63.
It had been his intention then to avail of an equity release mortgage when he reached the qualifying age of 70. However, he said the product had been withdrawn from the Irish market by the time he met the age criteria.
Mr Matthews had also been intending to reduce his mortgage from his pension lump sum, but this turned out to be much less than projected, it was claimed.
Keith Farry, counsel for practitioner Alan Clarke of AB Personal Insolvency Solutions, said there will be “no issue” preventing Start Mortgages DAC from collecting the mortgage balance from Mr Matthews’s estate, as his Mount Merrion home is valued significantly above the amount currently owed.
Start supported the three-year arrangement at a creditors’ meeting, he added.
Over €78,000 will be contributed by Mr Matthews and his family over the PIA’s three-year term, with unsecured creditors to receive just over 5 per cent of their claim.
Cabot Financial, owed some €90,000 arising out of its purchase of two car loans and a business loan, was the only creditor to vote against the scheme. However, the unsecured creditor did not follow through with an objection in the court, said counsel.
Preferential creditors will get 89 per cent of what they are owed, compared to 100 per cent in a bankruptcy scenario. Mr Farry said they are, nonetheless, supporting the arrangement, and he pointed to the added costs for creditors that are associated with petitioning for a debtor’s bankruptcy.
In an affidavit, Mr Clarke said a bankruptcy outcome would be “disproportionate” as it would more than likely leave the debtor homeless and in a queue for social housing while in his 80s.
He added that there is huge family support to fund the PIA, which he said appears to be a “fair resolution” that balances the interests of the debtor and his creditors.
Mr Justice Alexander Owens approved the arrangement, made under section 115A of the Personal Insolvency Act 2012.