Debt Forgiveness.

Firefly said:

I don't know!!! A lot of people are sitting on nice deposits and will be buying dream homes for the price of average homes a few years ago (feckers!)

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That would be me then. Also have a property in negative equity. Why shouldn't I be able to give back my negative equity property too and get debt forgiveness?

thesimpsons

Not all of us who bought during the boom behaved like that. I furnished my place from charity shops and furniture friends were getting rid of and have done without holidays since.

I agree though that some people were really stupid and their borrowing didn't end with trying to put a roof over their head and get out of the rental market. They also wanted brand new furniture, decking in the garden, a second car, winter holidays and so on. It is hard to feel sympathy for some people who are struggling, but its also annoying to see them being used as an example of why anyone who bought during the boom years was just a materialistic silly spendthrift.

truthseeker said:

I was just wanting a roof over my head, a home, even if it went down in value I thought that between the amount Id paid as a deposit, and the amount Id paid back in a 7/8/9/10 year period would allow me to at least break even to sell (or a manageable shortfall like 20k) and in the meantime have saved a good deposit for somewhere bigger.

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Unfortunately this is a perfect example of where it all went wrong. It wasn't you truthseeker. The problem was the banks started shelling out too much money, if they hadn't you wouldn't have been able to buy and property prices wouldn't have gone so crazy. Which all leads back to interest rates going too low. When I saw interest rates at 2 and 3 percent I thought it was like money for nothing.

liaconn said:

thesimpsons

Not all of us who bought during the boom behaved like that. I furnished my place from charity shops and furniture friends were getting rid of and have done without holidays since.

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Same as me. I saved for and paid outright for my wedding, and same for a very conservative second hand car. I have no other loans bar my mortgage. I do also have savings but right now need to keep them as a cushion with the OH not working and it looking like I may lose my job too.

Sorry to hear that Truthseeker.


I seem to be dipping more and more into my savings for everyday stuff that my salary just won't stretch to anymore.

liaconn said:

Sorry to hear that Truthseeker.

I seem to be dipping more and more into my savings for everyday stuff that my salary just won't stretch to anymore.

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Thanks Liaconn - its ok, I have alternative plans in place if the worst comes to the worst.

I hear you about the savings, earnings are back to 2002 levels, but expenses are still at 2011 levels!!!

No matter what way its dressed up, debt forgiveness or rescheduling or equity swaps will cost money immediately. The country has no money, so the cost will be passed onto taxpayers in terms of increased taxation.

There are a lot of struggling taxpayers in this country - increasing their tax to pay for the debts of a minority will be the last straw for many.

You'll end up with a situation whereby the most wreckless will get a bailout from the most prudent, which will in turn drag down a large proportion of the most prudent. Unfortunately for the prudent, there will be nobody left to bail them out.

The other thing to consider is the Constitutional position - I believe the context of the word "prudent" in the preamble could make any debt forgiveness which makes prudent people pay for less prudent peoples debts is unconstitutional.

csirl said:

You'll end up with a situation whereby the most wreckless will get a bailout from the most prudent, which will in turn drag down a large proportion of the most prudent. Unfortunately for the prudent, there will be nobody left to bail them out.

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This is already what is happening in this country with the taxpayers bailing out the banks.

I am one of those people in my late 30s who didnt buy in 2006 because I saw that the estate agents werent even working to make their money - frequently not turning up for appointments without telling prospective buyers, and with no apologies. The last house i looked at was in a run down area of Crumlin - needed full redevelopment - there was a queue of people outside and not an estate agent to be seen for one evening viewing.

I decided then to keep renting in a place I wanted to live as opposed to buying one in an house/area I didnt - because if people werent even having to work to make fortunes on the property market - there was something wrong.

At the same time I was asked to go to one of those qualitative discussion groups on mortages for people of my age interested in buying. It was hosted by a unnamed financial institution. It was about the 100% mortgages and people's opinions of them - and also of the 110% mortgages. I was vehemently opposed to them - I was always raised to believe - if you havent saved for something - you shouldnt have it.

At this group discussion there was a couple, both of whom were PhD students (in arts and sciences i believe). Qualifications in these do not necessarily mean large salaries. This couple were arguing that we should have 110% mortgages - as how else would they ever be able to get a house. My response at the time was that they shouldnt, they have no savings now - so why would they expect to own things. Its not a right!

I was kept in my corner by the discussion faciliator - it was obviously something that the FI was not interested in hearing.

It would gall me to know that a couple like that - who had no savings - were now being forgiven for their debt - when it was obvious that they should not be buying in the first place - not until their careers had actually started and returning profit!

I have every sympathy for thos in NE, but these same people were the ones parading around about how much their property had increased in value and that I was a fool for not buying at the same time of them. There is no way that their profits would have been shared - why should their debts.

csirl said:

No
You'll end up with a situation whereby the most wreckless will get a bailout from the most prudent, which will in turn drag down a large proportion of the most prudent. .

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Not everyone who still has money was prudent and not everyone who's struggling was reckless. That's an unfair statement.

There is no way of deciding fairly if someone should have debt written off. No matter who gets it there will always be someone who has a more deserving situation who wont have it written off.

Therefore it is every man for himself. Get what you can from who you can and dont worry about anyone else.

Somewhat similar to the Celtic Tiger. Only in reverse.

There is no way a bank would be chasing/making someone pay for 30 years for a shortfall.
The most they can eek it out is over a 12 year period where they can enforce a judgement for the shortfall.

If I was in the situation of having a shortfall of hundreds of thousands of euro I would be running down to the high court to file for bankruptcy. That would be discharged after 12 years in a worst case scenario. If I had the funds I would go the UK and go bankrupt there and never set foot in Ireland again.

Kate10 said:

Look , lets look at one of those young couples Shawady and truthseeker are talking about. Bought a two bed apartment in 2006 for €400k. Today worth €160k if it could be sold. NE of €240k. Mortgage payment €2,000. He was working as an engineer earning €65k. She's a public health nurse, was netting about €2,700 now about €2,100 after tax increases and pension levy. He got a cumulative pay cut of 40% before being let go in Jan 2010. They have one child and she is pregnant. They had savings which they used to pay their way while he looked for a job. No luck on the job front (two of his friends got jobs doing bar work in 2009 because it paid more than they were earning at the engineering consultancy, but by the time he was laid off these jobs were much harder to find ) and they have now missed four mortgage payments. He went to a job fair in Dublin and has been offered a job in Australia earning €75k. She can earn good money their too and they are told they will qualify for permanent residency, and ultimately citizenship if they want it. So they have a way out.

So they can either rent the apartment (if its lettable) and send money home to top up the payment, knowing that the apartment will probably never be worth what they paid for it), or they can send the keys in the post and bet that the bank won't track them down. Which would you do? Knowing all that went on in the banking sector, in government, in the regulator, and the EU, would you still feel a strong moral imperative to pay the mortgage?

People like this example are still the lucky ones of course, because at least they have a choice. I'm more worried about the people who don't have any choices.

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A friend of mine is in this situation. He had a very successful business and earned piles of money. He used it to fund a nice lifestyle, bordering on lavish. He also bought a big investment property in Dublin. Now his business is gone and he owes millions. He spend 6 months trying to find a job in Ireland that would cover his debts but couldn’t so now he’s moved to the Middle East on a three year contract. He will see his children for 2-3 weeks a year for the next three years. He’s 100% against any form of debt forgiveness.

Purple said:

A friend of mine is in this situation. He had a very successful business and earned piles of money. He used it to fund a nice lifestyle, bordering on lavish. He also bought a big investment property in Dublin. Now his business is gone and he owes millions. He spend 6 months trying to find a job in Ireland that would cover his debts but couldn’t so now he’s moved to the Middle East on a three year contract. He will see his children for 2-3 weeks a year for the next three years. He’s 100% against any form of debt forgiveness.

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Has he said why? If he feels it's because he was reckless then fair enough. But as I've already said not everyone who is struggling behaved recklessly during the good years. A lot of people just bought a very modest home in a very unsalubrious area because they thought it was the sensible thing to do. We weren't all out borrowing money for SUVs and skiing trips and unnecessary enhancements to our properties.

Purple said:

A friend of mine is in this situation. He had a very successful business and earned piles of money. He used it to fund a nice lifestyle, bordering on lavish. He also bought a big investment property in Dublin. Now his business is gone and he owes millions. He spend 6 months trying to find a job in Ireland that would cover his debts but couldn’t so now he’s moved to the Middle East on a three year contract. He will see his children for 2-3 weeks a year for the next three years. He’s 100% against any form of debt forgiveness.

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Purple fair dues to your friend. That is an enormous sacrifice and not one I would be willing to make.

I really don't think our society should expect people to make this sort of sacrifice to pay back mortgage debt. If all the daddies had to leave their kids (and wives/partners!) for three years in order to bail out our economy would we be willing to allow that? What sort of impact would that have on our society? I find it a bit nauseating to hear all of the anti Debt forgiveness (which is really just debt rescheduling by another name) and at the same time have to listen to a lot of talk about bond holders being "systemically important".

I agree with Kate. I think it is horrendous that someone will only see their children for 3 weeks a year and I think that would be a sacrifice way too far for most people. It is also not fair on the children. I think there has to be a middle ground here somewhere. Yes, people have to take some responsibility for their decisions, but there also has to be a recognition that a lot of people are suffering because of things that are not in their control. A bit of compassion and empathywould not go amiss and was something that was sadly missing during the boom years but will hopefully start creeping back into our thinking now. It really shouldn't be all about dog eat dog, tough luck I was smarter than you were now go sink or swim kind of thing.

Purple said:

A friend of mine is in this situation. He had a very successful business and earned piles of money. He used it to fund a nice lifestyle, bordering on lavish. He also bought a big investment property in Dublin. Now his business is gone and he owes millions. He spend 6 months trying to find a job in Ireland that would cover his debts but couldn’t so now he’s moved to the Middle East on a three year contract. He will see his children for 2-3 weeks a year for the next three years. He’s 100% against any form of debt forgiveness.

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While noble I think he is foolish. In 15 years time when his kids question where there father was during their childhood the last thing they will want to hear about is his noble efforts to pay back a bank who were bailed out by taxpayers..

Anyway, we can discuss debt forgiveness, debt restructuring, defaulting etc till the cows come home. At the end of the day its the people around you who are important not the address in which you live.

In 20 or 30 years time after we have been through another boom/recession/depression cycle the politicians will still be corrupt, the banks will still be screwing people and people will continue to live beyond their means.

But I am getting philosopical and I probably shouldnt...

liaconn said:

I agree with Kate. I think it is horrendous that someone will only see their children for 3 weeks a year and I think that would be a sacrifice way too far for most people. It is also not fair on the children. I think there has to be a middle ground here somewhere. Yes, people have to take some responsibility for their decisions, but there also has to be a recognition that a lot of people are suffering because of things that are not in their control. A bit of compassion and empathy would not go amiss and was something that was sadly missing during the boom years but will hopefully start creeping back into our thinking now. It really shouldn't be all about dog eat dog, tough luck I was smarter than you were now go sink or swim kind of thing.

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Sadly lacking from some posters here. Let them eat cake.

The_Banker said:

There is no way of deciding fairly if someone should have debt written off. No matter who gets it there will always be someone who has a more deserving situation who wont have it written off.

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I think this is part of the problem. There are so many variable to come up with a 'one size fits all' plan.
I know people that are in serious negative equity but are able to make their repayments and are not planning on moving.
I also have friends in apartments that again can make their repayments but want to move somewhere bigger to start a family.
Then there are the more serious cases when the mortgage cannot be paid.

The_Banker said:

While noble I think he is foolish. In 15 years time when his kids question where there father was during their childhood the last thing they will want to hear about is his noble efforts to pay back a bank who were bailed out by taxpayers...

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I think it’s more a case of personal integrity and keeping his word. He took the loans and so thinks he should repay them.
Why do so many people think it’s ok to keep something that doesn’t belong to them?
If a tenant can’t pay the rent should they be allowed to keep living in the house anyway? If not then how’s that different to not paying your debts?

Have people no sense of honour or integrity? Does their word mean nothing?