Bankruptcy Laws to Hit Mortgage Borrowers

Article excerpt

Byline: Joe Downes

THE planned overhaul of bankruptcy laws will bring in new rules for mortgage holders who cannot meet their repayments, a minister indicated yesterday.

Brian Hayes, minister of state at the Department of Finance, said that the debate on corporate insolvency and bankruptcy could not be undertaken without the issue of personal bankruptcy also being considered.

'We're talking about the totality of debt,' the Fine Gael TD said. 'You simply can't ignore mortgage debt in that context.' Eamonn Hughes, an analyst at Dublin-based Goodbody Stockbrokers, said: 'The Department of Finance doesn't want a situation whereby mortgage debt can be written down without [the borrower] being declared bankrupt, given this may have significant capital implications for the banks.' The Government is reshaping the bankruptcy and insolvency laws against the background of the bursting of the property bubble in 2008, which left some homeowners unable to meet their loan repayments while tens of thousands of properties are in negative equity.

Almost 13pc of private residential mortgages were either more than 90 days in arrears or had been restruc-tured at the end of September, according to the latest figures from the Central Bank. …