Caught declaring false bankruptcy

Last year marked one of the busiest years for the Insolvency Service of Ireland due to the large number of cases they examined in relation to bankruptcy. With at least 210 cases seeming somewhat suspicious, this independent statutory body had to dig deeply into financial and asset related records of every bankrupt person. 

In order to be eligible for bankruptcy declaration in Ireland, you must fulfill three main requirements. The first one is that your debts must exceed your assets by €20,000. Assets are both financial and physical; some examples include stocks, pension funds, receivables, homes, cars, exc. 

Many of the issues that the Insolvency Service of Ireland has seen in relation to this part of bankruptcy declaration is that many people who are declaring bankruptcy are attempting to keep some of the assets that are most important to them by illegally transferring the ownership to a family member or close friend. 

The asset cannot be leveraged by the bankrupter in the repayment of loans if it is not under their name, which is why this it is now being …

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Irish Times mention Irish Mortgage Brokers, 9th May 2017

We were mentioned by the Irish Times in a piece about mortgage arrears. It was in conjunction with a talk given to the Housing Agency on mortgage arrears. It quoted part of the talk we gave…

Financial adviser Karl Deeter told the conference his research puts the non-engagement rate at closer to 80 per cent.

Mr Deeter said the courts are “predisposed” towards borrowers, and that people are given many chances before they lose their homes.

“There’s three magic rules if you want to lose your home: pay zero for a long period of time, don’t engage with your lender – and then don’t show up to court,” he said.

“These three inputs were central to virtually every case of possession we saw.”

Mr Deeter said that according to his research, more than 90 per cent of distressed borrowers who engaged with their lender were able to work out some sort of deal to avoid repossession.

 

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Boucher says ‘X’ then BOI says ‘Y’

To veto or not to veto, that is the question…

There is a clear message of ‘veto’ coming from BOI, that has been covered in the press following his comments to the Oireachtas Finance Committee.

‘He said his bank would seek to veto any proposal from Personal Insolvency Practitioners (PIP) featuring mortgage write-down for its customers. Bank of Ireland’s policy is only to write off mortgage debt in cases of bankruptcy or personal insolvency, where the bank is forced to make the move’ 

Then they email all of the PIP’s the email below which states that they do want to engage, but to do so on a basis outside of formal arrangements and prior to things going that route, which makes sense if their message is that they will veto those anyway.

It is unrealistic to make this request then make a habit of saying ‘no’ twice, if they do all of the debt advisors will realise it’s a ruse and go straight to bankruptcy which will cost the lender, or they will always …

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RTE Six One News: Insolvency Service piece by Conor Hunt, 3rd April 2014

We gave a few thoughts on the recent ISI figures.

That the case numbers are low is to be expected, firstly, informal negotiations have had a six year head start, you can’t expect the ISI to be caught up already, secondly, in the UK it took about a decade for the system in general to find its feet.

Lastly, many people don’t want to use personal insolvency as it is rigid and informal deals are not to the same extent, banks offer better terms outside of insolvency, and perhaps the greatest success is that banks are doing these deals only since the ISI launched.

Prior to that they wouldn’t so the fear of people using these solutions has spurred the lenders into action.

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Insolvency Service Ireland putting regulation first?

The Insolvency Service of Ireland are already starting in on audits of regulated providers to ensure they have the proper procedures in place to deal with people correctly and that they are in adherence to the code.

From our perspective we see it as a very proactive move and a positive one for the regulated debt advisor sector. People complain all the time about ‘light touch regulation’ and it exists in part because the regulators in question are not out there looking into the affairs of the market participants, or the market participants are finding ways to duck the rules the normal firms have to abide by.

Regulatory arbitrage is thankfully not present in the PIP space the way it is in the debt mediation industry. You can’t call yourself a ‘Personal Insolvency Practitioner’ unless you actually are one whereas it is still the case that unregulated entities can call themselves debt mediators and charge for the service.

How long should they wait before the start a process like this given so few PIA’s have been done? No time at …

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Insolvency: creditors pay for it and carry cost & why some people can’t do it

Something that we hear a lot is that Personal Insolvency Practitioners are expensive, while they may be costly, it is worth looking at where the cost base rests. While one party may have the appearance of ‘paying’ for something, in fact it’s forgone income to the creditors, we demonstrate this using simple T-accounts to show how it works.

Another critique is that ‘not everybody will be able to afford it or obtain an insolvency arrangement’, again, this is in part structural and not necessarily some kind of financial bigotry. To strike an insolvency deal, the same as a company being granted examinership, you have to have some ‘post plan’ survival plan, if you are below poverty levels already taking one out would be to your detriment.

Rather it is the case that for people who are too financially underwater to create a plan will have two choices, non-ISI agreements with the bank, or bankruptcy. The same applies for a company, examinership is not always granted where there is no workable plan for after the protective period.

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Newstalk Lunchtime: Jonathan Healy and Karl Deeter on Insolvency Service of Ireland

We spoke to Jonathan Healy about the new insolvency service, how it was not going to be possible to determine its success for at least three months (as protective certs last 70 days and can last more), as well as the importance of understanding that the security behind a debt is a very different concept to the decency of the creditor.

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Overindebted property investors – a fix without insolvency using Section 69

There are a lot of property investors who will see the ramp up of repossessions or insolvency of their current situation result in large losses occurring.

We hear from many clients that they plan to opt for personal insolvency, but in many instances this doesn’t need to be the case. If a person has five properties and one is a family home they could opt to sell the investment properties and have any losses accrued into a general shortfall where the settlement repayment plan is a compromised effort.

Compromised settlements will be a stock solution for a huge number of investors, but this doesn’t demand insolvency. In fact, Personal Insolvency (given that property ownership is required to opt for it) may not be anywhere near as popular as predicted because sales resulting in losses will mean the debt is unsecured.

There is still the family home, but banks have given an undertaking to help cut deals for family homes once unsecured debtors are taken care of first, that is what doing a Debt Settlement Arrangement is for, a Section 69 …

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