# One way of dealing with a Judgment Mortage on a family home



## Jim Stafford (5 Feb 2018)

If you have an unpaid judgement mortgage ('JM') on your family home that pre-dates 1 January 2015 then, depending on your financial circumstances, you may be able to use that JM to prove eligibility for Section 115A of the Personal Insolvency Act 2012, and thereby achieve a significant write off of your debts.

Section 115A is one of the most complex insolvency provisions ever written: It runs to more than 4 pages. A critical sub-section is 18, which provides:

(18)_ In this section—_

_ ‘relevant debt’ means a debt—_

_ (a) the payment for which is secured by security in or over the debtor’s principal private residence, and_

_ (b) in respect of which—_

_ (i) the debtor, on 1 January 2015, was in arrears with his or her payments, or_

_ (ii) the debtor, having been, before 1 January 2015, in arrears with his or her payments, has entered into an alternative repayment arrangement with the secured creditor concerned.”_

It is clear from the Section that an unpaid judgement mortgage on a family home that pre-dates 1 January 2015 is a 'Relevant Debt'. Having a Relevant Debt means that a client can use a Court review to "force through" a Personal Insolvency Arrangement that some creditors voted against.

*Why was Section 115A introduced into the legislation?*

After the passing of the 2012 Personal Insolvency Act it was felt that lenders would vote in favour of "fair" PIAs that allowed families to stay in their family homes. However, the experience was that lenders exercised their "Veto" and voted against many PIAs. Accordingly, in order to balance up the scales, the Government introduced Section 115A which gave the Courts an opportunity to "Review" any "No" votes by banks, and, provided that no creditors were "_unfairly prejudiced", _enforce PIAs.

A particular strength of Section 115A is that the debtor may only need "one class" of creditor to vote in favour of the PIA in order for it to be successful.

*Why would a Judgment Mortgage creditor vote in favour of a PIA?*

Many creditors now realise that a Judgment Mortgage on a family home is not a very useful way to collect a debt. For a full discussion of the reasons why please read the link below:

http://www.frielstafford.ie/judgment-mortgages-family-homes-little-value/

Accordingly, some JM creditors may vote in favour of a PIA, as the PIA may write off other substantial creditors thereby enabling the debtor to possibly re-finance the entire JM or, alternatively to start making payments on it.

Even if a JM creditor voted against a PIA, the PIA may still be voted through provided another class of creditors voted in favour.

As Section 115A is a new piece of legislation, there is plenty of evolving case law on it.

*Are you facing  the registration of a Judgment Mortgage on your family home?*

If you are about to have a JM registered on your family home, then you should immediately consult a Personal Insolvency Practitioner to consider your options. As the case study discussed in the link below shows, the pending JM might be a blessing in disguise for you.

[broken link removed]

Jim Stafford


----------

