When we see big numbers and stats in the news, it can be difficult to remember that there is a person behind each number. In the case of home mortgage accounts arrears for two years or more, there are 32,000 of those in Ireland now, and each of these represents a person under huge stress, possibly a partner and children too.
Financial strain can have a wide-ranging effect on the well-being of any family; as debts increase and the bills go unpaid, the stress levels also rise. In a HSE study, 40 percent of Irish adults cited money issues as having a negative impact on their mental health.
"When someone's in mortgage arrears, they start to feel that there's no way out. That can have a huge impact on stress levels and mental well-being in general, not just for the mortgage holder but the whole family, we see people breaking down in tears" says Michael Doherty, from the Dedicated Mortgage Arrears Adviser (DMA) team at MABS.
For Personal Insolvency Practitioner (PIP) Daragh Duffy, of McCambridge Duffy, the challenge lies in finding a financial arrangement that suits each account holder, whatever their family situation. "There’s always something about each case that’s different, be it the number of kids, the work situation, or the size of negative equity on their house."
"Separation plays a massive role in mortgage arrears cases," he says. "It makes the situation a bit more complex because suddenly you go from having one house to run to two houses, both with individual debts. Sometimes both people will agree to work toward the same solution, but it doesn't always work like that.
When a couple is separated and trying to deal with arrears separately, that stress multiplies, particularly when there are children involved. Currently, over 20% of people with long-term mortgage arrears are separated or divorced and often it is the financial strain that has caused this.
Regardless of the state of the couples’ relationship, my role as a PIP is to act on behalf of the person that has appointed me to act as their debt advisor, to work out what amount they can realistically repay to creditors and find the best solution for them. The aim is always to keep them in the family home where possible."
In a landmark case last year, Daragh dealt with a separated couple who were at risk of being “tied together for life” by a mortgage. The lender was originally not willing to allow one partner remain on the property with a restructured payment plan. However, the High Court ruled that regardless of the separation, the bank must deal with each borrower individually where they have enlisted a PIP.
The reality of this ruling for the separated mother of two meant that after falling behind in her repayments due to illness and the marital breakdown, a six-figure sum was written off her mortgage with remaining mortgage repayments set at a manageable level. She gets to remain in and keep her family home and becomes solvent again.
Daragh says “that Court ruling has had huge implications for other people in similar situations. Here we had one parent doing everything she could to hold on to a home for her family, and the other parent was not contributing financially and was unsupportive of the proposed arrangement. Up until that ruling, banks were unwilling to deal with individual borrowers, but that has now changed.”
Judges in the Possession Courts across Ireland are now citing the case as a precedent for cases involving marital breakdown. In one such case we had a debtor, let’s call her Laura, who is separated from her husband and is currently raising her only child without any child maintenance or financial support from her estranged husband. Her husband has moved to the UK.
‘Laura’ who is working, fell into financial difficulty due to the financial strain caused by her estranged husband’s gambling addiction. Laura’s estranged husband had, unknown to her, run up significant gambling debts. As the family struggled to repay these debts, they fell behind on other household bills and expenses, which in turn meant they fell behind with their other creditors too. Ultimately the pressure of all this led to a breakdown in the marriage, and the debtor consequently could no longer afford the mortgage on the house on her own.
Laura’s estranged husband was no longer willing to take any responsibility for the mortgage they had entered jointly, and her lender was insistent they would only deal with them jointly until she got help from a PIP. The mortgage has now been written down by €174K to its current value with a realistic and affordable monthly payment. The mortgage is now in the sole name of the debtor, while the lender is free to pursue the debtor’s estranged husband for the €174k that was written off the mortgage.
Daragh goes on to explain that “that's what the PIP is there for as part of Abhaile, the free mortgage arrears support service. Our role is to help the individual, look at their options and find the right solution to get them back on track. There are solutions for everyone - no matter the situation or relationship status."
The services of PIPs like Daragh and DMAs like Michael can be accessed for free via Abhaile. Already over 10,000 people have sought help, either in person or via the MABS national helpline.
If you or somebody you know are in mortgage arrears or fear you are at risk of losing your home, you may be eligible for free face-to-face financial or legal advice under the Abhaile service. For information, click here or call the MABS dedicated helpline on 0761 07 2000