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SINCE 2008 DEBT has been a big part of my life. For five years until 2013 I worked in banks mainly dealing with lending and collecting debt. Then in 2013, I jumped to the other side of the fence and started helping people who couldn’t pay debts.
Many commentators talk about solutions and help but very few talk about the actual reality of dealing with creditors. I always try to be honest and realistic with people – everybody deserves to know the truth, especially about matters that will probably imprint the rest of their lives.
So what are the misconceptions? And what is the truth? Read on.
No such thing as a free house
It is a simple fact that if you can’t pay your mortgage or get your lender to agree to restructure it there is a very good chance that you are going to lose it. It is a sad reality that if you have lost your job and are not in a position to make any payments then you will not retain ownership of your home. Maybe not today or tomorrow, but eventually.
The reform of insolvency legislation in 2015 gave the courts the ability to force debt deals on banks. Hopefully this will soften their cough, but if you can’t pay a mortgage of greater than or equal value to the market value of the property keeping it is a non-starter in my view.
Reckless lending isn’t a crime
How many bankers have you seen in the back of a van heading to Mountjoy with a dressing down from a judge ringing in their ears about their stupidity and recklessness in handing out money to people who had no hope of paying it back? None I presume?
That’s because none have gone to jail. Being stupid and giving somebody money who can’t repay it isn’t illegal.
Funnily enough banks have been a bit more conscientious about collecting money than giving it out, but thinking that because the guy (or gal) who lend you the money was a buffoon will get you a free pass is a fallacy.
The bank doesn’t care about you
Anybody in financial difficulty will hear lots of pronouncements about codes of conduct, rules and regulations that lending institutions have to follow in dealing with people who are in trouble.
These documents and lengthy and detailed. The banks have to follow them and risk a telling off from the Central Bank if they don’t. They also cost the bank lots of money and staff to implement. But in reality the bank pays lip-service to these rules.
What is never talked about is that over 80% of borrowers out there are paying their loans back in full. These are the people who the bank cares about – not the minority who are not paying. The 80% generate profits, take out new loans and sometimes have savings and investments. This is what banks like – not a person struggling.
The banks are also petrified that the 80% will think there is an advantage of downing tools even if they can pay and their profits will evaporate – so everything done to help people struggling is done with one eye on the 80%.
I haven’t heard from the bank, have they forgotten about me?
Sometimes people tell me that they haven’t heard from their bank in three months, or six months or a year or maybe even two years. They think that the bank has forgotten about them, or lost their file or decided to just call it a day.
Sadly no, banks are large, reasonably inefficient bureaucracies who have been in a state of schism for the last seven years. The bank hasn’t been on because it is disorganised, not because it has forgotten about you.
Should you contact them? Yes, if you want to deal with the problem and move on. If you want to string out living rent free in your house and have no chance of recovery – stay put and wait for the sheriff.
No judge in the country will throw me out
Sorry, no. In fact every judge in the country will eventually throw you out. A loan contract is fairly simple – bank lends the money, borrower repays. If the borrower doesn’t repay the bank takes the house.
So whilst appealing to the judge’s better nature and trying to delay matters the judge will eventually give the order to evict. Many of the fringe groups especially on social media maintain that they have great victories in the courts. Sadly, this narrative is more effective at getting Facebook likes than actually helping people – they have precious few people, after all the stress and strain, with a set of deeds in their hands and no mortgage to pay.
Nothing will happen immediately and the process can be debilitatingly slow, but unfortunately to go back to my first point, there is no such thing as a free house.
I met the bank and they promised me x
Going to meet the bank can be a cruel exercise in false hope. You won’t meet a decision maker, nothing that is said to you is binding (only what is on paper is binding) and you will get patronised about wanting to help and discussing options.
If you want to know where you stand with the bank don’t go and meet them. Instead fill out a financial statement, put together the supporting documents and send it to them with a proposal. If you think you need help doing this, go and get it.
Debt is scary – sometimes scary to face and always scary to hide from. If you do have a problem with debt get some advice – try to go to somebody who will give it to you straight, tell you where you stand and let you make a decision.
Stephen Curtis is a Personal Insolvency Practitioner. He works with the Irish Mortgage Holders Organisation and is a Director of DFI Consulting.
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Good honest info that some people might not like to hear. Ireland still has a terrible relationship with property. Most people I know baulk when they hear I’ve invested in shares and say things like “oh that would be too risky for me” then these same people go and get a €300k loan without a second thought because it’s “the done thing”. The terms and conditions are thrown in a drawer and only taken out after the s**t hits the fan. People need to raise that nobody else is going to look after their best interest, quite the opposite in fact.
It’s not really comparing like with like though. Buying a home for your family to live in is entirely different to a speculative gamble like buying shares or an investment property to rent out.
In your head it might be but property is still subject to the same market forces as any investment and the market doesn’t care if it’s your family home or your tenth investment property. Not saying that’s the way it should be but you should prepare accordingly.
Ah yes, the Guru worships the almighty “market” god while ordinary families looking to house themselves are sacrificed on it’s altar.
You’re not saying that’s the way it should be because it most certainly should not be that way. Our government could of course correct this state of affairs through legislation etc but they choose not too as they also tug the forelock to the “market” while pretending to represent the interests of the majority of their people.
I deal in reality. You can keep imagining this fantasy world where the AAA are in power and everybody lives happily ever after but for better or worse we are humans who are ruled by fear and greed. If people take responsibility for their own actions they have less chance of being screwed.
What legislation could the government bring in to correct this state of affairs wally?
Guru – Shares and Houses are not subject to identical market forces. They are the same insofar as their value can rise and fall but that is where the similarity ends.
Speak for yourself Guru. I’m ruled by neither fear nor greed though it’s clear that you believe yourself to be which is highly ironic for a “Guru”. The banks have yet to take responsibility for crashing the economy and yet it’s the majority that got screwed. That’s the reality.
Another reality is that the market alone should not and does not determine the provision of housing. That’s why we’ve had large scale social housing construction for most of the history of the state and it’s the move away from this model under market dogma since the 1980s which has resulted in the property bubble, inevitable crash, the present spiraling house prices, rack rents and a homeless epidemic. Way to go O mighty market.
So whats the story when banks screw up and government screws up and we loose our good jobs and our homes whos fault is it then,because thats what happened here in Ireland.Also i read some where that the sheriffs job was abolished this article is nothing only scaremongering but they are right about one thing the 80per cent can control the banks just by not paying in one mass movement.
This recession is not the fault of the working people its the fault of the banksters,property developer,and speculators and with the help of corrupt politicians converted private debt of 64 billion into public debt.They should be made pay for their crimes
https://youtu.be/hooZW6QHB3Y the same is happening here fraud on a massive scale and no journalist to investigate no cab to investigate all to afraid
Again, what every begrudger misses in this debate is the fact that Roosevelt dealt with a similar crash in the 30′s and recognizing very early on that the only corrective measure is write down (it happens all the time but we hear little of it) Roosevelt warehoused debt and that lifted the burden on citizens which enabled them to get on with earning and paying taxes. In contrast the begrudgers here ensured only the banks were assisted. Until we address this aspect as others have done before, we will never recover with any sense of balance.
You cannot live in a share certificate as far as I am aware. Perhaps if you have enough of them you can make a paper house and wait for the big bad wolf to come and blow it away.
The basics of the article are correct. A family home with an unsustainable mortgage will eventually be taken. Debt reduction is generally only allowed on commercial loans to high net worth individuals.
The homes of some 38,000 people in arrears will be possessed sooner or later. AIB is especially aggressive.
The staff who were originally involved in predatory lending are already reallocated. ironically some have got jobs as Asset Recovery Managers in NAMA.
Oddly enough, Shatter tried at Cabinet to introduce measures for distressed borrowers but Noonan, who supportsthe Banks with a devotion approaching religious zeal, vetoed Shatter’s proposals.
The Irish Banks are insatiable. Some departing Banks from Ireland were willing to cut deals so as to exit.
As for the vulture funds who buy non performing debt, they will nail you to the wall, if they can.
There are many people who take out loans foolishly. There are many more in this country who took out loans with the express intention of paying them back but the recession took their income stream away from them. The banks in this country have left the entire country (whether you have a loan or not) crippled with debt. Of late, the bankers have raised their ugly heads again and are unafraid of ordering large scale repossessions – something they wouldn’t have done two years ago.
Do yourselves a favour people – go to your credit union and start throwing in something, even 20 euro a week. Use the credit union for your loans and do everything possible to avoid these vultures.
Well said. The banking function itself is highly exploitative as it hands the authority to create money to commercial institutions on which they can charge interest and so gouge profits.
Many people quite reasonably believe that the banks are loaning out the money that they hold on deposit (or fixed multiples thereof) when they issue loans but this is not a correct understanding of how banking works. In reality, a banking license is literally a license to create money.
Around 97% of the money in circulation in the world today is created electronically by the commercial banks when they issue loans. In issuing credit, banks simultaneously create a brand new deposit in the borrowers bank account. Quite simply, the loan itself creates new money. The banks bring this new money into existence by pressing a computer keyboard, nothing more. Money doesn’t grow on trees but if you hold a banking license it grows on your IBM. The money is extinguished (deleted) as the borrower pays back the loan and the outstanding principal amount falls. The bank of course gets to charge interest on the loan which it created with a casual wag of a finger. This interest which the borrower must also find is not extinguished but is held by the bank as retained profits.
For most people, the biggest purchase of their lives will be the family home and so the mortgage will be the largest debt they ever undertake. A bank can create a €200,000 mortgage in a couple of seconds with a few keystrokes. Over a term of 25 years at an interest rate of 4% to 5%, you will pay somewhere between €110k and €150k in interest payments to the bank on top of the principal repayment. This means that a person on an average annual wage of €25k net will work for 4 to 6 years and hand every single cent that they earn in that time to the bank to repay interest on the money which the bank created from nothing in a matter of seconds.
This is the enormous power that has been granted to the private banks which they have used to massively exploit the rest of us through the debt mechanism under the capitalist system. The banking function needs to be taken from the failed and grossly profiteering parasite banks and returned to the rightful ownership of the citizens.
Even some sections of mainstream media are finally beginning to draw attention to the great con that is commercial banking.
http://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity
What’s very wrong in all of this . is these banks where the ones that acted reckless and when they needed the money. The got a bailout . they got money from the people that lost jobs because of the banking collapse and recession. What happened to the big boys , who had large debts running into millions , they went in to NAMA , got writedowns again thanks to the people being made homeless and some got their property back at a knockdown price. Example being the Clarence hotel with bono.
No one is asking for anything for free . what they want is to be treated fairly irrelevant of wealth… People lost jobs and time is needed to get going again. They didn’t just hold out their hands and get billions put into it like the banks…
P
Wally is correct, currency is created at will by pressing money on computers. This is fiat currency, and it has no real value compared to labour. Likewise, Wally’s comments are fiat comments created at will by pressing ctrl+c followed by ctrl+v. No labour is involved in the creation of these comments, and they have no intrinsic value. Similarly, if you get tea from a vending machine, it’s not real tea, but fiat tea, as nobody has stirred it with a spoon. If you were, however, to generate a cup of tea in this mechanical fashion, and then add a tea bag to it and stir it yourself, it would then have value, vis a vis the struggle of the huddled masses. However there’s no call for tea made in such a way, because it tastes like muck.
The word “mortgage” comes from the French “mort-gage”, literally death-pledge
Watch The Money Masters (1996) If you fancy a real slap in the face with reality.
“Let me issue and control a nation’s money and I care not who writes the laws.” Mayer Amschel Rothschild (1744-1812), founder of the House of Rothschild
Zeitgeist movie done it for me.
I hate banks
Here we go again, it was all the banks fault. Us innocent people couldn’t possibly have said no to getting credit or loans for 3 holidays a year, the new car, the extension or the holiday home in Bulgaria. It was all the banks fault. Just because a bank offers you credit doesn’t mean you have to accept it. Take responsibility for your actions
Beano, your tired old tune is not a response to the article above, which supports the Banks. Read the article before you comment.
Jaysus, I’d love 3 holidays a year, a new car, and an extension to a holiday home in Bulgaria. Instead I drive over an hour to work in a banger, live with the parents, and will most likely be the most effected in paying this back if it all goes legs up.
Here’s another piece of advice for you,Beano -you should read Fiona’s post above,too ..
Most of the people in trouble with mortgages are there because they lost their job as a result of economic damage from the worst episode of Financial Sector fraud since the 1920s.
Even as the rigged property market gouged even higher prices out of citizens, a certain political leader publicly suggested any note of caution was the result of depressive tendencies, and the individual should consider suicide.
So, yes, along with the mainstream media cheerleading (and salivating over their juicy advertising income) the idea that anything but prudent macro economic mamagement could exist among the highly salaried authorities was poo pooed as the ravings of a lunatic.
Well, as we now know, at least some of the lunatics were right. The entire banking system nearly failed.
Not only that, but these same authorities would then go on to ensure that any recovery would take place at the slowest possible pace. Slower even than that of the Great Depression of the 1930s. Rather than act counter cyclically to stimulate a quick recovery, authorities did exactly the opposite – growth killing Austerity.
And it is for both these reasons that mass unemployment and low pay still stalks the country 8 yrs on, and counting, with the result that many are losing their houses. While those responsible continue on to enjoy enormous salaries and state g’teed pensions.
Beano, in with a surefire contender for ‘dumbest-post-of-the-day’.
@beano I suggest you should watch” the big short” it will explain to you how we got shafted or the Zeitgeist movie which is on line a great documentary which explains every thing in detail also it will make you a wise person and i am going to say again this recession is not the fault of the working man._.
@Bobby he won’t care for those kinds of things. He obviously has a vested interest in the way things are working at the moment.
Mcgowan very true indeed
Once you start down the dark path, forever will it dominate your destiny. Consume you it will.
Austerity and unaffordable borrowing are crippling.Then add LPT and water charges. Next add child minding costs. Add exorbitantly high household expenses, such as energy costs and high commuting costs. Soon, families become submerged whilst bankers collect massive bonuses.
Oh look another “concerned citizen”
Although the position is bleak, not all cases are hopeless.
In some cases, banks have failed to process the security documentation correctly. So, put in a Section 4 Data Protection disclosure and check out the paper work. Sometimes, emails have made collateral inducements and misrepresentations. Sometimes, the bank may have had a conflict of interest by lending to developers and to borrowers borrowing from the bank to borrow from that developer, sometimes the banks make major errors in the legal proceedings which they issue. Every case is different and sometimes if a forensic approach is used, it will be found that the bank has made major errors.
The Courts are aware that dispossessed familues will not get social housing and the private rental sector is unavailable. So, the courts may give extensions of time. Some County Regustrars are reluctant to give Possession Orders on family hopes.
We are live in a creditocracy. Credit is used to soak out income into the wealthier. Real incomes are eroded by debt servicing costs, especially in Ireland where real interest rates for non tracker mortgages are extortionate. Rents are unaffordable and mortgages are increasingly unaffordable again, even if you can get a mortgage. Housing cripples families in Ireland but enriches others.
Maybe it’s time to make banks accountable for misselling loans and set aside part of mountjoy solely for bankers. also introduce long jail terms for cleaning crimmials money which all the major banks are involved in. It’s strange that those who never had bank accounts, joined the housing list by the age of 15 have done so well out of crime and are paying maybe 50 euros a week to rent for a three bedroom council house while others fork out thousands to live in private accommodation. No one is accountable from insurance fraud to political corruption the banks are just another industry profiting from lack of regulation. Our laws blame the victim not the abuser.
Beano the Banker is emotional but solutions are needed, not recrimination.
Most important to teach your kids about “predators” ….
Financial Predators:-
- Landlords who will max their Rent – expecting your kids to work to create wealth for them.
- Bankers who will max their Debt – expecting your kids to work to create wealth for them.
- Political Parties who will max their Tax – expecting your kids to work to create wealth for them to distribute with largesse in their own electoral interest.
Social welfare predators?
Framework for people to make sane rational judgements in their personal and work lives and move from a “belief society” (believing ‘experts’) to a rational logical society. Teach philosophy in secondary schools and arm your kids with this most important life skill of making “good independent judgement” for themselves. French do it.
Correct. They are negatively correlated. Stocks and shares falling in value over last 8 months. Property funds seeing double digit growth.
Banks = stinking charnel houses of amoral politically condoned actions of the devil. ….am not legally allowed say what I would like to do to one or 2 of them if I had an instrument that makes a loud noise when activated
If you can save your in a good position keep saving and wait till the next recession buy cheap live life… HATE the banks don’t let them win! what you live in is a game controlled by the banks what you rent is controlled by the banks, you can’t win just be sensible and not too hasty buy cheap and at the right time
have your say