Bankruptcy is proving popular for a fresh start


All of our 20 clients who have gone through the bankruptcy process since the beginning of 2014 have expressed delight with their new found debt freedom.

Assignee meetings

After a few initial hiccups with bank accounts all has been plain sailing. Assignee meetings have take place for some of the people which have been conducted in a very professional and understanding manner by the ISI bankruptcy staff. These meetings have been very straight forward with all of the necessary information being supplied to the ISI by NEO Financial prior to the meeting making the meeting as short and painless as possible. There has been some emotion and tears both expressions of relief that the debt stress is now over!

Family Homes

Some people have already sold their family home so for them there has been on issue regarding trying to keep the family home. However, any negative equity remaining after the sale of the family home is now gone.

For those who wish to keep the family home that has not been a problem for the clients who are in this position. They were given clear advice on the process and the fact that they were able to keep up any mortgage payments has been vital in the process. There was no equity in the family homes that are being retained and so the assignee has no interest in confirming his interest in the home. Arrangements are being made to have the assignees interest passed back to the owners with legal fees having to be paid for the paperwork to be completed.

Income

For all of the clients who were made bankrupt their income was less than the reasonable living expenses guidelines as outlined by the ISI for families of their size and make up so there is no question of any payment order being made and unless there is a very significant change in circumstances there will be no such payment order during the 3 years in bankruptcy.

It has been important for us to point out to clients that eh bankruptcy period is 3 years and not 5 as some opponents to bankruptcy keep pointing out. The period can be extended if the circumstances permit. These circumstances are limited in nature and would not apply to many people.

Independent Advice

I cannot stress how important independent advice and plenty of knowledge is the key to a successful debt resolution process. And in a lot of cases solutions like PIA or DSA extending over 5-7 years are not practical nor in the interest of the Debtor and therefore should be avoided.

Liberation

Bankruptcy can be and has been for many this year already the liberator they are looking for. It can be liberation from the shackles of debt, banks, unscrupulous debt collection agencies and solicitors. The bankruptcy process and the assignee is there to assist the debtor and keep unscrupulous creditors away from the debtors. Once a client enters bankruptcy the creditors are not allowed to contact the debt and protection is in place. This alone, for many debtors has been a relief and stress reliever.

 

Paul C Carroll

Bankruptcy and Insolvency Partner

NEO Financial

www.NEOFinancial.ie

Phone: 01 437 0908

 

Why Reasonable Expenses Will Be Reasonable for Personal Insolvency


The past few weeks have seen the issue of what is “reasonable expenses” and who is going to decide what they are, regularly debated over the airways when it comes to the new personal insolvency act which is coming into operation in June.

The current ‘spin’ is all around making people feel that they are going to be turned upside down and every penny that drops out will be taken and given to the banks. This is of course yet another story the banks love the public to hear so they get scared of thinking about using the insolvency act. However, though the guidelines for reasonable expenses have yet to be published by the Insolvency Service of Ireland (ISI), I do not expect that any such shakedown is going to happen to people who find themselves in such difficulty that they have to declare themselves insolvent.

There are a few things that need to be made clear about the new personal insolvency act that will hopefully put people at ease in relation to its use and what it is really intended for.

The first clue is in the name “personal insolvency act”. The act is intended for people who find themselves in debt, to be given a mechanism to get themselves out of debt in a reasonable time with some payments to creditors where possible. It is not intended for the banks to be able to shake down people for everything they have and a bit more (though the banks would like us to think that). Yes there is a kind of veto held by the bank who is owed more than 65% of the total debt. However, that will usually mean that the biggest creditor will have the most to lose if a deal is not done. How often have we heard the more you owe the banks the more they want to do a deal with you? Well this is finally going to reach the ordinary man in the street. So making reasonable expenses unrealistic for people to live will not do anything for the capacity of people to engage with the banks to come to an agreement.

The second thing is to look at the personal insolvency act from the banks point of view (not from the bank spin). It is an opportunity for them to clean up their act and balance sheet, come clean on the extra ordinary amount of bad loans which will have to be written off, get good PR by saying they are supporting the use of the act and most importantly it is an opportunity for them to generate a lot of very much needed cash (and looking at the most recent Bank of Ireland financials it is very very much needed cash!). They are going to generate cash from two sources where they would not otherwise. In the first instance where there are buy to let properties in a portfolio of a person using a personal insolvency agreement these properties will be sold therefore generating the banks immediate cash which otherwise would not be generated. This is the case even if the sale proceeds are lass then the loan amount. Generating 60% of a loan outstanding  and in significant arrears is better than generating 0% which is what is happening right now. They will also benefit from the cash being paid by the Debtor over the lifetime of the personal insolvency agreement.

So it is in the bank’s interest to keep the debtor on side and not too squeeze the life out of them. The banks will not admit it but they need customers and ALL of the people who enter into personal insolvency arrangements will be their customers too.

The final point to consider is when a debtor looks at their position and is seeking to use the personal insolvency act it is likely that in reality they would be better off if they did just declare bankruptcy and not have any commitment to pay any amount over a 6 year period. Yes they would lose their family home and all other significant assets. However, they will lose their other assets anyway in a personal insolvency arrangement and considering the current property market if they do a deal with the banks on a write down on their family home they will possibly still be carrying a small portion of negative equity. So this is not a fantastic ‘get off the hook’ scenario for the debtor as being peddled in some quarters. The banks are very aware of the fact for most people bankruptcy could be a better option but a disaster for the banks and so in the end they will corporate with debtors going through the personal insolvency process because as much as it is seen as a mechanism for the survival of the debtor it is equally as important for the future of the banks.

The ISI is aware of the fine balance needed to engage all parties in the act and in reality it is the Debtor who is going to have to be kept on side for the recovery of the economy and banks. So reasonable will be reasonable!

Debtors need to keep in mind power is numbers and there are going to be very significant numbers going through the insolvency process so there is no need to give in to the shakedown!

 

Paul C Carroll FCCA

Personal Insolvency Expert

www.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

2013 time to MOVE ON


The arrival of 2013 has brought some welcome good news if not seismic (unless the news is being described by our Enda Kenny!). The increase in customer spending over the Christmas period, the reported slowing down of the property crash and today the announcement by PTSB that it is to dip its toe back into the lending market in 2013.

 

However, the biggest thing to happen which will make the single largest contribution to the recovery of the Irish economy and restoration of the dignity of the Irish people is the passing of the Personal Insolvency Act 2012. If the banks participate in the insolvency process as it is intended and promised by the minister of justice, it will bring dramatic relief for ordinary people stuck in a household debt trap. It will give those ordinary people the opportunity to ditch most of the excess debt while securing theirs family home and their dignity. The physiological effect of this alone will boost the ability of people to think of other things rather then their debt burden. It will free them to begin to live again knowing that they have down the best they can regarding their debts and now they can move on.

If anything, what Ireland needs in 2013 is to “MOVE ON”. It has become obvious over the past 5 years in Ireland that nobody is willing to take a real hard look at what has happened  to the country because those who need to look are the ones to blame. So what needs to be done now is for everybody to move on. People need to stop looking to have someone to blame for the depression. Banks need to move on and start taking the hits on household debt that they a mostly responsible for in the first place. Bank negotiations should not be so difficult. The political and professional classed should start adding value to the country and stop feathering their own nests like they have been doing for so long.

Ireland is a small county and so easily fixed. We have generated tremendous political respect over the past few years in the way we have tried to deal with our problems. Now it is time that some of that respect is felt by the ordinary people through household debt relief, realistic bank negotiations, proper and full implementation of the Personal Insolvency Act.

Sometimes we forget people are the economy and if we provide people with the ability to survive they will do that and grow bigger, stronger and drive on the road to recovery. That road is in front of us and people want to get on it but they need help. MOVING ON will be the catalyst and our saviour!

Paul C Carroll FCCA

NEO Financial Solutions

Mortgage arrears on the increase and simple solution being ignored


All of the comment yesterday and this morning on the current mortgage arrears situation miss one very important point and that is the significant number of people who are not yet in arrears but who will be in the coming months. The number of people who come to see me who are not yet in arrears is still rising and is of great concern since they are not in any of the arrears figures published yesterday.

Despite what the banks and government want us to believe this problem is getting bigger and nobody is taking it seriously enough to stem the tide. In the Irish times today David Hall of Irish mortgage holds association makes this same point better then I could and has been for some time.

In my recent interview on RTE I spoke of the current environment being different and nothing like what we have seen before. Well it seems to be getting worse through lack of action not because of lack of solutions. In fact since that interview solutions have dried up, banks have been given instructions by the central bank and government NOT to do any deals for debt forgiveness with borrowers. This is the continuation of the government policy of looking after the fat cats and make the people in trouble or most vulnerable pay more.

The upcoming Personal Insolvency Legalisation has been tainted by the fat cat banks and been allowed by the government. So if the banks do not play ball then the legalisation will be another failure for a government which has turned its back on the ordinary people.

It is obvious to everyone that there is a massive household debt problem here which is holding back the people economically and emotionally. This needs to be addressed and quickly. Our leaders should hop on the government jet and head not to Brussels for fancy meetings and dinners but head west to Iceland where they have solved the household debt problem simply and quickly. The Icelandic government nationalised their banks (as we effectively have done) then instructed them to write down all home mortgages to 110% of the property value. This had the effect of releasing the ordinary people from the excesses of massive household debt and in turn helped their economy to become the fastest growing economy in the western world.

Not only that but after having had to let their banks go bust and default on major loans they have successfully returned to the bond markets. The bond traders know how to get their money back when a default happens and that is to lend again! This is something which seems to have passed our government and their advisors by.

The mortgage arrears problems are not going to go away with tinkering around the edges. If the tinkering continues the economic disaster we are experiencing will only get worse! And it looks like that is what is in store for us for a long while!

 

Paul C Carroll

www.neofinancialsolutions.com

AIB AND SME Loans


If the announcement today from AIB is taken at face value it is a very positive step for SMEs all over the country. The shift of a lending decision back from the so called business centres to branches is a good move. After all it is the branches who see the owners of the SMEs on a daily basis, deal with their issues and know the business in as much as possible from a banking perspective.

Getting back to the core idea of banking in knowing your customer, assessing their needs and ability to repay on a face to face basis rather then some junk pumped out of a spreadsheet by a faceless person is surely a back to basics idea which is very welcome.

I have a few concerns though and the first being that this is a simple PR exercise and will simple produce faster NO answers! There needs to be a commitment of funds and confidence in the branch level personal to ensure they can lend when they want too.

My second concern is do the branch staff actually know how to do real banking any more?Before the crises they were involved in simply selling and with no regard for assessing a customers ability to pay. Now things have come full circle and we need the skills of the old style bankers who know their customs and could make good sound lending decisions. Are these people still in the banks and if so will they really be given the money to lend. Time will tell and very quickly if what the AIB statement says is true.

I will be taking myself down to my local AIB with my excellent business plan looking for €25k and the answer the day after! I cannot wait and of course I will keep you posted!

Paul C Carroll FCCA

NEO Financial Solutions

paul.carroll@neofinancialsolutions.com

 

Ireland Financially and Morally Bankrupt


So at long last the EU Commission and government is about to admit (again) that things are not getting better in Ireland (unless you are part of the political and professional elite who continue to rip our broken economy off). They are now admitting what we all have been experiencing for the past 5 years and will continue to experience while these fools are still in control of your country. And worse still is that they have revised their figures on growth 3 times in the past 6 months ….. all downwards! It seems that these people are clowns and just cannot do their job!

We still have falling property prices, falling income, no sign of urgent action on the household debt problems, refusal to address excessive pensions and salaries, increasing prices of utilities and anything else the government has its hands on!

Being the “good boy” in the Euro class has cost us dearly. It has robbed us of 4 years in the fight to overcome this Great Recession, cost us €64b in bank debt, given us unemployment approaching 20% and massive increase in immigration again!

We now need some simple but radical things to be done which include the immediate cutting of excess salaries and expenses of public servants to ensure nobody is paid in excess of €100,000, pass a law to have excessive pensions cut, a financial transaction tax should be introduced immediately, the utilities under control of government should be made reduce prices and immediate introduction of a debt forgiveness programme for anyone in negative equity! There a many more things to be done but these are starting points and targeted at the people at the top, those who are responsible for the mess and assistance for those who are suffering the most.

But I have no confidence in anything being done that will make things better and more fair! The main reason for this is that as long as the people in control and advising are the people who gain most from continuing to encourage the financial bankruptcy of the country we will be doomed to fail!

The people whom we have been brought up to trust and rely upon from priests to politicians to professionals have all slowly reduced this country to bankruptcy both morally and financially and it seems the majority of people seem to be happy to do nothing about it! I just wonder how long this will stay and when will people finally realise something needs to be done apart from talking about it?

Paul C Carroll FCCA
NEO Financial Solutions
paul.carroll@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

Mortgage Arrears 30% not 10% as reported by the Banks!


So the seismic shift that was brought home last June was a seismic figure of our leaders’ imagination. It is a shame that they do not use their significant powers of imagination to put a realistic plan together to get this country out of the depression we are in right now.

My biggest concern now is not how we are going to get back the money we paid into our Banks and then out the back door to private investor and banks in Germany, France, UK, US and further afield. The real worry now is where we are going to get the money to give the banks the second bailout or hopefully “bail in” this time. When I talk about a “bail in” I mean when funds are put into the banks they actually stay in the banks and are used to give people the debt forgiveness they need.

I have taken a short unscientific look at our ever growing client list and a sticking thing to come from the review is that over 65% of them have come to us BRFORE they have gone into arrears. They know they are heading into trouble because of falling salaries, falling rental income and falling savings. Another big reason for people coming looking for help is the ending of interest only periods and usually that means that repayments are going up by as much as 3 times when income is falling.

So from a banking perspective the numbers they give us about accounts being in difficultyare considerably more then they admit. It is our view that there are two reasons for this, firstly as described above they do not know of the pending trouble of people and the second they massage the published figures anyway!

So it seems the figures given by the central bank recently about 10% of mortgages being in difficulty are grossly underestimated (Central Bank report March 2012)  and/or reported. So whatever about recovering the €64b paid into the banks to date to “save” them I believe the next €20b or so for the impending “bail in” is the real problem.

The first €1b of that €20b could be gathered on Monday 1st October by refusing to pay the AIB bond which is up for payment. That would be a good start!

Paul C Carroll FCCA

paul.carroll@neofinancialsolutions.com

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