August 24th, 2013 (16.16)
Bankruptcy in Ireland – ‘Property high-fliers declared bankrupt over debt of e71 million’ Irish Independent. The Judge says that the Centre of Main Interest (COMI) is Ireland irrespective of investments overseas
by Michelle Clarke (Comyn)
5 years into this economic recession and at last the legal profession may be finally drawing a definitive line in the sand, in other words, a precedent, that will stop the “strategic defaulters” playing games with the banks and debtors, to whom they owe money and assets, and make them face up to their responsibilities in Ireland, rather than shirking those responsibilities to meet their debts, in their own country, where they have lived so lavishly during the ‘good times’. These Mr and Mrs Bankrupts like the Mr and Mrs Tax Exiles need to step up to the plate. Honour is called for not cowardice. Up to now in the absence of the Insolvency legislation, there may have been some justification but not now.
A solicitor and a psychiatrist, are declared bankrupt over a debt of 71 m euros. They sought to say that their centre of main interest (COMI) was not in Ireland, when evidence of their vast demesne on the Vico Road, Killiney, revealed quite the opposite. The Bank of Ireland applied to have them declared bankrupt; the O’Donnells had failed to satisfy a judgment against them for £71.57 million in loans from the Bank of Ireland.
Mr Justice Peter Charleton – a reserved judgment, quite clearly outlined for all to understand that:-
It was impossible not to find that the O’Donnells’ main centre of interest was not in Ireland”. He further stated:- ‘there could be no issue but that the couple were bankrupt. They had engaged in the business of property investment and held directorships in a number of Irish companies registered for this purpose. To finance their investments, they had borrowed huge sums…..
The message for the citizens of Ireland is now clear. The “Troika” tell the Central Bank who tells the bankers to force out the mortgage and buy-to-let ‘delinquents’ and finally start reclaiming ownership of our country and its economic base.
Like so many others, in March 2012, the O’Donnells sought to be adjudicated bankrupt in the UK courts claiming that since they had lived there since late 2011 and had extensive property interests in the UK they became eligible because they had relocated and set up a centre of principal residence there otherwise known as “COMI” in the UK. Their ‘expertise’ saw the opportunities of the more liberal bankruptcy regime in the UK. Yesterday Mr Justice Charleton of the High Court declared the law; they are bankrupt and in Ireland and not the UK.
Let’s start the debate about how the people in Ireland regard “Strategic Defaulters”?
August 25th, 2013 (16.48)
Central Bank welcomes Mr Roux, his expertise is regulation, so what lies ahead for strategic defaulters?
Karl Deeter (Irish Mortgage Brokers & Advisors) recently wrote an article concerning a white-collar “professional” and a “company director”.
This person had acquired 6 investment properties, a family home and “She” ‘has chosen not to pay the bank’. She states that she chose to default because the banks insisted she pay interest and capital repayments on the 6 investment properties. Her action irrespective of her legal duty was to choose to default. Asked about ‘Guilt’, and the answer was “none”; why because the blame game applies and the banks are at fault for their lack of “morality”. We all know that if you buy an investment property it differs significantly from a mortgage deal but yet this person buys six properties and forfeits the responsibility that goes with buying investment properties for the purpose of being a ‘landlord’. This raises the issue of “Moral Hazard” and highlights where the expertise will be needed to restructure debts with equity being core to the equation.
This woman goes further and when asked if she will go for a personal insolvency option, she elaborates that she is seeking an arrangement but is not interested in the personal insolvency using words ‘like its a pain…not wanting to kick the can down the road’. She blatantly comments that
‘we make a deal, or they go for me or I go bang on my own. I’ll still be be less than 50 when I am back out, so I can make some kind of come back, I’m hoping….they also know I have time on my side, it isn’t like I’m 50, so the process of dragging it out is their solution, not mine. The loans were priced for risk, that risk is at least part of theirs, not all mine’.
How will the banks sort out the wood from the chaff.
For those over 65, there is no regard for their commitment to paying mortgage interests rates of 14 to 20% over the decades. This woman is a product of the reckless mentality that has created the crisis and she has learned nothing. What makes it so much worse is that we are talking about a white collar professional who is a company director.
How do we deal with the crisis?
It is stated that at least 20,000 of our debtors have left Irish shores to get the microwave bankruptcy way-out. I ask who are these people and who really should take the blame? How to we rein in the ‘mortgage delinquents’ and those who are ‘buy-to-let delinquents’ who blame the banks for all their woes due in part to their reckless abandonment. The Banks are accountable for their Los Vegas Casino practices but borrowers also must take some responsibility, especially people who act as company directors or who are in the professions.
There is real moral hazard to be taken into account. Who picks up the tab? We need to understand that it is the Irish taxpayers and what exists now is an institutional enslavement which will be handed down to future generations and some economists estimate an 80 year plus debt sentence.
Beware of how the banks will react. One bank has already hired disgraced sacked rogue ex Garda John White to spy on the defaulters. This shows how low the banks have stooped to regain their losses. Read Greg Harkin’s article in the Independent about White and his investigation operation.
Mr Roux joins the Central Bank next month. Mr Matthew Elderfield steps down. Change is underway.
Personal Insolvency becomes an option in September 2013.
Moral Hazard – does this have an argument? Surely people who bought their houses and paid off their mortgages have a voice too.
by Michelle Clarke
September 7th, 2013 (16:20)
Insolvency Service of Ireland (ISI) starts taking applications next week
by Michelle Clarke
Should we start by giving the Insolvency Service of Ireland an easier to remember name like “ISI”?
Chris Lehane is the State appointed official in charge of “ISI”. This means Mr Lehane is the ‘court- appointed official whose role it is to assist bankrupts in their obligations to their creditors’. We are told that inquiries so far are in excess of 4,500. ISI’s Chief Executive Lorcan O’Connor expects many Irish people avail of the services provided by ISI.
Drip feed has substantially slowed the process of providing people with the workable option of “ISI”. Indications about the guidelines required for living standards of potential bankrupts have caused much discourse and no doubt persuaded people to follow the options taken by high profile developer Bernard McNamara and this week’s main man in the media openly telling people what it is like to be an exile pending bankruptcy (now declared) in another jurisdiction, Mr Ivan Yates.
“ISI” will reveal all this week.
For consideration: Aine McMahon in today’s Irish Times highlights something that should interest people in debt but who hold a joint tenancy.
The person made bankrupt and if married, then the joint tenancy is split, half the house becomes vested in the official assignee. If there is equity in the home, the assignee will ask the spouse for 50% of same so that the spouse can remain in the home. If this is not possible, the official assignee can go to court for the house to be sold and this would apply especially in cases where the spouse holds a large amount of equity but they cannot afford it. If negative equity applies, it may be more difficult for the official assignee to seek compensation for the equity because there is none. There is a provision however that after an extensive period in negative equity, the official assignee may be able to ‘accept a sum of e5,000 plus legal costs to sell half the house to the spouse but that would be the minimum amount he would accept’.
Does the ‘Golden Rule’ beckon? The banks are about to re-structure mortgages/loans and for people who are heavily indebted and overburdened with negative equity and other debts, bankruptcy 3-5 yrs conformity to demands of “ISI’s” official assisgnee may be the only way forward.
September 21st, 2013 (16:42)
In debt: 90 days in arrears + and now smothered with denial
Yes, given the omerta about “ISI” the “Golden Rule” is worth heeding.
Either way how many people now five years strangled by interest especially the reported 10%+ people with mortgages that are greater than 90 days+ in arrears and who have lapsed into denial to the degree that any mention of money, interest, debt, property values, is a pure haze driven by the fear the markets have imposed them. Those people whose only vice was to aim to be home owners or to opt out of employment pension schemes and choose the business buy-to-let landlord option of properties receiving an acceptable market return and capital appreciation that would eventually buy the pension annuity for old age. How were these people expected to realise that the objective of the governmental policy was to entice them with tax breaks so as to curb the social obligation of the State to provide housing for those in need. There was a shift in the vision of the FF party but we must also realise that there was a major shortfall of houses built for the social housing requirements that now tells us that there are 98,000 families in need of social housing. Add to this those to be forced and evicted from their homes as the Banks foreclose.
What do you really think about NAMA http://www.nama.ie, the largest owner of property that has to date provided a meager 200-400 houses for social housing requirements while figures indicate it has 10,000, if not many more, and add to this the ghost estates http://www.slate.com/blogs/behold/2014/08/10/val_rie_anex…, that they are strategically holding. Their auspices is not social distribution of homes for those in need; it is the making of profits and their continuity of an entity mass holder of properties going forward. Strategy and markets which have no memories are about property bubbles and people honing in on good value properties and buying them at knockdown prices. One man’s plight being another’s advantage.
For those wondering what to do about debt and what it really is about. There is an excellent article by Cathal Spelman who runs ‘Fair Money Ireland Campaign; firstname.lastname@example.org published in the August September Issue 24 Village.
Now is the time to wake up out of the denial and to start tackling the realities about debt. Listen to the stories of those who experienced negative equity in the 1990’s in the UK and the costs social, psychological and economic. These were harsh times but the banks were the winners and the costs placed firmly on the shoulders of people who had mortgages and who saw interest rates move over a 6 month period from 7% to 14% culminating in negative equity and left paying off interest.
The article – the title needs to rivet the people who are the casualties of this post Celtic Tiger crisis. ‘Interest not debt is the problem’ and this is the truth and this is what is lost when you are dug deep into the hole of facing that option of “ISI” or “Golden Rule” or even plain bankrupt.
Read the article and learn. Two points worth deep consideration:
‘If you take out a mortgage of say e200,000 over thirty years at 5%, you will pay back e500,000 over the lifetime of the loan. That means you will pay e300,000 of interest on the 200,000e loan’
‘The payment of interest to banks constitutes the greatest transfer of wealth and power in the history of mankind. The poorer you are, the more interest you are paying. The poor are borrowers; the super wealthy are lenders. That is the nub of all the talk of the 1%. In fact the bottom 80% are paying the top 10% a phenomenal rate, through interest payments.
Add to this that the banks are paying virtually nothing to people who have money on deposit at present and out there lurks the possibility of a Troika led swoop on deposits taking a cut of possibly 35% on those who have deposits in excess of 100,000.
Boggling numbers can cause people to opt out; but it is the privileged who step in so I really suggest reading this article and providing better and more informed solutions than the banks presently offer or for that matter “ISI”
September 23rd, 2013 (16.43)
You forfeit it all and become an economic Zombie”
Irish Independent 19th September 2013
by Michelle Clarke (Forster)
The Phoenix rising from the ashes is the message endorsed by the recent appointment of Mr Ivan Yates to the position of ‘a regular columnist’ with the Irish Independent. What does this say about “ISI”? The message is clear within certain media circles and that is get up off your knees as effectively and efficiently as you possibly can and keep on cycling.
Media has become Mr Yates latest module and his gambit will be that his personal experience gives him the expertise to promote Bankruptcy Swansea style. This is the opportunity now for the people who are besieged with letters from the banks, the credit card companies, the credit unions, to take stock of what options will work in their best interest. Already these people have taken the five year hit of the recession and are seriously in negative equity and in need of ‘salvation’. Moral hazard considerations by now have no bearing because desperation has set in and there needs to be an end to the horrors of being indebted.
What can we learn from Mr Yates? His career is ongoing. He has been a TD, a Cabinet Minister, a bookmaker, a bankrupt, a broadcaster and an author. The resonance is a bit like Lord Jeffrey Archer but the difference is Mr Yates has no experience of being imprisoned albeit he had to read aloud the “Perjury Act 1926” in the presence of the Bankruptcy Officials.
Donal O’Donovan’s interview with Ivan Yates is an essential for all those who receive letters from the Banks in the coming months. It is decision time now and Insolvency is an option that merits serious consideration. Ivan Yates returns to Newstalk, to the Independent and no doubt to Vincent Browne’s TV3 programme and he will be telling people how he survived and what it is like to be earning money minus debts once more without having the death knell of debt for too many years going forward.
They are called the ‘bankruptcy tourists’.
Mr Yates became a member of this category when his bookmaking company went out of business in 2013. Like so many more, he had provided the bank with personal guarantees for the loans used in the business. The banks loans were secured loans and therefore the assets are forfeited. Mr Yates put the company into liquidation in March last year.
Is this way forward? America, the UK, say yes. The question for the people in Ireland is what is the best option now? Is it “ISI” or is it to take the same route as Mr Yates who now is back in gainful employment and a voice to say ‘failure is but a postponed success’.
by Michelle Clarke (Comyn)
5 years on and our Banks, mostly State owned, are befuddled, muddled and a source of havoc for people who are in negative equity and worse again massively in debt.
As the years, months, weeks go by, the territory is becoming harrowing for those who have serious debts. It is looking increasingly so that the people like McFeely, McNamara and Yates have taken the correct route. They had the vision and they now have the benefit of knowing they can start again, free of all their debts. But what about the minions. Consider your mortgage. How much interest has accrued over the last five years based on the loan that is most likely in negative equity discount. Add another 5 years and you most probably will find out that 10 years+ into a mortgage sees the bank repaid the capital cost. Okay we all know that mortgages are subject to lower rates of interest than personal loans and it is linked to security but the problem for people in property in Ireland is that value of the property plunged and people basically found themselves with interest being paid on say e200,000 but if they were to sell their house now they would only receive e100,000 plus all the costs. More than likely they will have forfeited expenses, interest to date, costs, and the equity they invested in the first instance.
People who are facing eviction need to start looking at options urgently. The banks have dragged their heals and ultimately it is the people who will pay the costs.
Again as posted previously check out all sources of advice and information. Sunday’s newspapers provide a source of opinion and this man is worth connecting with:-
James Fitzsimons ‘The main solution being offered to distressed borrowers involves repossession’. This is an independent financial adviser specialising in tax and financial planning
We know the order of business: The Troika tells the Central Bank who tells the Banks but the message got lost in translation over the last five years. The sad fact is that it appears that ‘Repossession’ is their best solution to the crisis. The Central Bank wants a what’s known as a ‘Standard Financial Statement’ detailing the lenders best solution for customers. According to the figures up to the end of June, more than 60% of solutions involved giving up the property. More significantly is the fact that 57% of these relate to private dwelling homes and 74% buy-to-lets.
“If the banks want the nuclear option, let them take the fallout. That means sharing the negative equity and loss in the value that owners have sustained. If that’s unfair on customers who kept their payments up to date, go back to the drawing board and find sustainable solutions for those who can’t. Had they not been so slow to arrest growth in arrears, the majority would be back on track by now. Not only have lenders not made every effort to find the alternatives, in most cases, they made none at all”.
To remind people negative equity has occurred in the past, here in Ireland and over in the UK and elsewhere. They say markets have no memories but if one considers the lethargy of Central bank and the ordinary banks to make equitable decisions about the present mortgage book, this is a major denial of the truth. The fact is negative equity in the UK in the 1990’s impacted harshly on many emigrant Irish who moved away from recessionary Ireland of the 1980’s, The Banks can bully but the people have options and if some of those who rackrented our markets through development can escape the rigours of what is proposed now by the Troika and Central Bank in Ireland.
To those in debt, read this article and think about what is the best way to deal with your negative equity debt; ask is the timing right? We are five years into the recession; how many years will it take for the market supply or non supply of housing to increase the value of properties? Private equity groups especially from the US are hovering – listen out for Blackstone, Kennedy Wilson and others. 10,000 to 14,000 properties were ring-fenced by NAMA and rented out in social housing and private rental. 2020 is D-Day for NAMA when all properties should be sold. These properties are to be released for sale in the coming months so watch this space and watch markets change to landlord led private equity ownership.
by Michelle Clarke
by Michelle Clarke (Comyn)
Is it a bubble that certain prices of houses are rising or is it shortage of supply? Then perhaps it is the obvious, the banks have not been interactive with those in arrears. If this is so, the supply parameters are about to change.
The Irish Mail on Sunday reports that ‘Receivers sell 10 homes for as little as £30,000 amid protest’. Would you buy one of these houses that were reduced from £235,000 and £240,000 to £30,000 and £64,950? Would you ask the question about who took the negative equity hit and what hardship goes with it? What about the moral hazard factor and the other people who can repay the mortgages at £230,000+? These houses were sold. They were semi-detached at Knock Carrick estate in Annyalla, Co. Monaghan, and were sold by Gunne auctioneers on behalf of the receivers Farrell Grant Sparks, we know that the latter two will have financially gained from the transactions.
This is the beginning and maybe the bottom of the market in the way that debt is crystalised but it is a stark reminder to people that we may only now be witnessing the hardship of those who were caught in the negative equity trap of the housing collapse. How does a person release themselves, their families from the debt that they will never be able to repay? Do they follow the example of some of the developers who gambled in billions and then moved their centre of main interest (COMI) and alleviated themselves of such pressures?
Yates, McNamara and others are nearly home and free. What can we learn from their choices?
What we do know is that in a written judgment published only last week Stephen Baister, the chief bankruptcy registrar in the High Court in London ‘said the newspaper’s application for McNamara’s file could not be dismissed as “simply a fishing expedition” or on the grounds that it was “prurient”. He went on to say that “I think there is a genuine and legitimate interest on the part of the press in this significant bankruptcy and its surrounding circumstances”.
Hailed as a victory for “open justice” by the UK’s Press Gazette, it enables people to further investigate through freedom of information and access to the bankruptcy papers. McNamara’s legal team argued that the banker/client confidentiality meant that paperwork relating to his bankruptcy would not be available to people seeking information.
This is an important case. “Bankruptcy tourists” need to be aware of it. Baister further pointed out “that the “Bankruptcy Tourism question” remains very much alive and is a legitimate matter of public interest in this country, Ireland, in Germany and in Europe generally. The number of cases this court hears attests that”.
“ISI” and our banks need to start dealing with the live issue of mortgages and writing down debts.
by Michelle Clarke
Priory Hall: at last there is some hope for the distressed owners of apartments. A new mortgage for a new home will be granted by the banks and the building will be revamped in accordance with necessary building regulations under the direction of the Department of Environment.
Last week, a couple received a phone call that told/ordered them to sell their home. It is reported that the EBS told them ‘they had reached the end of the road, that no other option remained but to sell their home, the home that the couple had built on a site provided at a family farm.
The location is Waterford, the couple in their thirties, took out a mortgage for €210,000 in 2005 ‘to build a home on land adjoining his parents’ farm (please take account of the social value implications here). The repayment (tracker) hovered around €900 per month.
Two job losses later and their request to the EBS to be placed on an interest only mortgage arrangement which meant payments of 400e was their reality.
The EBS asked them for social welfare slips and bank statements which were duly submitted.
Guess what: They received the phone call and told Sell.
What about their equity? Is there a value based on the site?
Keep asking questions as to how the banks are really treated their customers
The Central Bank and the name that comes to mind is Patrick Honohan. Yesterday’s Sunday Business Post contained a concise piece of reporting by Emma Kennedy about a paper being delivered by Mr Edmund Honohan, The Master of the High Court.
Evictions occurred in Ballina last week, and now the writing is on the wall for so many people. What about the Allsop http://www.allsopireland.ie auction last week? The truth is that there is a mire being created and ordinary people are caught in the barbed wire of who says you forfeit your home to the banks.
Interestingly, it is the sibling of Patrick Honohan, Governor, Central Bank, who is the Master of the High Court, and it is Mr Edmund Honahan, who has raised questions about the Central Banks ‘ability to impose sanctions on lenders who fail to meet the strict targets on sustainable solutions for mortgage arrears’. Mr Edmund Honohan clearly stated that he could not see “any legal basis for the Minister of Finance’s notion that the Central Bank can sanction individual banks that are not offering or not accepting sustainable resolution targets”.
What does this mean? The use of the word ‘notion’ immediately conveys that there is no legal basis to the claim that the Central Bank has certain powers to sanction banks who fail to meet ‘targets’ ie to arrive at structured deal. What does this mean for the many people who are daily waiting the phone call or the post that says the order is sell your home?
Edmund Honohan (Master of the High Court) goes on to highlight the problems that have arisen in the Governments attempts to date to tackle the mortgage debt crisis – he refers to both the Keane Report and the proposed Insolvency legislation. 5 years and more now since the banking crisis and yet there are distressed borrowers in limbo with threats subsuming their abilities to contribute to our society. These are home owners in limbo and stand apart from those who are strategic defaulters or the tourist bankrupts. E Honohan states clearly and people need to be alert to this legal acumen that
“Personal insolvency practitioners (PIPs) now report an alarming dysfunctionality with the legislation. It is not just that the outcome in each case is entirely a matter of choice for the princiapl lender, it is that the cohort of borrowers for whom it appears to have any resolution potential at all is quite small”.
What is the position of the Court? As Honohan states, is the court to be the “regulator of last resort”. If this is so, then definition is required. ‘If so, we need to widely publicise exactly how and when the court may intervene on the borrower’s side when a lender seeks to foreclose’.
Mr Edmund Honohan presented this paper at a commercial law conference at Griffith College and for people facing the onslaught of the banks at the behest of the Central Bank/Troika foreclosure without mercy demands, it might be worth accessing the paper.
by Michelle Clarke
What is the position of the Court?
Approaching year six after the Celtic Tiger collapse, the real hardship is beginning to bite deep as the banks are pressured to meet targets. Strategic Defaulters, Mortgage Delinquents, the Tourist Bankrupts form one category on the spectrum of debt to the banks but we must not lose sight of the human factor. We hear about moral hazard but let this apply to the former but not to the genuine casualties of the housing fiasco.
Conor Feehan writes in today’s Independent about a woman’s body being found in a flat due to be repossessed. Longboat Quay off Sir John Rogerson’s Quay reveals yet another tragedy and loss of life that is part of the quagmire of distress imposed on people who had but one objective, and that was to own their own home, by way of a mortgage, funded by the Banks. These are the people who do not deserve the sentence imposed upon them of a negative equity apartment/house/home that is now worth half it’s value but is mortgaged for double.
The wound of negative equity is festering with no semblance of honest concern. Anomie is about suicide and there is a slow creeping anomie taking hold of our society. We need to embrace the wound and tackle the problem with practicalities. The truth is that sometimes it is not possible to repay the debt. The only way is to write-down a proportion of same. The banks must be forced to do so; but firstly it must be emphasised to the Troika that the ECB must act by making concessions of write-downs in bank debt to their ‘star pupil’ whose deficit positions them third place in Europe.
Wounded and in pain but it is time to say enough. Spare a thought for this woman who had a dream.
‘The sheriff’s team, backed up by Gardai, arrived at the Longboat Quay apartment off Sir John Rogerson’s Quay in Dublin at noon yesterday. They made the grim discovery inside the apartment they had been sent to reclaim. It is understood the owner of the apartment had made an agreement with the sheriff’s office to vacate the fourth floor property, and that there had been communications between both parties last Friday.
What the Sheriff found was a body, a human being who said goodbye. When does the pain stop? One must ask the question if the life insurance pays back the bank and at what value? We are all focused on cost but human value has become an irrelevance. There must be an equitable and fairer way for the banks to negotiate with people to remain in their homes. They can restructure debt over time. They can take a write-down. Short sighted is not acceptable.
November 18th, 2013 (16:25)
by Michelle Clarke
There are many people now living in fear of the letter that states they must leave their home and given the date and time that the sheriff will arrive.
What are the options? Will it be the Insolvency Service of Ireland (“ISI”) option or is it the option taken by some of the developers who led Ireland to this economic crisis but who have the expertise and advice readily available to them to take the UK or the US tourist bankruptcy route.
Not all people have the opportunities to shift their centre of main interest (COMI) to the UK or the US. What will ISI do for them? How will the banks deal with its customers who are in arrears and who possibly will never be able to pay their debts?
There may be some hope. Allied Irish Banks (the peoples’ bank in that it is owned now by the State) have adopted or so it appears, a sensible approach and have provided a new service starting today to assist customers of their bank to find long-term solutions to their financial problems. 300 have already made contact.
The Irish Mortgage Holders’ Organisation (IMHO) and AIB Group hopes to help 1,000 customers find solutions to tackling their arrears in a six month pilot project.
Those in difficulty will be provided by the IMHO with a designated contact person, who will help complete a standard financial statement (SFS) which is key to finding a suitable solution. The help will be provided over the phone, online or in person.
Is this pure tokenism? 1,000 people is so few when we all know people who are casualties and who live daily waiting for the banks to tell them get out of their homes! These are not the elites who are being forced out of Shrewsbury Road with provision for £3,500 per month to find them alternative accommodation in Dublin 4. These people have to deal with the real fear of trying to negotiate themselves onto the housing list of the local council or attempting to find accommodating in the rental market.
Too few solutions; too much hardship.
We know that many people are falling victims especially when we hear arguments being put forward that Gardai, soldiers and prison officers, because of their vulnerability to being bribed, may be excluded from having their names put on a public register if they succeed in getting a state-approved debt deal. According to the campaigner David Hall as many as one officer each day is becoming insolvent, and others are actually losing their homes through bankruptcy.
People who can get their bank or other creditors to allow them do a debt settlement arrangement will be listed on a website of the Insolvency Service. There are some 40,000 members of the three services…..and in Mr Hall’s opinion many of these would need to seek debt deals from their banks
AIB and its pilot project with IMHO for 1,000 over six months pales into insignificance. The crisis is upon us and tokenism is but a gesture to distract the attention from the realities.
AIB, we must not forget, in this pilot scheme of 1,000, if offering free advice to the customers of not alone AIB, but EBS and Haven ‘who are in mortgage arrears but have yet to approach their lender to seek a deal’.
For the fat cats, those developers who not alone bankrupted our country, their workers, their companies whose basic safety net of contacts remained intact and who eagerly moved themselves to an address in London, paying rent two years in advance, attending an odd soccer match, making sure to get their hair done locally – these are the people who have already or are just about past the post and are free of all their debts. The debt is but a blip and they are back in business…all we can hope is that they have gained some wisdom from the experience of being a Tourist Bankrupt.
But what happens to the ordinary family here in Ireland or for that matter those who decided to opt of marriage number one because marriage two meant a younger wife, more children and a bigger and better life-style. These are part of the people who have for over five years now struggled with debt like a noose around their neck. How many of these people are beyond work now because of ill-health from undue pressures?
Today we are told that the legislation is now being put in place and acted upon.
Protective certificates will issue from the courts to allow deals to be ‘formalised between the banks, the PIP’s (personal insolvency practitioners) at Grant Thornton and the new Insolvency Service’.
What a relief? or maybe not? How many people will opt for these ‘Debt Deals’?.
Estimates say 15,000 but so many more exist in the mire of negative equity and debt; so let’s not forget about them? 5 out of the 20 are said to have given up their homes, their buy-to-lets so this begs the question what happens to these properties? Will the banks hold them as stock in trade until the bubbles in the property market create new markets for the banks to sell them at a profit or substantially reduce the debt write-off granted?. Is this the banks way, 5 years into the recession to manipulate their balance sheets?
The Irish Independent reports the good news for some today; but we also must recognise that good news for some is moral hazard for others.
£233,000 is to be written off the debt mountain accrued by a Dublin Civil Servant and his wife, a nurse. We must note that both of these are representative of the public sector; have permanent jobs; have pensions and protection by employment rights. Therefore they are in the privilege category. They bought a house and took out a loan for e400,000 during the Celtic Tiger days. Then came negative equity, pressure and regrets. This couple have struck a deal with their banks.
……..their banks will see them voluntarily surrendering their family home and their two buy-to-let properties. But their creditors have agreed to the huge 233,000 debt write-off if they stick to a six year Personal Insolvency Agreement. 6 years represents what exactly we do not really know. What if either party inherits a sum of money; or a promotion and a “top-up”, life insurance if a party dies…. or for that matter the lotto. If any of these factors apply, the incentive is greater for the ‘debt-deal’ to be put in place. The gamble is good for the banks, the PIPS….
However, we need to note that not only did these two public sector workers incur losses through negative equity in their home and in their two buy-to-let properties….they also owed thousands of euros in bank loans, credit cards bills and credit union borrowings. We need to note again that this couple both have employment in the public sector and in no way represent a family dogged by consistent unemployment and massively in debt. What about the people who are both out of work with no realistic opportunities? Who will pledge their case with the banks?
Warnings attached to this personal insolvency stated that the Insolvency Service would be applying rigorous restrictions on lifestyle termed “reasonable living expenses”. However, this public sector employed couple are allowed as much as e4,809 per month. This surely is a departure from the guidelines. Initially, it was said that the “reasonable living expenses” guidelines issued by the Insolvency Service regarded health insurance as a luxury, and stressed that a case would to be made for a second car.
However, whoever represents your case, as in the situation of divorce, is the determinant of the best negotiated deal. You need the car; you need the health insurance; you need whatever – it can be negotiated into your package.
T’s (citizen journalism contributor) article on newswire crosses over into this. The Banks are in the business of making money; AIB today reports it will be returning to profit next year. What can we learn is the question?
Max Keiser on the “financial terrorism” of Royal Bank of Scotland
The headlines have recently reported that the Royal Bank of Scotland owners of Ulster Bank in Ireland carried out widespread fraud and engaged in forcing customers who were repaying their debt and otherwise healthy, into going out of business and this allowed the bank to pick up their assets namely their properties at a fraction of the true costs. They carried out this financial terrorism mostly against small firms who were too small to defend themselves.
December 4th, 2013 (16:36)
To those who are over indebted consumers, especially those in mortgage arrears.
Justice Minister Shatter has signed the order (part of the Personal Insolvency Act) that reduces the bankruptcy term from 12 years to 3 years.
Will this impact on our ‘bankruptcy tourists’ who have taken the option to move to another jurisdiction eg UK to avail of more lenient bankruptcy rules. We know the names too well of some like McFeely, McNamara, Ivan Yates…….
We know only 44 people in Ireland were made bankrupt last year. The hope with the new legislation is that 5,000 people will either declare themselves or be forced into bankruptcy next year. Higher numbers of bankrupts are expected based on the reduced time frame and lower costs, alleviating families from hardship imposed by unrelenting debt.
This is still an arduous and time consuming process but it provides options for people entangled with debts they can never envisage repaying.
Recommendations are to seek help from people like New Beginnings, Free Legal Advice Centres, MABS, and other bodies or groups dedicated to helping people deal with their financial crisis. The 3 year process means that your name will appear on a register of “Discharged Bankrupts” forever so please bear in mind the implications. This may not apply to the tourist bankrupts.
Mr Paul Joyce, a barrister, a senior policy analyst at the Free Legal Advice Centres cautions as follows:–
“Bankruptcy will still be a painful, messy affair,”…
‘The cost of being declared bankrupt has been halved from a total of 1400 euros. This includes 650 euros fees for the official assignee, 100 euros stamp duty, but there is no longer a requirement to publish a notice in a newspaper, saving around 70 euros. Solicitors fees may cost in the region of 2,000 euros to 6,000 euros but there are bodies who will support people and for free eg MABS and others’.
This is a solution for some only but check it out on the http://www.isi.gov.ie
by Michelle Clarke
The title of this topic misleading.
Its about bankruptcy, the choice to become a bankrupt in Ireland or the UK?
Irish Independent April 14th 2014 tells us that the bankruptcies in Ireland are set to soar. 6 years of ambivalence and now the categories of “Strategic Defaulters”, “Mortgage Delinquents” and in particular those in the “buy to let market” face the wrath of the Banks and the private equity firms who are now owners of debts and decisions to act rests with them.
The time is now to monitor “ISI”. We know the names of the developers who strategically and successfully have now distanced themselves from billions in debt and have re-structured and who have returned to the market some sufficiently clever to align themselves to the private equity buyers like Blackstone, Lone Star, Oak Tree, Kennedy Wilson – as many as 20 buyers in the marketplace presently.
Sarah McCabe – Irish Independent:-
“Following recent changes in insolvency laws, the agency predicts that bankruptcies will soar from minuscule levels to above 1,000 per year”.
“ISI” and the Department of Justice are finally ensuring that service companies are in place. These management contractors will be charged with managing properties “seized” and then renting out the properties surrendered by people who have chosen to declare bankruptcy. When the properties are handed over to “Official Assignee” ie a civil servant whose function is to handle the bankrupt persons’ assets will then delegate the function of maintaining and renting out the seized property in a cost effective manner to appointed contractors. These management contracts could involve months or years as negative equity means the markets determine when is best to sell and the owners of the debt are the people who decide.
England: You are bankrupt in 1 year. In Ireland, prior to the recent legislation it was 12 years. Now it is 3 years and the fees have been reduced also. 900 euros min is the present fee for each individual voluntarily seeking bankruptcy. However it is necessary to note that the Department of Justice has more than doubled the stamp duty to be by those declaring themselves bankrupt.
“As revealed by the Irish Independent, Justice Minister Alan Shatter plans to change the system once again and make it more similar to the UK’s Individual Voluntary Arrangement – meaning cheaper and less bureaucratic
A new protocol will be devised to streamline the insolvency process for people trying to work out deals with bankers and others creditors”
To those struggling in the mire of debt, maybe now is the time to grasp the nettle.
June 4th, 2014 (16:22)
Accelerated Personal Insolvency:’ Is there hope for ‘mortgage delinquents’by Michelle Clarke
Mortgage Delinquents, Moral Hazard, is there hope according to the news in today’s Independent?
If you read the case study, then read between the lines, it sure opens up avenues of negotiation for people who have negative equity homes, certain mortgage arrears and unsecured loans with the credit unions and with credit card companies.
They say the ‘devil is in the detail’ but this devil has been hiding since this legislation was introduced in 2013.
What is important to note is that instead of bankruptcy over a 5 year period, restricted living expenses, uncertainty of deals falling through with negative impacts on the family, the banks and the PIA’s, you can now get focused and be out of your economic crisis which emerged in 2008 in three months.
The case study:
The family concerned. They had a small business and it failed. Significantly they are living on reduced income from low paying jobs. They are not in a position to meet their mortgage repayments or other unsecured debt payments eg Credit Union debts, credit cards.
Borrowed 320,000 e (date unknown); the value of the house at present is 140,000* e
therefore their negative equity is 180,000 e and other secured debt is 35,000 e. The latest option/gestures by the banks may be of interest to many. It is called:-
“Accelerated Personal Insolvency Arrangement”.
It means, if successful, the family in relation to their mortgage laden home, will be out of the debt in three months. The key point here is that they once again “become solvent”.
To negotiate this deal i.e. ‘to get over the line’ as referred to in the article, you have to be in a position ‘to tap family and friends’ for a 10,000 e ‘bullet payment’. If you are successful and the Bank agrees to the write off of 180,000 e from the mortgage, which also facilitates the write-down of the 35,000 e unsecured debts, you have a situation where the unsecured debt is written-down to ZERO. The family can then resume paying reduced mortgage payments and no longer have debts relating to credit cards, credit unions amounting to 35,000 e leaving the family free re-construct their lives.
Is this a life-line to so many people who have lived in fear of being evicted from their family homes? Now is the time to ensure that if the banks are agreeable to these “Accelerated Personal Insolvency Arrangements” to kick-start the momentum and find ways of raising the 10,000 waiver of unsecured debt arrangement with vigour and enthusiasm.
Ireland is renowned for raising funds for the Third World. What if we could raise funds to pay the 10,000e waiver from debt obligations of our fellow homeowners?
A potential bankrupt in limbo who hopes what he reads in paper today is a lifeline.
* Presently house prices are rising in Dublin, some say by 20%. Supply is limited but this makes this move by the banks ask questions about their predictions for house price increases.
by Michelle Clarke
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