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Overturned Married couple see deal to have €250k written off their debts scrapped by judge

The couple sought the PIAs arising out of home loans of €790,000 they had acquired from the bank dating to 2006


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The High Court has overturned debt deals that would have allowed a married couple to write off around €250,000 owed to a bank.

In a detailed judgment, Mr Justice Mark Sanfey upheld EBS DAC's objections to the 2019 Circuit Court approving Personal Insolvency Arrangements (PIAs) in respect of Niall McKiernan, a garda sergeant, and his wife Karen Fitzpatrick, a secondary school head teacher.

The judge said the PIAs in this instance were premature and unfairly prejudicial to the interests of the objecting creditor.

Under the terms of the proposed PIAs, the couple, who are aged in their mid-40s and have three school-going children, would retain their Co Cavan home and would continue to make mortgage repayments on their home over the next 25 years.

They would also pay a lump sum of €40,000 and sell an investment property they had bought in Clones, Co Monaghan, valued at €30,000 by the bank.

The proposed PIAs would have led to EBS writing off €253,000 of the couple's debts, whereas under a bankruptcy scenario the write-off would increase to €290,000.

The couple sought the PIAs arising out of home loans of €790,000 they had acquired from the bank dating to 2006.

They fell into arrears in 2011, and in 2014 the loans were restructured, with €286,000 of what they owed to EBS being written off.

In 2019, their home was worth €320,000, while an active loan balance of €386,000 and a 'warehoused' amount of €97,900 remained owing to the bank in respect of their home.

The payment of 'warehoused' debt, which was agreed as part of the 2014 restructuring process, would be deferred until the end of the mortgage term in 2041, the judge noted.

The couple claimed they would be unable to pay the warehoused element of their debt to EBS when it becomes due and owing.

They claimed that debt would result in them becoming wholly insolvent and homeless.

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The judge said he noted the bank's argument that the debtors had a ready means of raising funds to discharge the warehoused amount, in that they could sell some or all of the 25 acres of land that surround their family home.

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