The Deeter Plan

My best laid plans have often blown up in my face, so chances are the idea I had which I mentioned to Pat Kenny last week has lots of snags built in; but today it was discussed on the Pat Kenny show (I wasn’t there for it) and given some additional context.

The thrust of the idea is that having something that is more process or practice based rather than principles based would work better in terms of fast and efficient negotiation.

You can listen to the concept in the link above which has the audio clip, but I’ll lay it out here too. When banks lend money they underwrite a person based on their affordability. My idea is that you re-establish a persons disposable income in their new financial circumstances and use the banks own calculations (albeit this time against them) to ‘re-underwrite’ the loan and in that respect reverse their own criteria against them.

This way if banks are conservative on lending they get conservative payments back …

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Debt forgiveness: An outline of how it would work (if I was in charge)

If I made the debt forgiveness rules… If I could make the rules surrounding debt forgiveness they would be something like this:

1. you can only seek application for debt forgiveness via the bank and not on your own. This may sound odd but doing this helps pre-qualify the case and remove moral hazard. If you go in on your own in early days then no meaningful engagement will have occurred and your credit history isn’t shot [which is a fair outcome to getting debt relief].

Banks (via the Mortgage Arrears Resolution Process) are also in an idea position to know when a loan is unsustainable. This is further described in S.39 of The 2011 Code of Conduct on Mortgage Arrears

Where ‘unsustainable’ is defined as per the Expert Group Definition. Which is where you go 18 months into arrears or after a 5yr Deferred interest scheme doesn’t work . It is important to remember that banks are legally obliged to be in contact with borrowers and attempting to find work …

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Negative Equity Financing

I was on the panel on Frontline recently and during it I mentioned a thing called ‘Negative Equity Financing’, we were asked by a few journalists and some clients about it, so hopefully this post will help to clear up what it is, and how it may work.

For a start, I’m anti-bailouts, in general and in particular, so debt forgiveness is not really something you’ll  see supported here, but we are big believers in facilitation, and any means that can help to oil the cogs is likely better than one that tries to create a new machine – albeit in time that is what we need; changes to our property and debt laws. However, in the here and now facilitation is quicker and easier to implement and has a better chance of reaching those it is intended for.

Negative Equity Financing is the idea we have put forward, but it isn’t just a case of doing a short sale because that doesn’t work in Ireland.

A short …

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Debt Management: no tax break for people in trouble

Financial services (such as brokering) are a zero VAT business, we cannot charge VAT for our activities, we do however, pay VAT on all of our supplies and in one respect that makes financial services good for the Revenue Commissioners, it’s a one way street.

Equally, it makes everything more expensive for a financial services company, but we won’t be expecting any sympathy on that!

However, what happens when that financial service is for a person in difficulty? A guideline given by the Revenue Commissioners to a debt management company in Dublin has lead to the interpretation that ‘Debt Management’ is subject to VAT.

What that means is this:- If you get into trouble servicing your debt and you hire a professional service to help you negotiate with lenders and to arrive at settlements on interest and principle amounts due then you will have to pay VAT on the fee applicable by the company that is helping you to get out of trouble. Thus the service becomes 21.5% more …

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