Borrowers will now be able to apply for a court review when a creditor rejects a personal insolvency proposal.
Minister for Justice Frances Fitzgerald signed an order on Thursday allowing a borrower to apply to the courts if a mortgage lender declines a personal insolvency arrangement (PIA).
If a court finds in favour of a borrower, it will be given the power to impose an arrangement on creditors.
Ms Fitzgerald said: “The new court review introduces an independent oversight mechanism to ensure that the right balance is struck between the interests of mortgage lenders and other creditors, and the interests of borrowers who want to work their way out of debt sustainably with a view to keeping their homes.
The new order removed the bank’s veto on PIAs, which are offered to people who cannot afford to pay their personal debts.
However, it will only affect those in arrears or in arrangements on January 1st this year.
Insolvency Service of Ireland director Lorcan O’Connor said the new order “is good news for people in mortgage difficulty, as it strengthens the likelihood of a PIA proposal being accepted”.
He said: “The current acceptance rate of these proposals is almost 80 per cent.
A key feature of the PIA is that it enables a person to get back on track financially and aims to keep them in their home where possible.
“There is now no reason for a person to put off visiting www.backontrack.ie for more information and consulting with a personal insolvency practitioner to solve their mortgage problems once and for all.”
Review cases will be heard by the specialist Circuit Court judges assigned to deal with personal insolvency cases.
