Walking away from debt

There is no solution unfortunately. There are simply far more debts than savings, and no-one left has any money for any further bailouts.

The banks have no money left, and can't take any further hits.

The system is that the people who owe millions are let off first, and millions of people who owe smaller amounts are chased and allowed no leeway.


The problem is the banks making silly decisions and going out of business as a result. This shouldn't be a problem I wouldn't have thought, but apparently banks going out of business is bad. (Why?)


The other fundemental problem is the fact that house prices can fall as well as rise,.. it appears that not everyone understands that fully. So should the government prevent people from purchasing houses on the open market? (That would prevent this problem in the future)


So perhaps people should only be able to buy houses if they have 100%, or 80%, or 50%, rather than 0%, or 2%, or 10% as previously. But people don't want this, they want to buy now, and have everything now... well, the problem there is that they're also taking on the downside risk, which has clearly caught a lot of people.


So can we force the banks to take on these downside risks? Well, yes, through non recourse mortgages, where the borrower can hand back the keys at any time. The borrower still loses out big time, but the banks take the entire (or a majority) hit for property crashes.

So what's the problem? Well, the non-recourse banks would need a lot of money, and most banks would go out of business during crashes. Bailouts must be ruled out by law, and can only be given after a referendum. I'd prefer to see bailouts for private companies ruled out completely... they must learn to understand that if they fail, they fail, simple as that, it applies to all other industries.



So perhaps the general public myust be prevented from making what might be (might be), silly decisions, by preventing people from spending money on houses.


Maybe the government should own all houses. If you want to sell, you sell to the Gov, if you want to buy you buy from the Gov. This might prevent speculation.


Rapidly rising house prices are bad it seems.. as people cannot save quickly enough to keep up with prices, so houses get more and more out of reach. Such people should rent and wait for the next crash.


Government intervention to prevent rapidly rising house prices distorts the markets, ..


The only solution I see amounts to a dictatorship., or communism.. the free market results in winners and losers, people who fluked good timing, and those who didn't. We can't allow the winners to win, and the losers to be bailed out.. that system doesn't work for anyone.
 
Complainer said:
Can't argue with that, but just to be clear - the mortgage deal that they signed up to hasn't changed.
Click to expand...

It is true that the deal has not changed but would the mortgage contract be open to challenge to void it on the basis that one party has created a situation whereby it is making it extremely difficult and near impossible for the other party to honour their side of the contract? Surely that would be a very simple thing to prove in a court. The simple reason people cannot pay is because of the complete social change since the contract was initially signed by both parties brought about by the blanket bank guarantee which was in response to the negligent behaviour of one party of the contract.



In response to JoeBallantin I will repeat what I kind of mentioned in an earlier post. We live in a capitalist society whether we agree with it or not. Therefore that is what our government policies should adhere to. They did not. They decided to suspend capitalism to socialise the private debts of private banks on September the 29th 2008. Socilaism for a select few. That distorted everything from there on in.
 
What about the thousands of families in north county Dublin and surrounding areas whose lives have been destroyed by Pyrite?

There are families who paid €400,000 for homes which are now virtually worthless. The developers have gone bust so there's no point chasing them. It transpires that Homebond is useless as many developers never paid the money to them and even if they did only a relatively small amount of money is available per development.

I'm not personally affected by the above scenario but I advocate full debt forgiveness for people unlucky enough to be in this situation. Someone has to carry the can and it should be the State or the State through the banks it owns and controls.
 
Gekko said:
I'm not personally affected by the above scenario but I advocate full debt forgiveness for people unlucky enough to be in this situation. Someone has to carry the can and it should be the State or the State through the banks it owns and controls.
Click to expand...

If what you say here then you are a rare enough thing in this country we live in. There are far too many begrudgers and these type of people would rather see the misfortunates live miserable existences for the rest of their lives rather than find a solution.
 
I agree with Gekko, I notice that the words 'moral hazard' are oft mentioned when the idea of debt forgiveness is brought up. However tax, by its very nature, is a moral hazard - designed to help those in society who are most in need. Young people who commited to (unbeknownst to them) unsustainable mortgages, to buy homes with prices encouraged to inflate by the actions of a corrupt and ill-managed government are in need of help. We all know FF not only ignored multiple warnings about a property bubble, but continued to expand the bubble through ill conceived tax laws, combined with a regulator who didn't perform his most basic duties.

Debt forgiveness to some degree is a moral hazard, as is social housing, as is rent allowance and free travel for the over 65's - ulitmately tax payers are paying for something that they will not use or benefit from in the immediate future. The difference though, is that, as a society, we should look after those who most need our help to ensure that quality of life is maintained at all times. Without that, where does that leave our society? Whether their situation is brought on by their own actions, or bad luck - they should get help when they need it - the hell that is negative equity is no different. We're the ones who need help now, so please please let us move on with our young lives.
 
ontheedge said:
Im in the same boat , I would suggest getting professional advise here.But i cant find anybody working in this area day in day out ....who can give practical advise ..

Please pass on any details if you find such a person.
Click to expand...

What you are considering is called bankruptcy tourism, and the UK is the most common place where this takes place.

As simply as I can put it, it involves moving to the UK, and setting up residence there for 3-6 months, before declaring yourself bankrupt which costs around £600 per person max (eg husband and wife). You need to show some sort of income eg benefits or employment and have a UK bank account, and utility bill set up within that time. You must prove that the new jurisdiction is now your centre of main interest (COMI). Within 12 months you should be in the clear completely. There are very few companies in Ireland who know how to do this.

w w w . f r o s t . i e
 
I've been working since I left school 14 years ago, I am not married and I have no children. However through my taxes I have supported those who do have children, in some cases I have put their school clothes on their backs and a roof over their heads and now if I needed some help with crushing debt I would basically be told - you got yourself into this mess you get yourself out, hardly seems like a balanced, fair social system to me. If the argument for not helping those in mortgage distress is 'if you can't afford it, you shouldn't had gotten it' well then by the same argument we should stop supporting anyone with children.
I am lucky, I bought in 2009 but I bought off my parents so while I do have some NE I can manage my mortgage each month, even if unemployed but many are not so lucky.
Can't people see that by not helping people with mortgage debt they are not helping Ireland move forward, they are just stalling this country in quick sand.
 
David McWilliams talks about "the former elite" (e.g. teachers, journalists etc) who were somewhat left behind from an income and asset perspective during the boom. In my view it's this constituency that's the principal source of pious ranting about "moral hazard".

A lot of people claim that they predicted our economic collapse. They're generally bluffing. If someone's not up to their neck in property related debt right now it's probably as a result of blind luck.

We're primarily a society rather than an economy and we should remember this. If people are in serious financial difficulty and lying awake at night worrying about themselves and their families then society should try and help them. I couldn't care less whether those same people used to go shopping in New York every November.

There are hundreds of thousands of people hiding away at home right now and buckling under unsustainable debt. Until we get these people back out and doing "stuff", we're all fecked. If people can't do compassion, they should do selfishness and realise that until we solve the problems of those in real trouble (for whatever reason), we can't solve our own problems.
 
Complainer said:
So is it 'blind luck' that I chose not to invest in property, other than my family home?
Click to expand...

I've no idea when you purchased your family home.

If your age and timing issues mean you haven't been utterly devastated by the property collapse, that's blind luck.
 
Gekko said:
I've no idea when you purchased your family home.

If your age and timing issues mean you haven't been utterly devastated by the property collapse, that's blind luck.
Click to expand...
The only people of my generation who have been 'utterly devasted by the property collapse' are the greedy ones.
 
frostie said:
What you are considering is called bankruptcy tourism, and the UK is the most common place where this takes place.

As simply as I can put it, it involves moving to the UK, and setting up residence there for 3-6 months, before declaring yourself bankrupt which costs around £600 per person max (eg husband and wife). You need to show some sort of income eg benefits or employment and have a UK bank account, and utility bill set up within that time. You must prove that the new jurisdiction is now your centre of main interest (COMI). Within 12 months you should be in the clear completely. There are very few companies in Ireland who know how to do this.

w w w . f r o s t . i e
Click to expand...

I'm not sure that this is as easy as suggested. If you move to UK for 3-6 months, you'll still be regarded as domiciled and tax resident in Ireland under Irish Law. While the UK may regard you as 'bankrupt', given that the Irish courts like to judge individual cases on their merits, its hard to imagine that this sort of thing would be looked on favourably and get someone off the hook in Ireland.
 
Complainer said:
Your initial was fairly general and all-encompassing, i.e. "If someone's not up to their neck in property related debt right now". Would you like to revise this now?
Click to expand...

Absolutely not.

Being of a vintage that makes one less likely to have been devastated by the property collapse is the epitomy of blind luck.

You should also have noted my deliberate use of the phrases "a lot", "generally" and "probably" to cover the exceptions that will almost always exist.
 
Gekko said:
Absolutely not.

Being of a vintage that makes one less likely to have been devastated by the property collapse is the epitomy of blind luck.

You should also have noted my deliberate use of the phrases "a lot", "generally" and "probably" to cover the exceptions that will almost always exist.
Click to expand...
Fair enough - I'll consider your contributions on this thread to be inaccurate ranting so.
 
csirl said:
I'm not sure that this is as easy as suggested. If you move to UK for 3-6 months, you'll still be regarded as domiciled and tax resident in Ireland under Irish Law. While the UK may regard you as 'bankrupt', given that the Irish courts like to judge individual cases on their merits, its hard to imagine that this sort of thing would be looked on favourably and get someone off the hook in Ireland.
Click to expand...

You are right, it's not that easy, which is why people should get advice on this. Very difficult to fully outline the whole context in one post. You have to be resident in the UK for the 3-6 months before you can declare, but this involves moving lock, stock and barrel to the UK, including your family if applicable. Any assets in Ireland would still be accessible to the creditors, but this is not going to be a concern to the majority who will go down this route, because of negative equity, and the fact that the assets would form part of the bankruptcy.

You must also notify the Official Receiver in the UK if you intend to leave the UK for up to three years after the bankruptcy is entered, although you can leave the country depending on the outcome of the bankruptcy.

There are terms associated with bankruptcy in the UK such as an income payments order for up to three years on any disposable income. It is not soemthing to be entered into lightly, but in the context of some of the earlier posts on this thread, where people are facing negative equity of 100k + it is definitely something to be considered, but ultimately it is a lifestyle change for a few years until the bankruptcy and any terms are discharged.

Irish courts have no jurisdiction on a bankruptcy declared and discharged in another state - proving your COMI is integral to show that you are now a taxable person in that jurisdiction. Depending on the individual merits of the case, a person may be able to return to Ireland in one year or less with the bankruptcy discharged, and as hard as it may be to imagine, no court or creditor in Ireland can do anything about it.#

It's a fairly common practice now, not only from Irish people going to the UK, German citizens would also do this in numbers, as would any country's citizens within the EU, where bankruptcy legislation in the respective country could be considered 'draconian'

w w w . f r o s t . i e
 
Complainer said:
Fair enough - I'll consider your contributions on this thread to be inaccurate ranting so.
Click to expand...

Feel free to reach ludicrous conclusions if you so wish.

Be mindful though that it's relatively easy to show compassion for those less fortunate than you...those who bought their family homes at the peak of the boom.
 
Gekko said:
Be mindful though that it's relatively easy to show compassion for those less fortunate than you...those who bought their family homes at the peak of the boom.
Click to expand...
My disagreement with you on a matter of fact has nothing to do with any compassion that I may or may not feel for "those who bought their family homes at the peak of the boom". If your claim had referred to "those who bought their family homes at the peak of the boom", it would have got a very different reaction from me.
 
Gekko said:
thousands of families

families who paid €400,000 for homes which are now virtually worthless.

I advocate full debt forgiveness for people unlucky enough to be in this situation
Click to expand...

Gekko said:
If someone's not up to their neck in property related debt right now it's probably as a result of blind luck
Click to expand...

Complainer said:
So is it 'blind luck' that I chose not to invest in property, other than my family home?
Click to expand...

Complainer said:
If your claim had referred to "those who bought their family homes at the peak of the boom", it would have got a very different reaction from me
Click to expand...

As you can see from the above posts, I've always been referring to "home related debt". It was you that alluded to more traditional property speculators.

Like it or not, historically we've had a culture of home ownership in this country. Purely for chronological reasons, a large group of people have been devastated by the collapse in property prices. Had they been a little older or a little younger, they wouldn't have been. Luck has played a big part in this. I won't get any help but I acknowledge that we should do something to help such people. I agree that property speculators (e.g. people who invested in property other than their PPR) don't deserve similar levels of assistance.
 
You must log in or register to reply here.
Back
Top