# First insolvency settlement with mortgage debt



## Matthew Moore (25 Jan 2014)

It'll be interesting to see what type of deal was reached.

http://www.rte.ie/news/2014/0124/500055-insolvency-mortgage/


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## daftpunk (25 Jan 2014)

I think the family involved had two buy-to-let properties written down, but can afford full mortgage repayments on the family home, so will be left with that mortgage only.
It is good news though, and congrats to them and their PIP.


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## Delboy (25 Jan 2014)

Another sad day for those struggling in this country to meet their debts.
They got to keep the family home and the buy to lets, with the debt written down to a 'sustainable level'....absolute sickening joke


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## commonsense (25 Jan 2014)

I would reserve judgement until we see the actual details of the deal that has been hammered out. While "now" is not the right time to sell the BTL's - that's not to say that down the line this could change. As it stands the deal appears to include the income from them and the owners paying towards them - all may not appear to be as it seems.


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## Delboy (25 Jan 2014)

http://www.independent.ie/irish-new...debt-first-to-get-writeoff-deal-29949084.html
Details are done and dusted from what I can see ....€600k write off and had to give up none of the gaffs.
And I doubt we'll ever see any deal being revisited unless it collapses....i.e. those who get a 'good' deal are'nt going to have someone come knocking on their door looking for more in years to come. That just won't happen in this country


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## Stu24 (25 Jan 2014)

I would be amazed if the secured lender is letting them retain the BTLs without some provision for them to benefit more from the agreement in the long run. BTLs to be sold at end of term and clawback used perhaps.. all guess work tho, and good to see a PIA approved.


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## Brendan Burgess (25 Jan 2014)

Delboy said:


> Another sad day for those struggling in this country to meet their debts.
> They got to keep the family home and the buy to lets, with the debt written down to a 'sustainable level'....absolute sickening joke



Hi Delboy

This couple was insolvent or else they would not have qualified for a PIA. 

They could have gone bankrupt which wouldn't benefit anyone. Their debts would be written off anyway. 

We don't know much about this case, and I am surprised that they kept the buy to lets.  But I would imagine that the PIA incorporates some form of a split mortgage, so that the lender shares in the upside. 

If the writing off of unsecured loans and negative equity allows people to keep their homes, then it's good for them, good for the secured lender and good for society generally.


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## Delboy (26 Jan 2014)

Brendan Burgess said:


> Hi Delboy
> 
> This couple was insolvent or else they would not have qualified for a PIA.
> 
> ...



It's good if they keep their home or their homeS?


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## Dr.Debt (26 Jan 2014)

I suspect that the only reason that they are allowed to retain the BTLs is because they are in negative equity and the banks don't want to crystallize the loss by having them sold. This is a fairly common approach by banks at the moment. The banks will be happy to play this card until the properties are back in positive equity.

If my suspicions are correct, its not such a great deal for the debtor. The debtor is still stuck with the huge burden of BTL mortgages for many years to come and just becomes a rent collector for the bank. The PIP has received a miserable 150 euro to date and will see the remainder of fees spread thinly over the next 6 years. The only winners in this are the banks. Quelle surprise.


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## T&R (27 Jan 2014)

Delboy said:


> Another sad day for those struggling in this country to meet their debts.
> They got to keep the family home and the buy to lets, with the debt written down to a 'sustainable level'....absolute sickening joke



Del Boy
There is nothing stopping anyone in this country who are struggling with debt to engage either with a PIP or their creditors. Its time we faced up to the issues that exist and deal with them. Had they gone bankrupt no doubt you would have been whining also


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## Brendan Burgess (27 Jan 2014)

Hi Delboy

I had missed the link in your post to the further details from Charlie Weston 

http://www.independent.ie/irish-new...debt-first-to-get-writeoff-deal-29949084.html



> The agreement at the creditors' meeting does not cover the family  home, but the family's two buy-to-let properties are part of the deal.
> 
> 
> It  is understood the family are able to cover the mortgage on their family  home, but were unable to meet the repayments on the two investor  mortgages and a string of other loans.



This is very odd indeed and I hope we get more details. 

Why did they not just surrender or voluntarily sell the RIPs? 

They might well have been able to do a DSA on the unsecured credit and be out of the arrangement much earlier.


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## Delboy (27 Jan 2014)

T&R said:


> Del Boy
> There is nothing stopping anyone in this country who are struggling with debt to engage either with a PIP or their creditors. Its time we faced up to the issues that exist and deal with them. Had they gone bankrupt no doubt you would have been whining also



Whatever...if you think people get 50% write off on their debts while apparently keeping several gaffs, at a time when there is a huge shortage of supply in some areas (with house prices roaring upwards again the past 2 years)....and that this is society facing up to it's 'issues'....well then I think your being very selective in the 'issues' you feel we need to face up to?


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## Codogly (28 Jan 2014)

Im with DelBoy on this one ... whats to stop us all speculating on BTL's into the future safe in the knowledge that if we guest right we benefit from capital appreciation / increased rental income , and also safe in the knowledge that if we are wrong and the market crashes that we simply enter PIA and get the negative equity written off.

Naturally the devil is in the detail and we wont have a full picture until we see that data.

I hope the detail shows that the lender has retained an interest in the BTL's and can recoup the write down + interest in the future ... otherwise its sending the wrong message.


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## Bronte (28 Jan 2014)

Delboy said:


> Whatever...if you think people get 50% write off on their debts while apparently keeping several gaffs,


 
Are they keeping property or keeping debt?

I don't understand your point about lack of homes, presumably these two BTL's are housing people? In any case the country is awash with property apart from Dublin and a couple of other cities.

_____________

I wonder how much the mortgage is on the family home and whether there is equity in it.  Only reason I can see for the banks allowing the BTL's to continue is if the loss would be greater if they were forced to sell now.  Plus another poster mentioned that banks don't want to crystalise their losses.


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## Wishes (28 Jan 2014)

This is a very odd case.  I thought we were all lead to believe that BTL's were not safe, whether they were making money or not??


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## Gerry Canning (28 Jan 2014)

I would be surprised if Bank has just (walked) away and left all property to debtor, unless there is as mentioned negative equity/write down Bank losses etc.

I find it a worry to read the (why let them off) atitude being driven so hard.
I must assume the re-solution was the best that could be achieved.There should be no winners .

I find it quaint there does not appear to be such (shouting) over write downs on corporate entities? 
Do not forget ,we, Joe and Josephine Muggins pay for both corporate and personal write downs!


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## Delboy (28 Jan 2014)

Bronte said:


> Are they keeping property or keeping debt?
> 
> I don't understand your point about lack of homes, presumably these two BTL's are housing people? In any case the country is awash with property apart from Dublin and a couple of other cities



'Dublin and a couple of other cities'...so thats probably affecting half the population!!! So we're not awash with property...there's a huge shortage, especially in large parts of Dublin that's driving prices crazy.
And lack of repossessions is only adding to the shortage and also encouraging people into a herd type mentality right now that need to buy asap as prices are going up.


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## Bronte (28 Jan 2014)

Delboy said:


> And lack of repossessions is only adding to the shortage and also encouraging people into a herd type mentality right now that need to buy asap as prices are going up.


 
If people are that stupid after all that has happened than I've no sympathy for them. You should only buy what you can afford and if you cannot afford it don't buy it. 

You haven't answered the question, who is going to house the people renting if the house is sold? You do realise the state is abysmal at housing people and have a hugh backlog on those needing housing, a need that is catered for by the much maligned private landlord who is taxed at every turn. I'd say a lot of the reason for housing shortgages is mainly down to lack of supply but also because people like me won't buy as the returns are abysmal, and the red tape every more onerous.


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## Wishes (28 Jan 2014)

I believe Dublin City Council has plans on building 5,000 houses as per a council meeting last night.  God only knows when this will happen.


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## Dermot (28 Jan 2014)

I'd say a lot of the reason for housing shortage's is mainly down to lack of supply but also because people like me won't buy as the returns are abysmal, and the red tape every more onerous.[/QUOTE Bronte]

The red tape, regulation taxation and anti landlord sentiment in government circles and in the general population is not only to the detriment of Landlords but also of Tenants.  There needs to be a balance in the legislation in relation to private landlords rights.


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## Delboy (29 Jan 2014)

Bronte said:


> If people are that stupid after all that has happened than I've no sympathy for them. You should only buy what you can afford and if you cannot afford it don't buy it.
> 
> You haven't answered the question, who is going to house the people renting if the house is sold? You do realise the state is abysmal at housing people and have a hugh backlog on those needing housing, a need that is catered for by the much maligned private landlord who is taxed at every turn. I'd say a lot of the reason for housing shortgages is mainly down to lack of supply but also because people like me won't buy as the returns are abysmal, and the red tape every more onerous.



I agree with your first point...hence it's why I don't like to see debt write offs while retaining house ownership now for people in trouble.
And the kind of deal struck in the original instance highlighted in this post, IMO, only encourages excessive risk taking in the future as people believe they'll never lose what they have no matter how indebted they find themselves. 

I don't get your question about who will house the people currently renting if the house their in is sold??? If they're renting now, they just go and rent in a different house if their current place is sold...why are you bringing the state and social housing into this....have you info on the tenants in these buy to lets that they are currently receiving RA for example?

On your last point, I think perhaps your dragging a different argument into the mix here from a landlords perspective?


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## Bronte (30 Jan 2014)

Delboy said:


> it's why I don't like to see debt write offs while retaining house ownership now for people in trouble.
> And the kind of deal struck in the original instance highlighted in this post, IMO, only encourages excessive risk taking in the future as people believe they'll never lose what they have no matter how indebted they find themselves.


 
As has been pointed out to you, particulary by Dr Debt, this might not be a good deal at all for the borrowers. They may be still saddled with NE, they may have had debt written off, but they may will owe a vast amount that will take every spare penny for the foreseeable future. 

As for the PIP, he's done a lot of work and has been paid practically zero and now we have the case of another PIP who was paid 3K and his proposal was rejected by the bank, and the borrower is mad at the PIP and has made a complaint about him to the ISI. 

Sounds to me that this whole insolvency and PIP is totally ill thought out and I doubt very much if any PIP will make money out of it. It's all a nonsense. And what's really laughable is that Lorcan O Connor of the ISI thinks this debt write off is brillant. This one is a showcase of what's to come.  The truth is that his office is not working as it should and there are no floodgates of debtors coming to him, because you know what, it's a bureaucratic nightmare and costly too. Why the ISI, the government, the mandarins who drafted the legislation and the official assignee are all in cloud cuckoo land.  Coz you know what people with no money cannot pay to go insolvent/bankrupt etc.  

Meanwhile we have all the newly appointed insolvency judges twiddling their thumbs. At a cost of 0000000. And we've a brand new quango the ISI also being paid for nothing. Meanwhile the people really struggling and trying to get on with their lives are getting nowhere.


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## Dr.Debt (30 Jan 2014)

Yes, I think the whole insolvency service is a dead duck. Its a pity that Lorcan O Connor doesn't acknowledge  that the whole thing is starting to crumble instead of making public announcements that he is expecting an avalanche of applications in the 2nd quarter. He also keeps on talking about hiring more PIPs when none are required.

Here's the problem. The banks are not interested in the Insolvency Service (mainly due to cost and bureaucracy)so they are doing everything possible to side step it. The PIPs have realised that they will never be paid for their time so they are working either on informal arrangements with banks OR preparing clients for bankruptcy.

I think the overall design of the legislation is 75% there. It falls down however due to unnecessary bureaucracy and the volume of work required. It requires a lot of work from the banks, the PIP, the ISI, and the courts. Bottom line reality is that there is no money available to pay for all this.The designers of the legislation seem to have completely ignored the "running cost" of these processes and the assumption is that the banks and the goodwill of PIPs will fund the entire shinnanigans . That assumption is flawed and thats why it wont work in current format. Does an individual with a 60,000 euro debt problem really need the input of so many agencies. I dont think so.


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## Delboy (30 Jan 2014)

Bronte said:


> As for the PIP, he's done a lot of work and has been paid practically zero and now we have the case of another PIP who was paid 3K and his proposal was rejected by the bank, and the borrower is mad at the PIP and has made a complaint about him to the ISI.
> Sounds to me that this whole insolvency and PIP is totally ill thought out and I doubt very much if any PIP will make money out of it.



The PIP in this case got 5k. The PIP who got 3k I presume refers to this case
http://www.independent.ie/irish-new...debt-first-to-get-writeoff-deal-29949084.html
I'm not sure how you equate that to getting paid practically zero. 5k/3k is a lot of money to me and I'm sure the PIP's could have quiet a few cases running at the same time.

But we're going somewhat off point here if we're going to start discussing PIP's fees


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## Dr.Debt (30 Jan 2014)

The PIP did not get 5K. He's expecting to get paid 5K in drips and drabs over the next five years.The press reported that he has received 150 euro so far !!


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## Delboy (30 Jan 2014)

Not sure where you get that he's 'expecting' to be paid 5k from. Per the report in the Indo


> He said he charged €5,000, plus VAT of 23pc, for the deal. Just €150 of this was paid upfront, with the main lenders ending up covering the rest of the PIP's costs.



So 150 from the client and the rest from the banks. Can't see the banks not paying up, can you?
So the tax payer takes a hit on the debt being written off, on already having funded the banks to get them this far over the past 5 years....and now pays for the PIP as well! 
3 cheers for the taxpayer, hip hip


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## Dr.Debt (30 Jan 2014)

Yes I can.

The way these deals normally work is that the PIP gets paid a certain amount from each payment that the debtor makes over the life of the arrangement. Do you really think the banks will pay the PIP 5K up front with the very tangible risk that the arrangement will not go the full distance.
If the PIP is paid 5K by the banks today and the debtor disappears tomorrow, then the bank has lost 5K. It doesnt work like that. The PIP is paid based on the payments made by the debtor and nothing else. If the debtor doesnt stick to the arrangement, the PIP doesn't get paid


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## Steve Thatcher (31 Jan 2014)

Bronte said:


> As has been pointed out to you, particulary by Dr Debt, this might not be a good deal at all for the borrowers. They may be still saddled with NE, they may have had debt written off, but they may will owe a vast amount that will take every spare penny for the foreseeable future.
> 
> As for the PIP, he's done a lot of work and has been paid practically zero and now we have the case of another PIP who was paid 3K and his proposal was rejected by the bank, and the borrower is mad at the PIP and has made a complaint about him to the ISI.
> 
> ...



Spot on Bronte

Steve


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## Bronte (5 Feb 2014)

Delboy said:


> And the kind of deal struck in the original instance highlighted in this post, IMO, only encourages excessive risk taking in the future as people believe they'll never lose what they have no matter how indebted they find themselves.


 
I was thinking of you when I heard about AIB writing off at least 20% of mortgages on some homeloans, hope it doesn't make you choke on your cornflakes this morning 

http://www.irishtimes.com/business/...ib-to-write-off-debt-for-homeowners-1.1679593

I'd say a foretaste of what's to come and something that should have happened years ago, which we discussed quite a while back on here.


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## Delboy (5 Feb 2014)

Glad to see your so glib about the whole process Bronte. Are you possibly looking to benefit from some of these write-offs yourself or perhaps you don't pay tax, and therefore this isn't going to hurt you?

So 2 neighbours ...1 struggling to pay but just about managing it. The other not/can't paying. The latter gets a good chunk written off and can afford a better standard of living than their neighbour
If that seems fair to you, then we have very different outlooks on life.

And under this new deal, if you 'come' into money at a later stage, you'll get bigger write-offs! 
http://www.irishtimes.com/business/...debt-for-some-homeowners-in-arrears-1.1679593


> If the owner comes into extra money, they will be given extra write-offs for sums set against the warehoused portion of the loan. In the first five years of the new arrangement, the write-off would amount to €3,000 for every €7,000 repaid off the warehoused €100,000. Between five and 10 years, the discount would be €2,000 off every €8,000 paid back. The move is designed to incentivise early repayment.


So when the banks should be writing these new deals in such a way as to have 1st dibs on any windfalls, they're instead going to give more write offs at the taxpayers expense!

I'm not stupid enough to think that debt write off's won't happen in this country. This is Ireland after all. It's the holding on to the asset(s) that annoys me. It punishes those that were prudent during the false boom, who were weary of taking on huge mountains of debt, living a flash lifestyle etc

But no, to answer your original question, I won't be choking on anything. It's nothing less than I expected.


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## Bronte (5 Feb 2014)

Delboy said:


> Glad to see your so glib about the whole process Bronte. Are you possibly looking to benefit from some of these write-offs yourself or perhaps you don't pay tax, and therefore this isn't going to hurt you?
> 
> If that seems fair to you, then we have very different outlooks on life.


 
I wasn't intending to be glib, just realistic, I've known since this whole sorry mess started that the only way to sort it was to write down debts to sustainable levels. 

Just to clarify, no I will not be looking for debt write off, and yes I pay income tax, some kind of social insurance, for which I don't believe I'll ever be entitled to any social payment, nppr, household charge, property tax, rates etc in Ireland. I come for the old school, you know the one where you borrow and you pay back every penny. And it's a real struggle to make any money as a landlord. 

I agree with you that it is not fair that those who seeming did the right thing and are struggling get no break, but those that broke every rule book on borrowing are seemingly getting away scot free. But I don't believe there is such a thing as a free lunch. If those that were idiots get off, they will just go and do the same again, and next time there will be nobody to pick up the pieces. But I also see that we have to have debt write off to get people back on their feet. And we mustn't forget those who are under an immense amount of stress, that's without the suicides. So in the case mentioned in this thread, I don't actually think yet it is clear to me that the debtors got a good deal.

And the reason for the carrot in relation to inheritances is... they know full well that the inheritence will go elsewhere otherwise, so they are being clever and ergo that costs you and me less not more as you seem to think.


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## Delboy (5 Feb 2014)

I agree that people should be helped to get back back on their feet, and given a chance to start again. You'd want to be made of stone not to have sympathy for most people in trouble (most, but not all !!!).

The way I'd help people in real trouble is to write off their debts(following a thorough review) as part of handing over the keys...they 'learn' their lesson (those that went OTT) and get a chance to start again. 
The banks get burned and hopefully learn a lesson for the future.
The next generation of buyers see some supply come on to the currently dysfunctional market and are'nt punished with high prices (which are as a result of Govt and Bank policy in trying to prop up the current generation who are in NE)


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## looking2011 (5 Feb 2014)

The moral high ground brigade here seem to think that everyone who is facing personal insolvency or bankruptcy were 'idiots', greedy or deserve to be punished. Some are in this situation due to severely reduced wages, seperation, berevement and a host of other reasons, they may have been amongst your hailoed 'prudent few' spending years being sensible and yet still got burned.
Hope it stays fine for you.


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## Delboy (5 Feb 2014)

Moral high ground brigade to you, prudent/conservative to me!


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