Life after debt: a critical analysis of the engagement/non-engagement of debtors with the insolvency service of Ireland

The state established the Insolvency Service of Ireland (ISI) in 2013 to respond to an arrears crisis involving almost 150,000 mortgages. The ISI’s strategy has focused upon teaching financial skills to insolvent debtors over a period of supervision lasting up to 6 years, after which some debt is written off. After five years of operation, the ISI has only approved 4,672 arrangements, despite the continuation of the mortgage arrears crisis (Insolvency Service of Ireland 2018). This thesis critically investigates this low uptake from a qualitative perspective, with a focus on the ISI’s applications process. 22 semi-structured interviews were conducted, 18 with debtors who wished to join a debt arrangement, and 4 with Personal Insolvency Practitioners (PIP’s), experts who administer the ISI’s arrangements. By interviewing these participants, my thesis accesses the beliefs, meanings, and contexts of these two groups, who are compared and contrasted throughout. My findings concentrate on the problematic nature of the applications process as a whole, disagreeing with the ISI’s own explanation that the dearth of applicants is due to a lack of awareness of the service (Insolvency Service of Ireland 2014a). I explore this application process in a step-by-step manner aided by governmentality theory, guiding the reader through the process as though they were applying for debt relief. Throughout I identify problems with this process as they emerge, such as class disgust, sexism and an interview between the debtor and the PIP that has the character of a confession. PIP’s emphasise the personal responsibility of debtors, and are opposed to debtors easily joining debt programmes, and I critically reflect on the implications of these personal responsibility discourses. This tends to result in feelings of embarrassment, shame and humiliation – leading my indebted participants to construct alternative means of coping in the absence of the ISI. Most common among these are (in)voluntary social exclusion, whereby debtors withdraw from social life, as they are ashamed that their friends and family will see the consequences of their financial situation, in addition to harsh budgeting and / or using charities. Regardless, my indebted participants are adamant that they cannot go through the humiliating process of applying again, and actively discourage other debtors from engaging with the service. I conclude my thesis by reflecting on the original problem that the ISI was supposed to solve: the mortgage arrears crisis. There remain tens of thousands of mortgage holders in arrears, whose mortgages are now steadily being sold to vulture funds. While mass repossessions remain politically untenable, it is now likely that the ISI’s ‘soft’ approach to debt relief will not work and the ‘hard’ approach of the funds will finally resolve the legacy debts of the economic boom and the crisis which followed it.