# Do guidelines exist around keeping a house in a PIP scenario, and are they fair?



## gnf_ireland (24 Aug 2019)

The McNamara case has got me thinking over the last 2 days. In this scenario, the PIP agreed allowed them to remain in their house, valued at 550k. They will repay the mortgage on 520k at very favourable terms, and the remaining 30k shelved.

However, this is quite a large house, currently 435 square meters (according to the below report) and it also appears to have extensive grounds, although some are being sold as part of the arrangement.
https://www.independent.ie/irish-ne...had-been-planned-to-store-music-38431882.html

But it does raise the question, in a PIP arrangement, what is a reasonable house to be allowed (or expected) to remain in? The McNamara's had nearly 3m of debt written off, and yet are allowed to remain in a pretty large house, on very favourable terms. Terms which I am unable to get if I go into the bank today. In effect it is being subsidised by others, including ourselves.

I understand they have 4 children, but they are between their late teens and mid 20's. Its likely they have already moved out, or will be doing so soon.

Would it not have made a lot more sense for the PIP arrangement to downsize to a house for half the cost (and size), and have a mortgage finishing at a reasonable age, rather than their late 70's. I fully expect this to be back in the courts within the next decade !

The bigger question is - are there guidelines on the size of the house a people in a PIP arrangement can keep, or the value of the house they can keep? If not, should there be ? My view yes !


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## Brendan Burgess (25 Aug 2019)

Hi gnf

A very good question. This is what the Act says.  

*104*_.—(1)  In  formulating  a  proposal for  a  Personal  Insolvency Arrangement a personal insolvency practitioner shall, insofar as reasonably practicable, and having regard  to the matters  referred to in  subsection  (2),  formulate the  proposal on  terms  that  will  not require the debtor to

(a)  dispose of an interest  in, or
(b)   cease to occupy, all or a part of his or her principal  private  residence and the personal insolvency practitioner shall consider  any appropriate alternatives.

(2)  The matters  referred to in subsection (1) are—
(a)  the costs likely to be incurred  by the debtor by remaining in  occupation of  his  or  her  principal  private  residence (including  rent, mortgage loan repayments, insurance payments,  owners’ management company  service charges and contributions, taxes or other  charges relating  to ownership  or occupation of the  property imposed  by or under  statute, and  necessary  maintenance in respect  of the principal  private  residence),
(b)   the  debtor’s income  and  other  financial  circumstances as disclosed  in the Prescribed Financial  Statement,
(c)  the ability of other  persons  residing with the debtor in the principal   private   residence  to  contribute  to  the   costs referred to in subsection (2), and
(d)   the reasonable living accommodation needs  of the debtor and  his  or  her  dependants and  having  regard  to  those needs  the  cost  of alternative accommodation (including the    costs   which   would   necessarily    be   incurred    in obtaining such accommodation)._

I don't know if the Insolvency Service has given further guidelines on this.

But it's clear that the Act was not designed so that an elderly couple could continue to occupy a 5,000 sq ft house. 

What would the cost of maintenance of this house be over the next 19 years? 

Brendan


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