In what has been regarded as an important test case, the High Court has refused to approve a pensioner's Personal Insolvency Arrangement (PIA) which would have seen her making mortgage payments on her home until she was 98 years old.
The court heard that 69 year old Ann Fennell owes Ulster Bank some €72,500. She had wished to restructure the length of her mortgage payments to 348 months under the PIA. It would have involved her making payments until she was 98. She had entered into an insolvency arrangement following difficulties in repaying a loan to the bank.
However, Mr Justice Mark Sanfey said that Ms Fennell would not be reasonably liklely to be able to comply with the terms of the proposed PIA. Ulster Bank had opposed the application. Mr Justice Sanfey said that he was satisfied that such an arrangement was not permissible where the term of the restructured loan is likely to exceed the lifespan of the debtor. He said his judgement may provide clarity in relation to such arrangements whcih provide for an extension of a mortgage term to a point where the debtor may not be alive and whether these can be permitted by the courts.
Mr Justice Sanfey said that personal insolvency legislation would have to be amended for such an arrangement to be approved by the court. He added that the aim of restructuring a mortgage term beyond the debtor's lifetime is to ensure affordability of the repayments and to secure the continued residence of the debtor in their family home.
The case will return before the court in due course for final orders.