Brendan Burgess
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What are the options for those in serious negative equity who also have huge borrowings?
How to handle serious negative equity?
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canicemcavoy
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Re: Change the law on bankruptcy for those in serious negative equity?
Marc Coleman also did a piece that compared those in negative equity to people locked up in Guantanamo:
http://www.independent.ie/opinion/a...-break-chains-of-negative-equity-1943913.html
I'm sure Brendan you will agree this as hysterical as anything that Redser and Morgan have come up with.
Famously, Marc himself bought at a house at the height of the market, then wrote a book (1 star on Amazon) entitled "The Best is Yet to Come". Not exactly Derek Acorah then. He's now demanding "state help with repayments". Which is another of saying he wants other taxpayers to pay for his mortgage.
And, god help us, multi-generational mortgages. Because what this country needs right now is to foist even debt onto our children too.
Now that NAMA is a done deal, looks like everyone is bringing out the begging bowl.
Marc Coleman also did a piece that compared those in negative equity to people locked up in Guantanamo:
http://www.independent.ie/opinion/a...-break-chains-of-negative-equity-1943913.html
I'm sure Brendan you will agree this as hysterical as anything that Redser and Morgan have come up with.
Famously, Marc himself bought at a house at the height of the market, then wrote a book (1 star on Amazon) entitled "The Best is Yet to Come". Not exactly Derek Acorah then. He's now demanding "state help with repayments". Which is another of saying he wants other taxpayers to pay for his mortgage.
And, god help us, multi-generational mortgages. Because what this country needs right now is to foist even debt onto our children too.
Now that NAMA is a done deal, looks like everyone is bringing out the begging bowl.
L
lightswitch
Guest
Re: Change the law on bankruptcy for those in serious negative equity?
Much as I do have sympathy for people in negative equity those of us who were not sucked in during the "boom" should not have to bail them out.
I lived well, but within my means during those years and should in no way have to contribute towards those who for whatever reason over extended themselves.
This is a free market economy. Unfortunately people have to feel the pain during times like these as well as the gains during times just past. Otherwise nothing will have been learned and we will go into an even bigger bubble next time.
Much as I do have sympathy for people in negative equity those of us who were not sucked in during the "boom" should not have to bail them out.
I lived well, but within my means during those years and should in no way have to contribute towards those who for whatever reason over extended themselves.
This is a free market economy. Unfortunately people have to feel the pain during times like these as well as the gains during times just past. Otherwise nothing will have been learned and we will go into an even bigger bubble next time.
Brendan Burgess
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- 52,121
Re: Change the law on bankruptcy for those in serious negative equity?
Hi lightswitch
That is why I said:
I have spoken to people who are in serious negative equity and are blaming the banks and the Financial Regulator. But they are still going on two holidays a year and driving two cars.
So there is a serious moral risk in helping people out. But it does have to be balanced against consigning ordinary citizens to being long-term financial zombies.
Brendan
Hi lightswitch
That is why I said:
I have spoken to people who are in serious negative equity and are blaming the banks and the Financial Regulator. But they are still going on two holidays a year and driving two cars.
So there is a serious moral risk in helping people out. But it does have to be balanced against consigning ordinary citizens to being long-term financial zombies.
Brendan
L
lightswitch
Guest
Re: Change the law on bankruptcy for those in serious negative equity?
Exactly. A bailout for people who over extended themselves would send exactly this message. What is the point in engaging your brain when not doing so has no consequences? Its the same as sticking your hand in the fire and not getting burnt.
Exactly. A bailout for people who over extended themselves would send exactly this message. What is the point in engaging your brain when not doing so has no consequences? Its the same as sticking your hand in the fire and not getting burnt.
Brendan Burgess
Founder
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- 52,121
Re: Change the law on bankruptcy for those in serious negative equity?
There would be serious consequences - going bankrupt or insolvent.
But it would allow the person to participate in the economic activity of the country.
As I have said, it's a very difficult balance to strike.
Brendan
There would be serious consequences - going bankrupt or insolvent.
But it would allow the person to participate in the economic activity of the country.
As I have said, it's a very difficult balance to strike.
Brendan
canicemcavoy
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Re: Change the law on bankruptcy for those in serious negative equity?
What about those who admit they knew they overpaid for their property, even at the time?
I'm still unclear as to what is so bad about being in negative equity. The person still has a roof over their head. They're paying the price they thought the property was worth.
What about those who admit they knew they overpaid for their property, even at the time?
I'm still unclear as to what is so bad about being in negative equity. The person still has a roof over their head. They're paying the price they thought the property was worth.
Brendan Burgess
Founder
- Messages
- 52,121
Re: Change the law on bankruptcy for those in serious negative equity?
Good point and yet another complication.
Negative equity is not in itself a big problem unless the person has to move home or split up.
The big problem will be for people who are unable to service their mortgage and who have negative equity.
So do we do something for those on salaries of €40k with a mortgage of €300k - but not do anything for someone on a salary of €100k with a mortgage of €400k?
Again, if someone has negative equity on their home of €200k but has a pension fund of €200k, the pension fund should be made available to pay off their debts.
Brendan
Good point and yet another complication.
Negative equity is not in itself a big problem unless the person has to move home or split up.
The big problem will be for people who are unable to service their mortgage and who have negative equity.
So do we do something for those on salaries of €40k with a mortgage of €300k - but not do anything for someone on a salary of €100k with a mortgage of €400k?
Again, if someone has negative equity on their home of €200k but has a pension fund of €200k, the pension fund should be made available to pay off their debts.
Brendan
Re: Change the law on bankruptcy for those in serious negative equity?
It's such a complicated aspect, I'm unsure what way to go and I haven't come across any real coherent argument from any side, expert or analyst either. I’ve no idea if my house is in negative equity, but then I had no idea how much "profit" I was in during the boom either because it's my home, not an investment and I wasn't particularly interested.
However, one of the significant issues is just how much debt is personal debt rather than state debt. So while it may be uncomfortable for anyone who was prudent during those years, it may have to be another bullet to bite in order to recover. Just like we have to accept NAMA, even though we may resent the reason it was brought in.
I'm not too happy with the proposals though. I'd prefer greater incentives to keep the house and reduce debt. If that can be done hand in hand with other measures for the really desperate, then it may be a necessary evil.
Mind, the only idea/concept I've come across for incentivising debt reduction is in the form of tax breaks. I'm sure we can eliminate the tax breaks that helped to create the system in the first place and replace them with a more focussed system that rewards repaying of debt. It may even mean savings overall to the state.
It's such a complicated aspect, I'm unsure what way to go and I haven't come across any real coherent argument from any side, expert or analyst either. I’ve no idea if my house is in negative equity, but then I had no idea how much "profit" I was in during the boom either because it's my home, not an investment and I wasn't particularly interested.
However, one of the significant issues is just how much debt is personal debt rather than state debt. So while it may be uncomfortable for anyone who was prudent during those years, it may have to be another bullet to bite in order to recover. Just like we have to accept NAMA, even though we may resent the reason it was brought in.
I'm not too happy with the proposals though. I'd prefer greater incentives to keep the house and reduce debt. If that can be done hand in hand with other measures for the really desperate, then it may be a necessary evil.
Mind, the only idea/concept I've come across for incentivising debt reduction is in the form of tax breaks. I'm sure we can eliminate the tax breaks that helped to create the system in the first place and replace them with a more focussed system that rewards repaying of debt. It may even mean savings overall to the state.
L
lightswitch
Guest
Re: Change the law on bankruptcy for those in serious negative equity?
"So while it may be uncomfortable for anyone who was prudent during those years, it may have to be another bullet to bite in order to recover."
Recover to what though? We were going through a boom and now we are going through a recession! Some people spent too much money on property, TV's, holidays, cars etc...
If they are bailed out they will behave in exactly the same way when the "recovery" takes place. Only this time people like me, who had to bail them out, will say to hell with this, and join them!!
Now lets see, who will bail us all out then?
NAMA is a completely crazy idea that we are stuck with. NAMA for the people is total madness. If things progress in this direction I will seriously look at emigration as there really is only so much Banana Republic I can take.
"So while it may be uncomfortable for anyone who was prudent during those years, it may have to be another bullet to bite in order to recover."
Recover to what though? We were going through a boom and now we are going through a recession! Some people spent too much money on property, TV's, holidays, cars etc...
If they are bailed out they will behave in exactly the same way when the "recovery" takes place. Only this time people like me, who had to bail them out, will say to hell with this, and join them!!
Now lets see, who will bail us all out then?
NAMA is a completely crazy idea that we are stuck with. NAMA for the people is total madness. If things progress in this direction I will seriously look at emigration as there really is only so much Banana Republic I can take.
Re: Change the law on bankruptcy for those in serious negative equity?
I'm not suggesting a NAMA for the people, I'm just stating that there may be more to be served by providing assistance in some of the problem cases.
I'm not excusing or defending the habits of people during the "good" times, I just don't see how it benefits us to turn around and say tough leaving them with 200K debt. Take the example of a couple who bought at the height, one is now out of work and they've split up and are in negative equity. It's bad timing, it's lack of foresight, but what is to be gained by leaving them in that situation aside from a satisfaction that maybe that'll learn em.
It's not about bailing them out it's about an incentive and means to try to pay the debt first and second with a mechanism to not have to go down the bankruptcy route.
We have NAMA, it was needed, but not a nice thing to have to swallow. It is now in our national interests to make sure as much of the bad debt is repaid rather than to let it all fall on our shoulders if they default or claim bankruptcy.
It doesn't have to be bailing out and supporting any prior excess, but it may prove more beneficial to us in the medium to short term to look at this in a more reasonable manner.
I'm not suggesting a NAMA for the people, I'm just stating that there may be more to be served by providing assistance in some of the problem cases.
I'm not excusing or defending the habits of people during the "good" times, I just don't see how it benefits us to turn around and say tough leaving them with 200K debt. Take the example of a couple who bought at the height, one is now out of work and they've split up and are in negative equity. It's bad timing, it's lack of foresight, but what is to be gained by leaving them in that situation aside from a satisfaction that maybe that'll learn em.
It's not about bailing them out it's about an incentive and means to try to pay the debt first and second with a mechanism to not have to go down the bankruptcy route.
We have NAMA, it was needed, but not a nice thing to have to swallow. It is now in our national interests to make sure as much of the bad debt is repaid rather than to let it all fall on our shoulders if they default or claim bankruptcy.
It doesn't have to be bailing out and supporting any prior excess, but it may prove more beneficial to us in the medium to short term to look at this in a more reasonable manner.
Brendan Burgess
Founder
- Messages
- 52,121
Re: Change the law on bankruptcy for those in serious negative equity?
It is important that we don't arrive at a solution which allows people off scot free.
If they avail of an arrangment, something like the following would have to happen:
1) Be barred from all new forms of credit - including credit cards and overdrafts and HP.
2) pay 20%(?) of their earnings by attachment to their creditors.
3) Agree that all future inheritances go to their creditors
4) Not purchase property for 10 years.
5) Pay the current value of their pension scheme to creditors.
The arrangment would be painful enough that they would have an incentive to discharge themselves from it if at all possible.
Brendan
It is important that we don't arrive at a solution which allows people off scot free.
If they avail of an arrangment, something like the following would have to happen:
1) Be barred from all new forms of credit - including credit cards and overdrafts and HP.
2) pay 20%(?) of their earnings by attachment to their creditors.
3) Agree that all future inheritances go to their creditors
4) Not purchase property for 10 years.
5) Pay the current value of their pension scheme to creditors.
The arrangment would be painful enough that they would have an incentive to discharge themselves from it if at all possible.
Brendan
Re: Change the law on bankruptcy for those in serious negative equity?
2) Should be a sliding scale depending on earnings. Minimun 20%, but rising the more you earn.
6) Not hold more than €5k in an assets or bank accounts
2) Should be a sliding scale depending on earnings. Minimun 20%, but rising the more you earn.
6) Not hold more than €5k in an assets or bank accounts
L
lightswitch
Guest
Re: Change the law on bankruptcy for those in serious negative equity?
When I first read this Brendan I thought, OK this makes more sense.
Then I thought if I were living I a trophy home, filled to the brim with everything imaginable, with a nice trophy car or 2 in the drive way, possibly a few "speculation" houses in negative equity, these terms would very much appeal to me.
If we are in any way going to compensate those who got burned then we need to in some way "reward" those of us who have to carry the can for them. Of course that can't/wont happen.
Should we not just live with the effect of market forces? These people are in debt, they are not facing starvation after all.
I might chance my user name to one very p'd off tax payer.
When I first read this Brendan I thought, OK this makes more sense.
Then I thought if I were living I a trophy home, filled to the brim with everything imaginable, with a nice trophy car or 2 in the drive way, possibly a few "speculation" houses in negative equity, these terms would very much appeal to me.
If we are in any way going to compensate those who got burned then we need to in some way "reward" those of us who have to carry the can for them. Of course that can't/wont happen.
Should we not just live with the effect of market forces? These people are in debt, they are not facing starvation after all.
I might chance my user name to one very p'd off tax payer.
Re: Change the law on bankruptcy for those in serious negative equity?
Couldn't agree more and it has to be pretty tough when it comes to the end. I guess my point is that it is a stronger system if there's an incentive to keep the property and keep the debt in the first place. There's certainly an incentive for us as taxpayers and the State because of NAMA and I guess it sounds pretty inconceivable to most of us that keeping your own home isn't enough incentive. However, we have to accept that to some this it isn't enough, or certainly their circumstances don't permit it to be enough.
I'd be loathed for anyone one who was excessive to get away without some form of payment. But given the extraordinary nature of our circumstances, the less the impact on bad debts the better for all of us.
Couldn't agree more and it has to be pretty tough when it comes to the end. I guess my point is that it is a stronger system if there's an incentive to keep the property and keep the debt in the first place. There's certainly an incentive for us as taxpayers and the State because of NAMA and I guess it sounds pretty inconceivable to most of us that keeping your own home isn't enough incentive. However, we have to accept that to some this it isn't enough, or certainly their circumstances don't permit it to be enough.
I'd be loathed for anyone one who was excessive to get away without some form of payment. But given the extraordinary nature of our circumstances, the less the impact on bad debts the better for all of us.
L
lightswitch
Guest
Re: Change the law on bankruptcy for those in serious negative equity?
Of course the above is assuming they get to keep all their properties cars etc, can't see how you could actually take the stuff off them?
Of course the above is assuming they get to keep all their properties cars etc, can't see how you could actually take the stuff off them?
Re: Change the law on bankruptcy for those in serious negative equity?
How many are the trophy houses and how many are facing starvation? To be honest I don't know, but the system has to take into account assets to a greater extent and demand a payment where it is more beneficial to stay on and pay the debt rather than declare bankruptcy.
As for rewarding those who are not in a similar position, again it's difficult to see any real mechanisms. Again, without harping too much, but a tax break for paying debt could be one avenue hand in hand with a permanent SSAI type of system for people who save.
When I first read this Brendan I thought, OK this makes more sense.
Then I thought if I were living I a trophy home, filled to the brim with everything imaginable, with a nice trophy car or 2 in the drive way, possibly a few "speculation" houses in negative equity, these terms would very much appeal to me.
If we are in any way going to compensate those who got burned then we need to in some way "reward" those of us who have to carry the can for them. Of course that can't/wont happen.
Should we not just live with the effect of market forces? These people are in debt, they are not facing starvation after all.
I might chance my user name to one very p'd off tax payer.
How many are the trophy houses and how many are facing starvation? To be honest I don't know, but the system has to take into account assets to a greater extent and demand a payment where it is more beneficial to stay on and pay the debt rather than declare bankruptcy.
As for rewarding those who are not in a similar position, again it's difficult to see any real mechanisms. Again, without harping too much, but a tax break for paying debt could be one avenue hand in hand with a permanent SSAI type of system for people who save.