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Thread: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

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    Default Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    Government proposals published today for reform of insolvency / bankruptcy law.

    Here they are

    http://www.justice.ie/en/JELR/201201...lvencyBill.pdf

    This is one of the measures required by the terms of the EU/IMF Bailout. The reform has been painfully slow in coming.

    There will now be a period of date, consulation and lobbying before the Bill goes to the Dail for a vote at the beginning of March.

    The Bill, for amounts over €20,000, seems to allow for voluntary arrangements. While that kind of thing may have worked out for Charlie Haughey and Garret Fitzgerald, I doubt that the ordinary mortgage holder would get the same treatment.


    The Minister said that the proposals for the reform of personal insolvency law will involve the introduction of the following new non-judicial debt settlement systems, subject to relevant conditions in each case:
    · A Debt Relief Certificate to allow for the full write-off of qualifying unsecured debt up to €20,000, after a one-year moratorium period;
    · a Debt Settlement Arrangement for the agreed settlement of unsecured debt of €20,001 and over;
    · a Personal Insolvency Arrangement for the agreed settlement of both secured and unsecured debt of €20,001 and over.

    Further, voluntary, measures for dealing with mortgage debt are also being prepared, according to Alan Shatter.

    Given that Ireland has the highest average level of personal debt in the world, and the high and increasing level of mortgage arrears, legislation is urgently needed.

    Whether or not the banks and credit unions will be able to withstand the amount of defaults on personal debt remains to be seen.


    Minister for Finance Michael Noonan and Minister for Justice Alan Shatter unveiled the Personal Insolvency Bill today, under which debtors will be allowed to emerge from bankruptcy after three years rather than the current 12.
    The proposed Bill also includes new voluntary non-judicial debt settlement systems aimed at providing alternatives to formal court insolvency, such as the introduction of a personal insolvency arrangement for the agreed settlement of both unsecured and secured debt of more than €20,000.

    http://www.irishtimes.com/newspaper/...m_medium=email

    Shatter is emphasising that the draft Bill is open for consulation and amendment.



    The Tánaiste Eamon Gilmore T.D., has welcomed the publication of the Scheme of the Personal Insolvency Bill by the Minister for Justice Alan Shatter and Minister for Finance Michael Noonan.


    “This is about giving people a fair deal and a fresh start in dealing with their debts. It will also form a central element in resolving the problem of mortgage arrears as highlighted in the Keane Report on Mortgage Arrears.


    “When enacted, this legislation will strengthen the hand of distressed borrowers and mortgage holders in dealing with the banks as they may have the option to settle their debts without going bankrupt and if they do, they could be discharged after a three instead of an onerous 12 year term.


    “I would encourage people to talk to their banks about how they should best work through their debts as the emphasis of this legislation is on workable solutions that give people space and a realistic way of managing their debt.


    “This will help the Government achieve its objective of keeping distressed mortgage holders in their home during this crisis, in so far as it is practicably possible. This also gives lenders certainty about the Government’s direction in that it is in their interest to start reaching voluntary and realistic solutions with borrowers now, rather than face losing their security through a borrower’s bankruptcy down the road.


    “Alone, this legislation is not the solution to the country’s mortgage arrears problems, but it does form a crucial part of it.”




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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    This article appeared today in our (english Language) natioanl newspaper Ekathimerini:
    "In what could turn out to be a significant ruling for Greeks suffering from the economic crisis, a court in Hania, Crete, has become the first in the country to order that the majority of the debt owed to banks by someone still in full employment be wiped out.

    Sunday’s Kathimerini understands that the Justice of the Peace Court in Hania based its decision on a 2010 law that allows judges to give protection to people struggling to meet their financial commitments. Until now, the legislation has only been used to give debt relief to unemployed people or those with no substantial income.

    However, in the Hania case, the court ruled in favor of a full-time civil servant. The divorced woman, who has three children, asked to be given protection after her banks refused to offer her new terms for combined loans of 112,000 euros. The unnamed woman explained that she did not have any assets she could sell to pay off her debt.

    In its ruling, the court deemed that the woman, who has moved in with her parents, needs 350 euros a month to cover her own costs but that the rest of her earnings could be distributed equally among the three banks she owes money to. The judge deemed that this process should last for four years, meaning the woman would pay back some 30,000 euros and the remaining 82,000 would be written off.

    Thousands of people have already appealed to the courts for protection under the 2010 law but legal experts believe the decision in Hania may lead to a new wave of appeals by Greeks who still have jobs but are unable to repay their loans."

    Over to you Minister Shatter.....

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    Quote Originally Posted by Ephilant View Post
    This article appeared today in our (english Language) natioanl newspaper Ekathimerini:
    "In what could turn out to be a significant ruling for Greeks suffering from the economic crisis, a court in Hania, Crete, has become the first in the country to order that the majority of the debt owed to banks by someone still in full employment be wiped out.

    Sunday’s Kathimerini understands that the Justice of the Peace Court in Hania based its decision on a 2010 law that allows judges to give protection to people struggling to meet their financial commitments. Until now, the legislation has only been used to give debt relief to unemployed people or those with no substantial income.

    However, in the Hania case, the court ruled in favor of a full-time civil servant. The divorced woman, who has three children, asked to be given protection after her banks refused to offer her new terms for combined loans of 112,000 euros. The unnamed woman explained that she did not have any assets she could sell to pay off her debt.

    In its ruling, the court deemed that the woman, who has moved in with her parents, needs 350 euros a month to cover her own costs but that the rest of her earnings could be distributed equally among the three banks she owes money to. The judge deemed that this process should last for four years, meaning the woman would pay back some 30,000 euros and the remaining 82,000 would be written off.

    Thousands of people have already appealed to the courts for protection under the 2010 law but legal experts believe the decision in Hania may lead to a new wave of appeals by Greeks who still have jobs but are unable to repay their loans."

    Over to you Minister Shatter.....
    Welcome. Ephilant, and thanks for that informative post.

    The Insolvency Act, unfortunately, is based on entirely voluntary agreements with the banks. If it was enforceable, the consequences to the banks could be calculated, and their insolvency revealed earlier than will otherwise be the case.

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    Quote Originally Posted by C. Flower View Post
    Welcome. Ephilant, and thanks for that informative post.

    The Insolvency Act, unfortunately, is based on entirely voluntary agreements with the banks. If it was enforceable, the consequences to the banks could be calculated, and their insolvency revealed earlier than will otherwise be the case.
    Isn't it just a shame that the whole Irish bank guarantee scheme was forced down the throats of the Irish people instead of put on "an entirely voluntary" basis, like the Insolvency Act. What's good for the goose is not necessarily good for the gander it would seem..

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    Quote Originally Posted by Ephilant View Post
    Isn't it just a shame that the whole Irish bank guarantee scheme was forced down the throats of the Irish people instead of put on "an entirely voluntary" basis, like the Insolvency Act. What's good for the goose is not necessarily good for the gander it would seem..
    Very true!

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    TBH, given the likely extent of the problem, the banks will eventually have to start playing ball. The real question will be how long it takes for the penny to drop with their various HQs.

    I'd be more optimistic about recapitalisations, or at least, keeping the banks afloat. Signor Draghi seems to be quite good at providing them with emergency liquidity at low interest rates so they can buy nice profitable sovereign bonds at high interest rates. Could restore a few profit margins.....or, if not, the whole EU will have to be declared bankrupt anyway. Mwaahahahaha.....

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    Ireland is going to waiting until 2013 for this Insolvency Act, it seems. In January Alan Shatter said the Bill would be finalised and ready by the end of April and said he hoped it would become law in the autumn.
    A MAJOR piece of legislation aimed at tackling the State’s personal debt crisis is facing delays of at least two months, The Irish Times has learned.
    The banking industry has furiously contested the inclusion of mortgage debt in the legislation and warned of dire consequences for the sector if people who can’t service their debts are allowed to get write-downs on their mortgages.
    The Government also suggested the insolvency arrangements would be voluntary and under the plans, as outlined, major creditors would be able to veto all proposals without any appeals or review process for debtors.
    Prof Jason Kilborn of the John Marshall Law School in Chicago and a leading insolvency expert said the proposed legislation was deeply flawed.
    He said it contained “a series of half-measures” which would see it founder because banks were being handed too much power and not being incentivised to deal meaningfully with debt-ridden consumers, he said.
    And of course there's still no sign of that house price database which Shatter appears to be sitting on as well.
    Curious that the TD with the largest property portfolio in the Dail ends up dealing with these issues.

    http://www.irishtimes.com/newspaper/...315193933.html

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    “I would encourage people to talk to their banks about how they should best work through their debts" - Eamon Gilmore


    Talk to the hand, Eamon!

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    Quote Originally Posted by Slim Buddha View Post
    “I would encourage people to talk to their banks about how they should best work through their debts" - Eamon Gilmore

    Unless they are in NAMA. Then the State will do all the work, pay them for the privilege and spend a small fortune in the process
    Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other. ~Oscar Ameringer

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    Programme on debt relief last night. Ireland has the most unforgiving debt law in Europe.

    What we need to face is that much of this private debt is not repayable, and that debt forgiveness of the required scale would "bring down the banks."

    No signs of any reality from any party.

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    Quote Originally Posted by C. Flower View Post
    Programme on debt relief last night. Ireland has the most unforgiving debt law in Europe.

    What we need to face is that much of this private debt is not repayable, and that debt forgiveness of the required scale would "bring down the banks."

    No signs of any reality from any party.
    These morons will have to face reality soon. The number of defaulting mortgages is rising daily. And before this year is out, I am hoping we get to the point where the level of default is "unsustainable".

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    Quote Originally Posted by Slim Buddha View Post
    These morons will have to face reality soon. The number of defaulting mortgages is rising daily. And before this year is out, I am hoping we get to the point where the level of default is "unsustainable".
    Either we are going to see this country reduced to beggary, with a few fat gauleiters continuing to strut about immune to all ill effects, or we will have to organise things in a radically different way to house, feed and provide education and health services to people, as of right.

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    Quote Originally Posted by C. Flower View Post
    Either we are going to see this country reduced to beggary, with a few fat gauleiters continuing to strut about immune to all ill effects, or we will have to organise things in a radically different way to house, feed and provide education and health services to people, as of right.
    It is becoming increasingly clear that the struggle is one of Banks v People and the government, the Dail and what loosely be termed as the Establishment in Ireland, and elsewhere for that matter, is on the side of the Banks.

    It seems to be shaping up to be as simple as that and the question is fast becoming one of "Which do I want to see destroyed?"

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    The 'bad' level of mortgages are contributing to the shrinkage of bank's assets in the balance sheet as their liabilities would increase. Hence another stress tests or more of the same re recapitalisation to balance out.

    Also they would stop or cease giving business loans to SME or any other business.

    Hence a very pressing need or urgent need for a 'new' bank to be set up here.

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    Default Re: Personal Insolvency Act - Debt Forgiveness, or a Political Fudge? "Talk to Your Banks" Says Gilmore

    Quote Originally Posted by disability student View Post
    The 'bad' level of mortgages are contributing to the shrinkage of bank's assets in the balance sheet as their liabilities would increase. Hence another stress tests or more of the same re recapitalisation to balance out.

    Also they would stop or cease giving business loans to SME or any other business.

    Hence a very pressing need or urgent need for a 'new' bank to be set up here.
    We do not need Irish banks. New Zealand has no "New Zealand" banks and manages just fine without them. ANZ, which I understand to be the biggest in the New Zealand market, is controlled from Australia.

    So while I agree there is an urgent need for a "new" bank in Ireland, there is also a need to kill off AIB and BOI, as a matter of urgency.

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