Time has almost stood still for Irish consumers as government busies itself in the implementation of NAMA. There has been plenty of talk about how the government is ‘bailing out the banks’. To be fair, 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. Regardless of how the banks and building societies behave, the truth is that there is no such thing as a non-recourse home mortgage in Ireland. The homeowner can hand the keys back and walk away from home, but he or she cannot walk away from the debt. It is there forever, with hopeless insolvency legislation no consolation. Leaving home in Ireland not only pulls at your heart it pulls at your purse strings – forever!
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 about 14%); 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 new government – likely to be a coalition of the Fine Gael and Labour parties – will enact the Draft Personal Insolvency Bill 2010 which was published by The Law Reform Commission of Ireland (LRCI) in its final report on Personal Debt Management and Debt Enforcement in December 2010. 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 which do not cost the earth.