More than €3m in debts owed by a former businesswoman are to be written off under a personal insolvency arrangement approved by the High Court.

The woman, who now works as a receptionist, will pay creditors just €1,612 to have the debts largely written off.

The arrangement will also involve substantial mortgage restructuring, with a reduced interest rate put in place for four years.

Distressed debt fund Cabot Financial Limited will receive €1,432 of the €2.6m that was owed by Josephine Cooney (65), of Mostrim Road, Ballymahon, Co Longford.

An additional payment of €179 will have to be made to Start Mortgages, which was owed €507,933.

Although the sums being paid are a fraction of what was owed, they are still double what creditors would have received had Ms Cooney gone bankrupt, according to a document put before the court.

The arrangement was approved by Mr Justice Denis McDonald on Monday.

It was put together by personal insolvency practitioner Eugene O’Brien and presented to the court by barrister Keith Farry.

It is the latest in a series of cases where significant sums have been written off under such arrangements, which were introduced in 2012 for people who cannot afford to pay their personal debts.

Under the four-year arrangement, the woman’s mortgage is being written down from €507,000 to €175,000, which is the current market value of the property.

The interest rate on the mortgage has been reduced to 3pc and the mortgage period extended to 13 years.

The mortgage will be serviced via capital and interest repayments of €667 during the term of the arrangement, with the first year on reduced monthly payments of €449.

Some €78,500 will be cleared after three years from a lump sum contained within a pension owned by the debtor’s husband. After the four-year arrangement expires, monthly repayments will increase to €879 until the end of the mortgage period or until the mortgage balance is cleared in full.

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