Central Bank New Debt Resolution Plan


The Central Bank’s new plan for assisting distressed borrowers to get out from under their excessive household debt is, if it works, a welcome addition to the growing (though still largely unimplemented) suggested solutions to the debt cancer that has riddled households throughout the country.

The pilot plan is mainly focused on those who will not qualify for the new Personal Insolvency legalisation because they are not insolvent although they may be having difficulties paying their loans. This would typically include someone who has a home mortgage but not in negative equity and have some other unsecured loans such as credit union loans, credit card debts and/or term loans.

The new pilot plan will, with the assistance of a service provider (SP), bring the lenders together and agree a temporary restructuring of the payments, term and sometimes interest rates on all loans to bring the payments down to a manageable level until such time as the Debtors situation has improved or the loans are cleared. However, the new plan does not envisage any significant write offs of loans and any small write offs of debt will only apply to unsecured debt.

In fact of the 8 scenarios outlined in the debt resolutions “waterfall” in the Framework for a Pilot Approach to the Co-ordinated Resolution of Multiple Debts owed by a Distressed Borrower there is only 1 scenario which envisages any possibility of a debt write down. All of the other scenarios include restructuring however there is interest being charged on all debt of between 4.5% and 9% depending on the debt and level of distress. This is hardly a good deal for the borrower …. as usual!

The level and type of debt that currently exists in households throughout the nation would suggest that this new plan is not going to be a significant problem solver. It will address some small limited cases but not the vast majority of cases where nothing but significant write downs of home loans will provide a solution for the majority of debtors struggling to survive never mind pay their unsecured loans.

The new plan is an indication again that the banks are being pushed slowly towards the cliff of debt forgiveness. Eventually they are going to have to take that leap which will mean that their recapitalisation will happen as discussed in the recent IMF report. This re capitalisation which will be funded by the ECB (not the Irish tax payer) but will have a direct and positive impact on the taxpayer unlike the previous bank bailout which crippled us.

So it looks like we are back to the personal insolvency legalisation and personal insolvency practitioners to get the solutions for people in real distress with their debts. This is where the resolution is and hopefully the insolvency service will be up and running in June as promised so people can finally get long term resolution to their debt problems. And be assured the long term solutions will include significant write off of debts!

 

Paul C Carroll FCCA

Personal Insolvency Partner

NEO Financial Solutions

paul.carroll@neofinancialsolutions.com

IFB Bankers Protocol – Debt write off is finally here!


The Irish Bankers Federation (IBF) published a protocol on unsecured debts yesterday to address the biggest household debt crises ever to visit our state. The cost of addressing the household debt could be in the region of €15b to €20b and the bankers’ federation have addressed the issue with a TWO page protocol document! That fact alone demonstrates their total contempt for the issues that face Irish households.

The IBF attempt at addressing the unsecured debt issues with this nonsense of a protocol is merely an attempt to keep people paying their excessive mortgages which the banks gave them in the first place and which they are eventually going to have to write down (not postpone, split or any other fake forbearance).

The very FIRST point in the protocol is that ‘mortgage debt will be prioritised’! Well that is very interesting for a protocol which is meant to address the issue of unsecured debts!

The protocol goes on to suggest that a creditor should give consent to all of their lenders to get together and ‘arrive at appropriate agreements’! Does IBF think we are all stark raving mad? To think that anyone would be crazy enough to believe bankers would do anything but look after themselves in such a process is be utter nonsense.

Let’s be honest the IBF protocol is a last ditch attempt to avoid the inevitable of having to take responsibility for the unmitigated disaster their members created in the mortgage lending market over the past 15 years.

However, there is one very significant positive in the protocol and that is that the IBF have finally acknowledged that debt write off is here and necessary in order to get us out of the crises. Of course the mention of debt write off is couched in obscure language like ‘creditors will discharge the customer from residual unsecured debt’ but it still means debt write off is here and the IBF have finally acknowledged it. This is a first step in a very long road that should have been taken five years ago.

So as usual we have the bankers coming to the table but kicking and screaming all the way and in a last ditch attempt to still keep some control they produce this shambolic protocol which attempts to hijack the already introduced Personal Insolvency Act. Their attempt at this protocol only shows further their contempt for their customers who they made so much money from over the years and whom now they are going to have to give debt write offs too.

The protocol is a document produced out of fear that no matter what debt forgiveness is here and it is slipping from their control.

 

Paul C Carroll

NEO Financial Solutions

Bully Boy Banks I have been a victim too!!


Bully Boy Banks I have been a victim too!!

 

Are you being bullied by your bank? Well it would seem you are not alone. According to an article in The Independent today by Charlie Weston banks are trying to set spending levels for their customers who happen to be in trouble with their mortgages.

Like every bully when allowed to carry on their oppressive and aggressive tactics they will thrive. They pray on the weak and vulnerable who feel they have not got the position of strength to stand up to the bully. The bully will pray on this perceived position of weakness and will push to endless limits with sometimes fatal consequences.

I am afraid to say I have myself been the subject of such bullying from the very same banks who I challenge on behalf of our clients every day. I say “I am afraid to say” because I know now the only day to deal with them is to stand up to them, bully them back, tell them to get lost and take control back by telling them what you are prepared to do rather then what they want.

My personal experience has thought me a great lesson in dealing with the bully and how to overcome their oppression. They hate anyone who will stand up to them. When your weakness becomes your strength they run, they become passive and simply skulk off looking for another victim.

Banks are no different, stand up to them, push back and they will back down. So do not let them tell you what you can spend, who you can pay, where you can live. These are your choices and for you to decide. The bank only have their interests at heart, you however, have to consider your family, your future, your health and your future financial security. The path you take should be with these in mind and not what he Bank considers you should do.

So do not let the bully have its way. Stand strong because it is your life and your family.

They are being taken on and people are winning so become a winner today!

Paul C Carroll FCCA

www.neofinancialsolutions.com

AIB Interest rate Increase part of the Enda Kenny “Celtic Comeback”??


The increase by AIB in their mortgage interest rates last week is another element of the scam that is continuing in this country by the elite professional and political classes. These classes are described so well in the recently published book by Shane Ross and Nick Webb The Untouchables.

Another element of the scam is that we must continue to pretend that things are getting better in Ireland. The economy is recovering, people are slowly recovering, property prices are stabilising, unemployment is stabilising, etc..  This is being peddled because it is important for “the Untouchables” to create this illusion about Ireland being the Good Boy in the class of austerity so their position of overpaid offices and professional fees continues.

How on this earth can it be justified that the bank owned by the state is allowed to put up interest rates on people who are already struggling except for the creation of an illusion that AIB will recover. We all know that the increase in the interest rates will make AIB worse and not better. It will simply cause more people to fall into arrears. It may also cause some people to reflect on why at all they should be paying anything on a loan which is possibly in excess of 50% greater then the value of the property it is on! Why Bother? Why Bother?

It seems the chief driver of the scam is none other than our leader and poster boy of “the Celtic Comeback” Enda Kenny. He is on the front of Time Magazine peddling the comeback scam and today insists that AIB are right in increasing rates to ensure its recovery! What about the recovery of the people? What about the Celtic Comeback of the people? Or do the people not matter as long as AIB and the other Untouchables are looked after? Is that what Mr. Kenny considers a comeback? AIB, BIO, Anglo, PTSB, EBS and Nationwide can all have debt forgiveness but the ordinary person cannot that is a comeback? I do not think so Mr. Kenny!

In the interview by Mick Wallace TD on the Marion Finucane Show on RTE radio 1 he said that one of the things that strikes him most about the Dail is how out of touch most people are there! Well it seems he is right on that one and the more Mr. Kenny goes on about the comeback the more Mick Wallace is right! Somehow we need to drag these guys back into the real world. Let them sample the “comeback” and see how it feels!

There can be no comeback unless excess household debt is addressed, the real level mortgage arrears are admitted to and the national current account deficit is addressed.

Paul Carroll FCCA

www.neofinancialsolutions.com

Political Appointments, Judges, Top Public and ESB/ Bord Gais for sale! The SCAM continues


Justice Peter Kelly had the guts to say what we all have known since this government has taken power “the more things change the more things stay the same”. The extent of broken promises by Enda and his band of merry men on their election campaign has not only been limited to not standing up to the Trika on bond holders. Now it seems that it has continued the cronyism they so criticised the last government for. Not only do over 30% of the judicial appointments have direct political connections to government parties but the political connections are more important than the ability of the appointee!

Added to this insult to the people who elected the government on a false mandate we now see that Judges are paid in excess of €150,000 pa. They are joined by ALL politicians who get in excess of €150,000pa and over 3,000 top public servants who earn in excess of €150,000pa. Who says that you have to pay peanuts to get monkeys? These people are grossly overpaid for the job they have been doing. These are the people we are relying on to give us proper justice, implement fair plans and legislation to ensure that the people of this country will be able to get back to having a decent living. Yet if they do the things that need to be done they will be the first to be found out. Is there any wonder 5 years on we in Ireland Inc. are going further into depression. And today the Central Bank says it may continue until 2010!

These same people have stood over the grossly unfair rises on utility bills just so that another band of overpaid people can continue with their lavish lives at a direct cost to the Irish people. We are told that this is part of the process of getting the utility companies of ESB and Bord Gais ready for privatisation.

This is another scam! So we are going to take more out of the Irish people’s pockets by way of increased utility bills. Then we are going to sell the utility companies in a depressed market getting poor prices for them. But here is the real kicker …… who is going to buy the ESB and Bord Gais at knock down prices …….. the very same BOND HOLDERS we bailed out at TOP prices! How come? Because they have the money (the money we gave them)! And believe me they think Ireland is a great place to do business. And why not since they made a really bad investment in the Irish banks…. all now bust … but they managed to get 100% of their money back PLUS interest.

And who is overseeing this SCAM? The same band of €150,000+ public servant earners. No Wonder capital markets are back open to the Irish if in return the bond holders can partake in such a lucrative scam!

Paul C Carroll FCCA

Negative Equity Mortgages


We have seen some attempt for banks to suggest that in limited cased negative equity loans can be a solution to some peoples housing problems. In particular where a couple have been in a small apartment and now wish to move to a house or larger apartment for expanding family reasons. However, in many such cases the original apartment is in negative equity in other words what the apartment is sold for will not cover the outstanding mortgage. Some banks may suggest you carry this deficit on too the next mortgage in the new house. This is a complete disaster for the customer and only benefits the bank by not having to realise the loss on the loan. So what the bank wants the ordinary people to do is to take the loss while they, the Banks, have the customer on the hook for another 20 or 30 years! Do not let this happen to you EVER!

Personal Debt Restructuring and Corporate Debt Restructuring


Debt restructuring whether corporate or personal is the necessity to reorganise your debts in order to ensure that you can attempt to have some financial security in the future.  Such a reorganisation can involve many parts including asset disposals, mortgage debt forgiveness, reduction in loan repayments, increase in income, debt forgiveness, corporate liquidation, creditor arrangements, and personal bankruptcy.

Debt restructuring is often undertaken when the debt mountain becomes too great and the person or entity is at breaking point. It is unfortunate that it is left that late because if addressed earlier it is often much more successful and the outcome is much more beneficial to the parson or entity endeavouring to restructure. This sounds like a bank statement and on this very rear occasion Neo Financial Solutions agrees with the banks. Though the motive for Neo agreeing with the statement is very different to that of the banks motive.

Debt Restructuring when addressed early can be done in such a manor that you the debtor can have control over what you do with your assets and limited cash resources. If you simply go to your bank and discuss the matter with them their object will be to “see how much money you have and see how they can get as much as they can off you”. Now, despite what the banks claim that is not in your interest. In fact it is directly against your interest because usually one of the first things any debt restructuring investigation will show is that you should be reducing your payments to banks for various loans and mortgages and not keeping the payments up or paying them more! In these difficult times the payment of a credit card bill and missing a mortgage payment may be the difference between feeding the family or not. And here at Neo Financial Solutions we always recommend feeding the masses rather then the Bankers!

Some of the matters that would need to be addressed in the initial debt restructuring assessment are:

All assets need to be listed and an approximate value put on each together with any loans/mortgages outstanding that the assets are securing. Details of all repayments being made on the loans and a description of the loan type i.e. mortgage, term loan etc. particular attention needs also be given to assets which may be owned but are not pledged to any bank or used to secure any loan.

Income needs to be itemised to include salaries, business income, rental income, etc. The level of income and the types of income is very important in the debt restructuring process, for example, income from rental income should be used to pay loans/mortgages on the properties producing the rental income. Other income should not be used to top up these payments and this usually form part of the restructuring package.

All expenses apart from the above mentioned loan payments expenses should be detailed with a view to reviewing and prioritising their importnace. It is very important to ensure that all expenses are given careful consideration and the importance of some over others are considered. This is a very personal thing and should be done on an individual bases because what is important to one person may not be as important to another.

Finally, whether for personal or corporate debt restructuring it is vital to consider where it is you want to end up and what assets you want to try and keep. This will enable the restructuring to focus on what is it is you are trying to achieve. When that objective is clearly defined it make the restructuring specialists job much easier and results much more definable.