Why don't more people avail of PIAs if they can get Negative Equity written off?

Bronte

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Bronte, thousands of people have already availed of PIA's. Having said that, I am still baffled, in 2019, to meet clients facing severe financial difficulty that have not previously heard of Personal Insolvency Arrangements, despite all of the media attention and advertising.
Wow, that's unreal. Then I would suggest someone like Charlie Weston in the Indo etc ought to do an article about how the different 'schemes' work out.

The PIP - insolvency or bankruptcy
The Mortgage to Rent
The Arizun stay in your home
Iclude

etc.

Actually BB that might be an idea for here, take one couple, and see how each of those schemes compare. It's a no brainer to me that the PIP insolvency is the best if you have income, bankruptcy if you're broke, Mortgage to Rent if you just want to stay put and are clueless (where is Mabs) plus you can't afford to rent so the state pays. Arizun if you're the same as the latter, but you have income are are ignoring the banks.

Maybe broke people don't hear the radio, or see advertising. Is there a way to target the modern generation otherwise I wonder. Clueless people don't tend to read the business sections of the main newspapers.
 
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Bronte

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Jim's link
http://www.courts.ie/Judgments.nsf/...8477b6567ec76a6e802581d00054be96?OpenDocument

Two primary matters arise for consideration in this judgment, the proposed extension of the mortgage term, from the current remaining term of eighteen years and two months, to twenty-seven years, when Mr. Hayes will be 79 and is likely to have retired from his employment, and the proposal to fix interest for the entire of the term at a rate of 3.65%.

8. The debtors argue that the return to creditors from the proposed PIAs is greater than the likely return on bankruptcy, that the maximum means of the debtors have been brought to bear on the repayment of debt, and that there is no unfair prejudice to Shoreline arising from the proposals.
 

Bronte

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Facts:
Modest family home worth €190,000,
Amount owed €323,626.21.
Term: 18 years
Couple with two young children
Income Wife: €1,488.
Income husband€1,625.
Total income monthly€3,112.65
Reasonable Living Expenses €1,835.74 per month.
Mortgage €1,080.58
Mortgage insurance€106.48 per month.
Total outgoings of €3,022.80
Surplus €89.85 per month.

Questions:
Term goes to 27 years. And husband will be very elderly !!!
Is this the best option? They keep their home, if it goes up in value it's theirs, they get to own their home, they are housed, they are presumably happy.
Which other scheme would be better for them.

But I see mega trouble ahead with an extension into the wife's and husband's retirements.
 
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Brendan Burgess

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Then I would suggest someone like Charlie Weston in the Indo etc ought to do an article about how the different 'schemes' work out.

The PIP - imsolvency or bankruptcy
The Mortgage to Rent
The Arizun stay in your home
Iclude

etc.

Actually BB that might be an idea for here,
Hi Bronte

A very interesting suggestion. I will put it on the to do list.

Don't forget
  • Most people actually do want to pay their full mortgage
  • Most people are not insolvent even if they are in negative equity
  • Most people do not want an insolvency marked on their history.
It seems clear to me that a PIA trumps the Arizun scheme for someone who is in deep negative equity whose lender won't restructure their mortgage. But in most cased, the lender will split the mortgage or do some other restructuring so they don't go for a PIA.

Brendan
 

The Horseman

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My
Facts:
Modest family home worth €190,000,
Amount owed €323,626.21.
Term: 18 years
Couple with two young children
Income Wife: €1,488.
Income husband€1,625.
Total income monthly€3,112.65
Reasonable Living Expenses €1,835.74 per month.
Mortgage €1,080.58
Mortgage insurance€106.48 per month.
Total outgoings of €3,022.80
Surplus €89.85 per month.

Questions:
Term goes to 27 years. And husband will be very elderly !!!
Is this the best option? They keep their home, if it goes up in value it's theirs, they get to own their home, they are housed, they are presumably happy.
Which other scheme would be better for them.

But I see mega trouble ahead with an extension into the wife's and husband's retirements.
My concern on this is how does a pensioner pay a mortgage. Is this not just kicking the can down the road.
 

The Horseman

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Hi Horsey

You are quite right.

They should simply sell the home now and rent for the rest of their life.

Ooops wait a minute... how does a pensioner pay rent?

Brendan
Rents are at an historic high and will drop.

With home ownership comes a whole host of other costs not just mortgage payments, how many older people are currently in properties they must pay property tax on although they don't have the funds to do so and also live in properties which are to big for their needs.

It would appear that some of these people are not capable of maintaining a mortgage long term even a restructured one. I don't see how the proposal from Arizun is in any way advantageous to the mortgage holder.
 

Bronte

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Ooops wait a minute... how does a pensioner pay rent?
Not sure what is the sarcism here. Is it because if the pensioner can't pay his rent than the state will house/pay rent for him? But they won't help him with the mortgage (which in the past they used to pay the interest)
 

NoRegretsCoyote

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Rents are at an historic high and will drop.

With home ownership comes a whole host of other costs not just mortgage payments, how many older people are currently in properties they must pay property tax on although they don't have the funds to do so
The poorest pensioner generally has an income of €1000 or so a month. LPT on a big property would cost a lot, but it wouldn't be financially crippling once the house was owned outright.


There is a much bigger problem. Traditionally people have reached pension age in Ireland either in social housing or with a mortgage paid off.

Now there is a growing population of people who are going to have to pay private rents or have mortgage commitments while retired. Check the Census data - it will only get bigger too. This is going to cause a lot of financial hardship for people who are only on the state pension.
 

The Horseman

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The poorest pensioner generally has an income of €1000 or so a month. LPT on a big property would cost a lot, but it wouldn't be financially crippling once the house was owned outright.


There is a much bigger problem. Traditionally people have reached pension age in Ireland either in social housing or with a mortgage paid off.

Now there is a growing population of people who are going to have to pay private rents or have mortgage commitments while retired. Check the Census data - it will only get bigger too. This is going to cause a lot of financial hardship for people who are only on the state pension.
While the current pensioner does indeed receive circa €1000 per month via the State Pension it is well documented that we are facing a pensions time bomb. We will have an increasing number of people relying on the State Pension with a reduced number of tax payers financing that pension. I know we are introducing an opt out pension but would expect a lot of people may opt out not realizing the long term impact of their decision (although the State would still give them something as a pension). Perhaps we need to look at retirement villages/sheltered accommodation specifically for this eventuality.

Perhaps we need to accept that some people will have to rent once they retire. Surely other countries have pensioners renting privately.

I would expect property tax will increase and will become similar to the Poll Tax in the UK. The Govt want to spread the sources of its tax take rather than relying on a small number of sources for the majority of its tax take. The property crash is one of the reasons the tax take fell so dramatically.
 

NoRegretsCoyote

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I would expect property tax will increase and will become similar to the Poll Tax in the UK. The Govt want to spread the sources of its tax take rather than relying on a small number of sources for the majority of its tax take. The property crash is one of the reasons the tax take fell so dramatically.
The LPT is nothing like the poll tax.

The poll tax was a tax on the number of persons living in a house.

LPT is a basically a % tax on the value of the house.
 

TLO

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Today's Irish Times carries an interesting report on a "no veto" PIA.

https://www.irishtimes.com/news/crime-and-law/courts/high-court/court-approves-insolvency-deal-that-halves-woman-s-mortgage-1.3789632

The wife was the applicant, the husband having deserted.
PTSB tried to veto the PIA in the Circuit Court and were unsuccessful.
PTSB then tried to veto the PIA in the High Court, and were unsuccessful.
The wife's mortgage has been reduced from €343,785 to €160,000, the value of the house.
The judge said that write-downs aren't automatic, they are based on affordability.
The judge said that warehousing was not appropriate, it would leave a large debt for the wife at retirement age.
The judge also said that PTSB can pursue the husband over the mortgage debt.
And the judge said that the PIA provided a better outcome for PTSB than a bankruptcy.

The full judgement is here:
http://www.courts.ie/Judgments.nsf/0/4A928F34AB70459680258398004A0C62
 
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Bronte

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This has come up in the context of a PIA for Frank McNamera and Theresa Lowe, they are arguing in court that they can service a mortgage into their late seventies as they are self employed.

 

demoivre

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And if they can why not? My self employed father worked until he was almost 80 because he wanted to. Maurice Gaffney was still practicing as a barrister aged 100. I despair for anyone feeling spent at 65. You're pushing it at mid 80s imo.
 

gnf_ireland

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This has come up in the context of a PIA for Frank McNamera and Theresa Lowe, they are arguing in court that they can service a mortgage into their late seventies as they are self employed.
I am a bit torn on this case - a lot more than most than I read about. I think its difficult to determine what the money was spent on, given the level of it involved. With debts of 3.9m and very limited assets, the only options were bankrupcy or a massive debt write-down. It appears some have been linked to property deals which went bad, which is fair enough - but surely this issue should not have dragged on for so long given they have clearly been bankrupt for years.

The issue I have though is the lifestyle they clearly enjoyed while all of this was going on. The clearly kept children in private school (Beledere College) while this was ongoing. It is that sense of entitlement to the 'good things in life' while they were clearly bankrupt for a long time is difficult to swallow for most people.

I also debate whether they can afford a 550k house at this stage in their lives. The mortgage repayments on that over 11 years (Frank is 59 - that brings him to 70) is massive. I think there needs to be a discussion around what happens if they fail to meet their commitments again - which in my view is massive. There is no guarantee their health or ability to earn will continue into the future. This is a very high risk mortgage, and while I am not proposing evict them, I would question whether they should be awarded the 'luxury' of a 550k house and maybe downsizing would be a more realistic approach to take.

I guess, what I am saying is - should someone in a PIA arrangement have a limit on the value/size of the house they can keep given the size of the debt writedown involved.
 

gnf_ireland

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And if they can why not? My self employed father worked until he was almost 80 because he wanted to. Maurice Gaffney was still practicing as a barrister aged 100. I despair for anyone feeling spent at 65. You're pushing it at mid 80s imo.
There is one thing being in a position or interest to do it, but there is a completely different matter of HAVING to do it to keep a roof over your families head. The reality is this is beyond average life expectancy and effectively banking on no health issues arising
I like the idea of 'working' ad-hoc for years, but this is totally different to having to work each and every month to make a mortgage commitment into my 80's !
 
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