Making sure I can get debt forgiveness.

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z107

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Debt forgiveness for mortgage holders seems to be gathering steam. There seems to be more articles in newspapers about it, and I also noticed this today:
http://www.breakingnews.ie/ireland/noonan-banks-have-capital-for-debt-forgiveness-518454.html

Finance Minister Michael Noonan said today that the capital is already in Irish banks to allow them to write off loans in a debt forgiveness scheme.

Minister Noonan said that it is a pressing issue for some families and will have to be dealt with, but insisted that it is manageable.
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I expect that what may happen is that anyone with mortgage arrears on a certain date (eg 1 jan 2012, after the next budget when the scheme may be announced) could have chunks of their mortgage written off. If any other approach is taken, then we'll end up with no one paying back their mortgage.

So the question is, to maximise my chances of this, should I stop paying my mortgage now? Instead put the money way, then if there is no debt forgiveness on the horizon, I'll just pay it off. My mortgage also allows me to take back money I've already overpaid. I might as well get this back anyway.

Could be worth it to get a few thousand written off.
 
I'm not trolling. I'm just illustrating one of the main flaws of debt forgiveness.
 
umop3p!sdn said:
I'm not trolling. I'm just illustrating one of the main flaws of debt forgiveness.
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I absolutely agree. Two things to keep in mind, if you stop paying your mortgage your credit rating would be affected. This is of course only a problem if tend to take out loans; if you only spend what you save then this would be completely irrelevant. Your other option of taking out the overpaid money would possibly be a better option.
 
It's not a flaw because you are unwilling to pay, not unable to pay. People haven't chosen to lose their jobs. No bank will restructure your mortgage or write off debt while allowing you keep a large cash pile. No Court would have sympathy for you if the bank issued proceedings against you if they see you still have a job, brining in the same income and just deciding not to pay. I am against debt forgiveness but arguments like this are as ridiculous as the idea of just writing off debt in the first place.
 
If someone quits their job, then they would be unlikely to get any sympathy.

But if someone just blows their money on holidays and cars and private schools instead of repaying their mortgage, it would be very difficult for some debt management agency to say that they don't qualify for debt forgiveness.

Certainly while the government is still talking about debt forgiveness, there is little incentive to struggle to pay your mortgage.
 
Brendan Burgess said:
Certainly while the government is still talking about debt forgiveness, there is little incentive to struggle to pay your mortgage.
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I agree that for those just about making repayments, they are probably going to start thinking about why bother struggling to make the payments.

It shouldn't really be the difficult to sort out the genuine hardship cases though from the ones that are just not bothered. The banks are sitting on a load of uselss mortgage underwriters. Get them working on revisiting individual mortgages and lets get a clear picture about what's happening out there
 
The Minister is repeating Professor Karl Whelan's line that because the capital has been put in the banks can now afford debt forgiveness. So much wrong with this statement but the biggest flaw is what about the foreign banks?

Are mortgage holders in AIB etc. going to get a softer approach than in say BoS? If not, is the Minister going to force BoS to go soft or is he going to give it taxpayer money as well?
 
Sunny said:
It's not a flaw because you are unwilling to pay, not unable to pay. People haven't chosen to lose their jobs. No bank will restructure your mortgage or write off debt while allowing you keep a large cash pile. No Court would have sympathy for you if the bank issued proceedings against you if they see you still have a job, brining in the same income and just deciding not to pay. I am against debt forgiveness but arguments like this are as ridiculous as the idea of just writing off debt in the first place.
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I think that the idea put forward is for the case of a general or blanket debt forgiveness. I certainly would agree that each case needs to be looked at individually and ideally through a streamlined court process and bankruptcy proceedings.
 
Seems like the Minister slept on it:

DUBLIN, Aug 31 (Reuters) - Irish banks must remain prudent with their capital and only write-off the mortgage debt of people who can't pay their home loans, Finance Minister Michael Noonan said on Wednesday.
The government is considering options to deal with the 10 percent of Irish mortgages that are in arrears or restructured but is eager to avoid a new injection of taxpayers money to deal with the growing problem.
"Any approach would have to distinguish between those who can't pay which is the real issue and those who won't pay where people could avail of an opportunity," Noonan told Newstalk radio.
"The banks have capital which they can use to assist people but at the same time they have to be prudent with that capital, the banks have to continue to be viable and they can't fritter away capital either."
The government has rejected calls for a blanket debt forgiveness scheme to help stretched borrowers and is instead signaling the banks can deal with the problem after they have been recapitalised to the tune of 70 billion euros ($100 billion).
Noonan said the government would wait to receive an expert group's report on the issue of rising mortgage arrears, expected in around three weeks, before making any policy decisions.
"It is not a question of coming up with a new pool of money to deal with bad debt," Noonan told state broadcaster RTE.
The number of mortgages in arrears or restructured due to financial distress jumped 10 percent in the second quarter from the previous three months, heaping pressure on a government which needs to introduce yet another austerity budget in December. [ID:nL5E7JT0PX]
Noonan said the government was looking at ways to help small businesses who are forced to lay people off due to property debts.
Mortgage holders will enjoy some relief from ECB indications that it will not increase interest rates in the coming 12 months, Noonan said. More than half of Irish mortgages track the ECB rate.
"It seems now there will be no increases in interest rates for the next 12 months," he said.
Financial markets have moved to price out any chance of a rise in interest rates by the ECB for the foreseeable future.
While propping up households is vital to get Ireland's economy growing again, concern has grown about banks across Europe suffering from the fallout of three years of financial turmoil. The head of the IMF warned at the weekend that the financial sector may need further forced recapitalisation.
Ireland's banks have been recapitalised to deal with nearly seven percent of their combined residential mortgage book being written off.
 
I take issue with the term "debt forgiveness". the impression given is that the Governmant will in some way introduce legislation where a wholesale write down of mortgage debt occurs. This is not going to happen. I accept that a number of people will disagree but there is no logical rationale for this approach to be taken. It makes no economical sense on a number of fronts. What is likely to happen is a more pragmatic solution to the current impasse. I.e. a realisation that there are a number of borrowers in negative equity who cannot afford to pay their mortgages at the current level. In those cases there is a need to write off a portion of the amount owning (as any creditor would do) and restructure the balance to enable the remaining debt to be serviced. Portion of the debt may well be postponed rather than written off. I have worked all my life in finance and banking and a common approach to bad debt problems has always included an element of write-off where necessary. This is a pragmatic approach to a bad debt problem. It is not "Debt Forgiveness" and useage of this term is giving many people false hope and expectation.
 
I've abig student loan to pay off from a bank abroad. Should i start paying more into that and less into my mortgage as im not going to get debt forgiveness for the student loan?

I can live without a good credit rating?
 
Or should i quit/get sacked from my job, get debt forgiveness and then get a new job which wouldnt be hard for me?
 
I guess that any person in mortgage distress would be disheartened by the content in this thread.
There have been suicides, marriage break ups and nervous breakdowns, households where the children are stressed over the their parents fighting and crying as the contemplate losing their homes, a lifetime of debt and being unable to see a way out.

I think this thread does not do justice to the many decent kind hearted and generous people on this forum.

Its not a joke and some of you should be ashamed.
 
Slaphead said:
Or should i quit/get sacked from my job, get debt forgiveness and then get a new job which wouldnt be hard for me?
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Don't quit, you would have to get sacked for your plan to work.

Apart from that it' s foolproof, just send a one liner to your bank saying "I can't pay" signed Slaphead and they'll fall over themselves to write off your debt.

Fair play, it's original thinking like this that will get Ireland back on it's feet. Maybe you should write an opinion piece in one of the papers or start a blog. I and many others long to follow someone with such radical thought.

Vive la revolution.
 
monagt said:
I guess that any person in mortgage distress would be disheartened by the content in this thread.
There have been suicides, marriage break ups and nervous breakdowns, households where the children are stressed over the their parents fighting and crying as the contemplate losing their homes, a lifetime of debt and being unable to see a way out.

I think this thread does not do justice to the many decent kind hearted and generous people on this forum.

Its not a joke and some of you should be ashamed.
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PLUS 1 totally agree
 
NorfBank said:
Don't quit, you would have to get sacked for your plan to work.
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I could of course arranged to be sacked, ie not turn up for a few weeks etc.

Just saying, if they're going to cut amounts off people's mortgages they have to do it for everyone. Not going to happen of course but i would accept it if they just allowed ppl to rent the houses for a long period of time and if/when things improve they can start paying the mortgage again.
 
surely if there was some debt forgiveness scheme in place, the people availing of it would not be able to get another mortgage again. What bank would ever lend to them again?
 
STEINER said:
surely if there was some debt forgiveness scheme in place, the people availing of it would not be able to get another mortgage again. What bank would ever lend to them again?
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Yes and what would this mean for the already huge lists for council housing? This whole thing needs to be thought through in huge detail, I think people have already forgotten the debate about moral hazard.

To those saying people commenting on here should be ashamed of themselves, no-one on here has downplayed the problems some people are facing, it's the fact that what seemed to be coming out of Govt was a blanket plan which would be unfair to those struggling to pay and would benefit those not bothering to pay.

Discussion of this topic is hugely important.
 
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