NAMA and Personal Insolvency in Ireland
Time has almost stood still for Irish consumers as banks, builders and government finalize the commencement of the implementation of NAMA. There has been plenty of talk about how the government is ‘bailing out the banks’ and parallel with this the main players in the mortgage market are almost invisible in terms of seeking to repossess homes, even where mortgage re-payment is substantially in arrears. The government has imposed a twelve months moratorium on such repossessions by banks and other lenders which it has ‘bailed out’ but sub-prime lenders have not been constrained in this way and can be remorseless in pursuing their security through the courts which are obliged to allow them to re-possess such properties.
Almost forgotten in this quagmire of debt and insolvency is the consumer who finds himself or herself insolvent and is unable to repay unsecured debt let alone secured debt such as a mortgage or car HP. The mountain of unsecured debt is like a giant floating iceberg with only the tip of the problem visible. With the arrival of the credit crunch the size of the problem has begun to emerge. At least 2.5 million credit cards were issued by Irish institutions and prior to the credit crunch, 90% of credit card companies failed to check the income of applicants. Spending in Ireland on credit cards is estimated at Euro12 billion per annum and it is estimated that private sector credit supply is of the order of Euro375 billion. To pit this in context, mortgage lending is just Euro150 billion.
An increasing number of Irish consumers now find themselves to be insolvent with quite a diverse range of contributory factors triggering this state: a relationship break-up; unemployment (currently almost 13%); underemployment due to only part-time work being available; freeze on overtime or on shift working; illness – self, spouse, partner or child; business failure; fall in house prices & therefore insolvent on the basis of asset value; lack of credit such as working capital & therefore insolvent on a cash flow basis. Like the recession itself, these ‘life events’ are usually unforeseen, not anticipated and therefore not planned for.
Individuals feel the impact of such debt as they suffer from increased stress, aggravated health problems, shame and stigma, loss of profession and even an increased risk of self harm.
Families have to endure the consequent strain with the risk of break-up, separation and divorce.
Society loses out with increases in poverty and crime, reduced productivity and work performance and the inhibitions, obstacles and barriers to the development of an entrepreneurial society.
People are looking to the government to put in place a framework to enable them to address their unsecured debt problems and to be able to do so in a finite period of time which is short enough to give hope and to be meaningful and is not a life sentence as at present. The hope is that the government will implement the key recommendations made by The Law Reform Commission of Ireland (LRCI) in its consultation paper ‘Personal Debt Management and Debt Enforcement’ which was published in September 2009. Until appropriate legislation is drafted and enacted, the insolvent consumer can only look with envy at the legislative regimes in the UK and other EU countries where a large number of modern enlightened solutions are available and which do not cost the consumer the earth to avail of.
You can read about the recommendations in the consultation paper published by LRCI in our article entitled Personal Insolvency in Ireland, also available on this website.
To find out more about all aspects of insolvency and the complete range of available financial solutions in your jurisdiction, please contact National Debt Relief.
National Debt Relief
National Debt Relief belong to a firm of leading chartered accountants who are one of the largest insolvency practices in the UK. We offer a complete portfolio of personal insolvency services in relation to IVA, Debt Management and Bankruptcy. All our debt advice is free, confidential and with no obligation.
Call us on 0800 043 5135 or 028 71 376854 or email enquiries@nationaldebtrelief.co.uk
