Walking away from debt

[Time]

My heart bleeds for them.

 

[millieforbes]

I think this is a key quote from the article...

Mr Joyce said: "I believe that there will only ever be debt forgiveness for individuals who are financially ruined; ie, they have no job, they have no assets and are in negative equity. Otherwise the concept of an across-the-board debt forgiveness regime is not practical."

I don't think we'll see debt forgiveness for people who don't want to live in their homes and don't want to spend years paying off negative equity but we might see it for those who can't conceivably pay anything

 

[JoeB]

How can we determine who cannot pay anything?

Would smokers be forced to stop smoking?

Would parents not be allowed to use fee-paying schools?

If smokers are allowed any form of debt forgiveness then they don't fit the criteria 'cannot pay anything'.. they could conceiveably stop smoking and use that money for debts.

 

[paperclip]

Ouch, that's some serious negative equity op. You must have just bought before the ship went down.

Well they've only left you with 2 choices, walk away, and live your life free of this horrible debt. Or struggle in debt for the rest of your life.

I guess you need to ask yourself, what would be the sane thing to do?

They're not really giving people much choice here. I've been reading a few posts on this topic here, and I can't believe how un co-operative the banks are.

This is a very gray area. Is it right to walk away from debt, no. Is it right what happened to people because of the government, reckless banks and developers, no.

If the banks aren't willing to meet people half way... then why would someone choose to spend the rest of their life paying off huge debts like these?

 

[44brendan]

Options and consequences;
No action;- Continue to meet int payments on the loan. Sooner or later this will need to come to a head. I.e. either you commence meeting P&I repayments or the Bank takes some action. Given the extent of negative equity I see no real benefit in looking at this as a long term strategy.
Walk away (Burn the Bankers):- While morally this may seem to be a major issue it has to be looked upon as a realistic option. The consequences are that the Bank take posession of the property and take legal action against you for the residual debt. This legal action will lead to a judgement being registerd in time and the Bank may decide to proceed for an installment order. Unless your financial position is better than that indicated by you they would be unlikely to obtain anything other than a token instalment which may not be worth their while. Judgement will hold for 6 years but while it will restrict you borrowing further in that time it's not necessarily a millstone around your neck.
My response would be to go for option 2 but you need to consider carefully before making any decision. Also discuss with friends/family.

 

[Pope John 11]

Because they made a decision to purchase property and with that there are inherent consequences.

Yes THEY borrowed the money to purchase the property and THE BANK lent the money to the borrower.

There should be a 50% responsibility on both the part of the borrower and of the lender.

 

[JoeB]

Yes THEY borrowed the money to purchase the property and THE BANK lent the money to the borrower.

There should be a 50% responsibility on both the part of the borrower and of the lender.

The bank are still upholding their side of the deal, as the borrower has had the money. It's the borrower who is failing to live up to the agreement. So I can't see the logic where the lender has to take responsibility for the borrowers failings.

Having said that if I was in serious negative equity I'd probably look into emigrating.

I think in the future all mortgages should be non-recourse mortgages, where people can walk away at any time. Either that, or it's made clear that if banks suffer losses they will fail, and won't be bailed out.

It seems we had some banks that were too big to fail.. so no we're basing our comeback on two pillar banks.. well, those pillar banks must be gloating, .. as it's unlikely they'll ever be let fail, .. so they can do what they like, with no downside. We've already seen it, with the government unable to insist upon anything, despite nominally owning the banks.

 

[hydeman]

The banks lent the money to the developers to buy the land, the developers bought the land, the vendors of the land went off to the bank and deposited their money, the bank then lent the money to the developers to build the house, then, they lent the money for the borrower to buy one of these sh1t holes(we wont open a debate about the appalling building standards here). So the bank benefited '4 times' for the one house i.e 3 loans and a deposit. The bankers were the professionals and knew that property was grossly overpriced(both BOI and AIB sold their headquarters in 05 yet bizarrely continued to lend to people so they could buy the grossly overpriced property). Some people were wise enough to know that property was extremely overpriced and refrained, other people were led to believe by the government and banks that they simply had to get on the ladder(now more of a snake i would say!). Ok, I think I am just ranting now, anyway back to your problem of what to do with the 1 bed.

Here is my advice....move out and rent a new place i.e 2 or 3 bed, which is what u need with a family, stop paying the mortgage on the 1 bed entirely, the bank will repossess (dont hand back the keys as ur social housing entitlements will be effected) and sell....eventually. They will then obtain a high court judgement for the residual balance and seek to attach this to any assets you might have - as u are renting u wont have any! Caution - this may not be a suitable plan if u are expecting to inherit ur uncles farm or parents house etc. Yes your credit rating will be shot, but I think I would prefer to have my credit rating shot then share my bedroom with my wife and teenage son...sorry i am not trying to be disrespectful, i'm just lying it on the line.

The only other thing the bank can do with the judgement is to attach it to ur income, however the banks are taking judgement left right and centre at the moment but are not actively following up on these? Why not u ask? Well they possibly might in the future, just doesn't seem to be a priority right now. The main reason the banks are taking out judgments is to keep the 'loss' on the sale of ur house off their balance sheet, judgments, imho, are nothing more than a means for the bank of hiding losses i.e. taking a judgement means its not actually a loss, technically anyhow!

if u continue to rent, a court will have to leave u with enough of ur income to support ur family and u might end up having to pay a small amount towards the residual balance if the judgement is successfully attached to your income.

The other option is to emigrate. One thing I will say however, the banks certainly do have some dam good investigators so dont think they wont find u overseas if they have to, dont fret however as u are overseas, so while they might find u there is little or nothing they can do to you.

Best of luck, I feel really sorry for ur situation.

 

[Mark Pig]

I left behind almost half a million in debt, they won't find me. Changed name, revoked Irish citizenship. I wish them the best of luck. Any 2 bit judgement from Ireland would be laughed at here in any event.

 

[Jim2007]

The only other thing the bank can do with the judgement is to attach it to ur income, however the banks are taking judgement left right and centre at the moment but are not actively following up on these?

Only time will tell, but they could seek to have you declared bankrupt, which would put a very different spin on your scenario!!!

there is little or nothing they can do to you.

Only time will tell, but if you live in a country who's law is based on the Napoleonic code, then they could at least register the debt against you, which in itself would make life very difficult, as you are very often required to produce a letter showing that there are no debts registered against you, for example:

• get a credit card
• take out a bank loan or other credit facility
• gain employment in the areas of: Banking, Insurance, Law, Accounting...
• other employment involving the acceptance of money: cashier, front office clerks and so on

I expect that it will be a few years before debt collection becomes a big issue, but I would not plan on there being no follow!

Jim.

 

[Pope John 11]

Wrong. The bank was simply providing a financial service

Yes but it is the banks responsibility to stress test the borrower correctly, this did not happen in the boom times.

Also persons who have lost their jobs could still have those jobs only for the reckless lending on the part of the banks to developers. The banks have to be held accountable.

If a bank loans the borrower the money, there is a risk that the bank takes on, that the borrower may not pay back some or all of the money borrowed.

 

[jetstream]

..

 

[jetstream]

Wrong. The bank was simply providing a financial service

The Banks provided a financial service outside their terms and conditions (1.5 x earnings). Therefore the banks should be held 50% responsible and liable. Not everybody lies about there earnings to get a morgtage so how can u justify a person earning 60k and getting a mortgage for 500k ??? Sorry but thats just crazy, what kind of financial service is that ??? More like fraud, deception, misguidance even possibly a breach of their own terms and conditions by themselves ?

 

[Jim2007]

The Banks provided a financial service outside their terms and conditions (1.5 x earnings). Therefore the banks should be held 50% responsible and liable. Not everybody lies about there earnings to get a morgtage so how can u justify a person earning 60k and getting a mortgage for 500k ??? Sorry but thats just crazy, what kind of financial service is that ??? More like fraud, deception, misguidance even possibly a breach of their own terms and conditions by themselves ?

Exactly what terms and conditions are you referring to???

With respect to the 1.5 earnings cap, where did this come from???

Exactly what fraud and deception are your referring to??? Are you referring to a particular case, a court action, an investigation or what???

Jim.

 

[rustbucket]

A lot of people are in the same position as the OP. It seems the OP has engaged the bank to help find a solution and the bank are not willing/able to do anything about it.

So the OP now only really has two options. 1. Post keys back to the bank. 2. Struggle for God knows how long, get into arrears, possible default, legal proceedings etc.

For me, family is number 1. If I were the OP I would certainly take option 1 if it meant keeping my sanity, putting food on the table etc.

Despite what some people say, the banks Do need to take some of the hit. Especially as they have themselves been bailed out by the taxpayer.

Yes people bought at overinflated prices but I think the majority of people did not have any conception that the boom would end so suddenly. For most people (like myself) it was not about how much the place was worth, it was getting a place to live!

In relation to the banks, Im wondering why they could not have put a stipulation in when the taxpayer bailed out both AIB and BOI (and the rest) that part of the re-capitalisation would result in a write down on the value of mortgages for people in Negative Equity

 

[Jim2007]

For me, family is number 1. If I were the OP I would certainly take option 1 if it meant keeping my sanity, putting food on the table etc.

This is not the US and the borrower's obligations do not finish simply by sending back the keys, much as we might like it to be. The bank could very well sell the house to the highest bidder on day and the borrower would still be liable for the balance, only difference is that he would be minus the house!!!

Despite what some people say, the banks Do need to take some of the hit. Especially as they have themselves been bailed out by the taxpayer.

I wish that people would understand the reality of the so called bail out - The state took over a couple of bankrupt banks and for all practical purposes now owns and operates those banks using the tax payer's money. Any further write down in their loan books will have to be underwritten by the tax payer once again and so what you are really suggesting is that the tax payer should take yet another hit!

In relation to the banks, Im wondering why they could not have put a stipulation in when the taxpayer bailed out both AIB and BOI (and the rest) that part of the re-capitalisation would result in a write down on the value of mortgages for people in Negative Equity

There is a big difference between being insolvent and owning a property with negative equity. And while it might be possible to get the tax payer to agree to providing some support to those who find themselves insolvent, I expect that getting the electorate to underwrite those with negative equity will be a very hard sell!

Jim.

 

[jackbetal]

Because they made a decision to purchase property and with that there are inherent consequences. If house prices had continued to increase exponentially there would not be posts such as these from current homeowners despite the affordability implications for would-be purchasers and the wider social implications.

Anyone who buys property believes in the free market economy and the risk of a collapse in prices is an inherent part of that.

And the underlined part is exactly why your argument holds no water. As soon as our government decided to socialise the private debts of the banks and therefor creating a knock on effect which has totally destroyed our economy then the integrity of the free market was gone. Most people would not be in the situation they are in if the country was not irreversablly damaged by the negligence of our last governement.

Suggesting or encouraging the abrogation of responsibility for debt is reprehensible. No-one was coerced in to buying property and anyone who didn't see the property bubble for what it was should question their judgement.

We all make decisions and are responsible for the consequences rather than offloading the responsibility to society writ large.

People didn't sign up to the responsibility which they are now burdened with. That was lumped on them by our governement. When they signed up to their mortgages they signed completely different deals.

 

[Complainer]

When they signed up to their mortgages they signed completely different deals.

What was different?

 

[jackbetal]

What was different?

They didn't foresee that our economy was going to contract more than any other economy ever since records began in the Western world. Surely ordinary working class people were not expected to see that our government would completely destroy our economy through a mixture of complete corruption and incompetence. The average home buyer is not a mixture of one half clairvoyant and the other half top economist. The majority of those currently in this hell which they are in just wanted a home for their family and some other may have got a little extra so as to have a pension waiting for themselves. Is that a crime punishable by what is happening? Certainly not considering they have been cheated by those in power who were paid big money to protect the citizens of the land.

 

[Complainer]

They didn't foresee that our economy was going to contract more than any other economy ever since records began in the Western world. Surely ordinary working class people were not expected to see that our government would completely destroy our economy through a mixture of complete corruption and incompetence. The average home buyer is not a mixture of one half clairvoyant and the other half top economist. The majority of those currently in this hell which they are in just wanted a home for their family and some other may have got a little extra so as to have a pension waiting for themselves. Is that a crime punishable by what is happening? Certainly not considering they have been cheated by those in power who were paid big money to protect the citizens of the land.

Can't argue with that, but just to be clear - the mortgage deal that they signed up to hasn't changed.