Banks waiting for the new Personal Insolvency Bill to kick in

Banks waiting for the new Personal Insolvency Bill to kick in

 

Banks in general are waiting until the terms of the new Personal Insolvency Bill is enacted before any meaningful negotiations become commonplace. Anthony Joyce, a specialist in this area, outlined his general experience to-date in the Sunday Independent.

 

Although there are many stories circulating to the contrary, his experience is that currently it is not possible to negotiate a write down prior to a sale of a property, even in cases where it is clearly of benefit to both parties.  As withIrelandsbail out debts, which everyone agrees must be dealt with as they are unsustainable, unsustainable mortgage debts will need to be dealt with.

 

Ross Maguire of New Beginnings wrote a detailed 2 page article in The Sunday Business Post this week which covered in detail the various options expected.  It is interesting that the Personal Insolvency Bill is being viewed as lacking in many articles in the Irish newspapers but some of the reports from outside Ireland take a more positive view.

 

Whichever view is correct, as with the financial problems throughout the EU and the concern for several years now of contagion, this problem needs to be resolved before strategic defaulting becomes a problem. Adding to the confusion is the Secretary General of the Department of Finance calling on the banks to write off unsustainable mortgage debt. These statements can actually cause more problems and confusion.

 

With it reported today that over 170,000 mortgages are in arrears, including 37,000 buy to let mortgages, a clear, workable plan is needed urgently with all participants singing off the same hymn sheet. Otherwise the problem will spiral further out of control.

 

With all the talk of moral hazard, maybe we need to think back to a solution used when we wanted to deal with the black economy and mattress money. The Tax amnesty solved more problems than it created and nobody avoids paying tax now expecting another amnesty in the future. The majority of the country, tax payers, did not revolt at the time as the means justified the end.  Desperate times require desperate measures.