18 December 2014

Central Bank launches scheme for multi-debt restructuring

15:23, Post Reporter

The Central Bank of Ireland is to oversee a pilot scheme for restructuring distressed consumer debt across multiple lenders.

The scheme, in which all the main retail banks plus many credit unions are expected to take part, establishes a series of principles to be applied in debt restructuring solutions for borrowers.

For three months, participating lenders will offer the scheme to a representative sample of borrowers who are experiencing significant difficulty repaying the mortgage on the family home and who have other unsecured debt.

The aim is to achieve "sustainable and fair outcomes" without the need for the borrower to enter the full insolvency process, the Central Bank said.

"It is focused on enhancing cooperation between lenders of secured and unsecured debt in order to resolve distressed debt at an early stage."

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Results of the pilot phase will be reviewed to determine the next steps.

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Director of Credit Institutions and Insurance Supervision, Fiona Muldoon, said the decision to enter into this pilot was a constructive step by the lenders involved to help their own customers.

"We actively encourage the involvement of all lenders to ensure maximum effectiveness of this learning and information-gathering pilot stage."

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