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Can the average Mortgage holder(negitive equity) do what the big Developers have done

  • 11-06-2010 11:02AM
    #1
    Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭


    Hi all first time posting but I would like a serious debate on this. I know many friends who are in the neg equity trap and was wondering what's stopping them turning to the bank and giving them the keys and then declaring bankrupcy??

    I mean the big developers can do it why not the average..Does anyone know why this isnt being done already?


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Comments

  • Registered Users, Registered Users 2 Posts: 3,086 ✭✭✭Nijmegen


    They could, in theory, go down that route. But it's very difficult, and all of your assets will be stripped.

    It's easier for an individual with wealth, because - frankly - they can put away substantial enough assets outside of the hands of the Irish system.

    All of our senior disgraced bankers have fled to homes I'd bet an eye aren't in their name, yet are owned by them in the end.


  • Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭fliball123


    Nijmegen wrote: »
    They could, in theory, go down that route. But it's very difficult, and all of your assets will be stripped.

    It's easier for an individual with wealth, because - frankly - they can put away substantial enough assets outside of the hands of the Irish system.

    All of our senior disgraced bankers have fled to homes I'd bet an eye aren't in their name, yet are owned by them in the end.

    Cheers for the response but as stated I have circle of about 15 close friends 8 are in neg equity and out of these 5 are unemployed, which would ask the question these 5 lads whats to stop thm just chucking the keys I am bankrupt they only get the scratch and are barely living off that...The phrase blood out of a stone comes to mind


  • Registered Users, Registered Users 2 Posts: 1,801 ✭✭✭highgiant1985


    fliball123 wrote: »
    Cheers for the response but as stated I have circle of about 15 close friends 8 are in neg equity and out of these 5 are unemployed, which would ask the question these 5 lads whats to stop thm just chucking the keys I am bankrupt they only get the scratch and are barely living off that...The phrase blood out of a stone comes to mind

    When the bank sells the house for say e.g. 400k if that doesn't cover the full mortgage your friend owes to the bank e.g. 500k then your friends will still owe the difference to the bank though I think?


  • Registered Users, Registered Users 2 Posts: 2,333 ✭✭✭jonnyfingers


    fliball123 wrote: »
    Cheers for the response but as stated I have circle of about 15 close friends 8 are in neg equity and out of these 5 are unemployed, which would ask the question these 5 lads whats to stop thm just chucking the keys I am bankrupt they only get the scratch and are barely living off that...The phrase blood out of a stone comes to mind

    As the previous poster said, they could declare bankrupcy but all of their assets would be stripped. Where would they live? What would they drive? Their credit rating would probably be seriously affected so they might not be able to get loans or mortgages in the future.

    For the average person bankrupcy is not a viable option I'm afraid.


  • Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭fliball123


    The reason thats stopping your friends just chucking the keys back to the bank is that when the bank sells the house for say e.g. 400k if that doesn't cover the full mortgage your friend owes to the bank e.g. 500k then your friends will still owe the difference to the bank.

    Hense the reason for declaring bankrupcy. I was reading up on it and its the same drill as a liquidation with the tax man coming in first and taking anything the individual owns ie a car or whatever and then the bank / other creditors next or am I wrong about this. but I am sure if you declare bankrupcy your obsolved from all debts only downside is there is a black mark against your name for a certain number of years not too sure what it is.


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  • Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭fliball123


    As the previous poster said, they could declare bankrupcy but all of their assets would be stripped. Where would they live? What would they drive? Their credit rating would probably be seriously affected so they might not be able to get loans or mortgages in the future.

    For the average person bankrupcy is not a viable option I'm afraid.

    Hi Johnny yeah was looking at that but the way I see it I of the lads situation he is about 1/4 of mill in neg now he has a banger sure whats the downside of him declaring I mean would he be cut off from the scratch???? But I reckon there are tonnes of people in the same boat as him


  • Registered Users, Registered Users 2 Posts: 57 ✭✭elnino35


    agree with you totally on this...its a f**ckin outrage what ordinary householders have to put up with compared to that shower of b$tards who stitched us all up with their slimy backhanded deals:mad:..I'm currently paying interest only on my mortgage, and trying to manage only on the social after losing my job..only good thing is, I somehow have the deeds to my house after a feck up from the solicitor;)..they keep sending out letters requesting them back, but ain't no way I'm handing those babies over!!:D:D


  • Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭fliball123


    elnino35 wrote: »
    agree with you totally on this...its a f**ckin outrage what ordinary householders have to put up with compared to that shower of b$tards who stitched us all up with their slimy backhanded deals:mad:..I'm currently paying interest only on my mortgage, and trying to manage only on the social after losing my job..only good thing is, I somehow have the deeds to my house after a feck up from the solicitor;)..they keep sending out letters requesting them back, but ain't no way I'm handing those babies over!!:D:D


    Well then My advise is to stop paying your mortgage you have your deeds lol...I mean you could do a burner out of this country and rent there is not a damn thing they can do but you will probably be arrested on return...But the reason I started the thread is that with property only going one way there are going to be people falling into this trap every day


  • Registered Users, Registered Users 2 Posts: 2,333 ✭✭✭jonnyfingers


    fliball123 wrote: »
    Hi Johnny yeah was looking at that but the way I see it I of the lads situation he is about 1/4 of mill in neg now he has a banger sure whats the downside of him declaring I mean would he be cut off from the scratch???? But I reckon there are tonnes of people in the same boat as him

    I wonder how old this person is? Do they earn a lot of money? Could they live the rest of their lives with a bad credit rating and get by without having to borrow money?

    I think it's terrible how rich developers can declare bankrupcy and still live relatively well. There's a well known family in Waterford who own many of the main bars and clubs who have gone down this route. There were rumours of the owner keeping €150,000 in a safe and taking it out just before the administrator came in to take over the businesses. And there is already talk of this guy's next business venture.

    But the way I look at it those with money tend to keep their money. Those without suffer much more.

    So in an ideal world, yes we could tell the banks to stuff it "I'm bankrupt", but unless you have some money tucked away somewhere I fear it would not be a good idea.


  • Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭fliball123


    I wonder how old this person is? Do they earn a lot of money? Could they live the rest of their lives with a bad credit rating and get by without having to borrow money?

    I think it's terrible how rich developers can declare bankrupcy and still live relatively well. There's a well known family in Waterford who own many of the main bars and clubs who have gone down this route. There were rumours of the owner keeping €150,000 in a safe and taking it out just before the administrator came in to take over the businesses. And there is already talk of this guy's next business venture.

    But the way I look at it those with money tend to keep their money. Those without suffer much more.

    So in an ideal world, yes we could tell the banks to stuff it "I'm bankrupt", but unless you have some money tucked away somewhere I fear it would not be a good idea.


    I believe you have a 7/10 year black mark against your name in all honesty which would be better even 20 years without getting a loan or 1/4 mil in debt and increasing all the time...I mean if every dev or builder is getting away with it why not the little guy...But as you rightly said if you had s lump sum to fall back on might not be as bad...


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  • Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    fliball123 wrote: »
    I believe you have a 7/10 year black mark against your name in all honesty which would be better even 20 years without getting a loan or 1/4 mil in debt and increasing all the time...I mean if every dev or builder is getting away with it why not the little guy...But as you rightly said if you had s lump sum to fall back on might not be as bad...

    Its 12 years fliball. I believe there is a scheme along UK lines been mooted to help people who lost their jobs and are in negative equity.

    If your friends decided to jump ship abroad, it will be the banks and eventually us the taxpayers who will be picking up the bill.


  • Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭fliball123


    gurramok wrote: »
    Its 12 years fliball. I believe there is a scheme along UK lines been mooted to help people who lost their jobs and are in negative equity.

    If your friends decided to jump ship abroad, it will be the banks and eventually us the taxpayers who will be picking up the bill.


    Hi Gurramok good to hear from you. Yeah but the way he sees it is he was paying for the developers/banks **** up so now its his turn. I aint saying its right or wrong but could anyone blame him for thinking along these lines?


  • Registered Users, Registered Users 2 Posts: 57 ✭✭elnino35


    I wonder how old this person is? Do they earn a lot of money? Could they live the rest of their lives with a bad credit rating and get by without having to borrow money?

    I think it's terrible how rich developers can declare bankrupcy and still live relatively well. There's a well known family in Waterford who own many of the main bars and clubs who have gone down this route. There were rumours of the owner keeping €150,000 in a safe and taking it out just before the administrator came in to take over the businesses. And there is already talk of this guy's next business venture.

    But the way I look at it those with money tend to keep their money. Those without suffer much more.

    So in an ideal world, yes we could tell the banks to stuff it "I'm bankrupt", but unless you have some money tucked away somewhere I fear it would not be a good idea.
    This is where our excuse for a government could step in and maybe draw up some new legislation that doesn't have people being blacklisted for 7-10 years, in the event of them declaring bankruptcy through losing their jobs and being in negative equity...don't think it would be too hard too implement and police properly against genuinely hard hit people...then again this is Cowens' mob were talkin about:eek:


  • Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭fliball123


    elnino35 wrote: »
    This is where our excuse for a government could step in and maybe draw up some new legislation that doesn't have people being blacklisted for 7-10 years, in the event of them declaring bankruptcy through losing their jobs and being in negative equity...don't think it would be too hard too implement and police properly against genuinely hard hit people...then again this is Cowens' mob were talkin about:eek:

    I think its 12 years as Gurramok said..well I mean I kind of agree with him that everyone else will be picking up the tab but having said that he was already picking up the developers tabs with his tax when he was working

    I can see this scenario being played out before the end of the year


  • Registered Users, Registered Users 2 Posts: 2,333 ✭✭✭jonnyfingers


    elnino35 wrote: »
    This is where our excuse for a government could step in and maybe draw up some new legislation that doesn't have people being blacklisted for 7-10 years, in the event of them declaring bankruptcy through losing their jobs and being in negative equity...don't think it would be too hard too implement and police properly against genuinely hard hit people...then again this is Cowens' mob were talkin about:eek:

    Oh I completely agree. NAMA should be used to help everyone, not just developers that made risky investments and now don't want to pay for taking those riskes.

    The amount of money being pumped into Anglo Irish Bank could easily cover the mortgages of most of the country who are struggling with mortgage repayments.

    I realise that we might not have the money to do it but I think looking after the honest hard-working people of this country should come first over looking after the rich. But this is what Fianna Fail do. I've never voted for them but unfortunately the majority have in the past. So we must take a bit of the blame for the mess we're in.

    But back to the OPs original question about can we declare bankrupcy right now I don't think we can.


  • Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭fliball123


    Oh I completely agree. NAMA should be used to help everyone, not just developers that made risky investments and now don't want to pay for taking those riskes.

    The amount of money being pumped into Anglo Irish Bank could easily cover the mortgages of most of the country who are struggling with mortgage repayments.

    I realise that we might not have the money to do it but I think looking after the honest hard-working people of this country should come first over looking after the rich. But this is what Fianna Fail do. I've never voted for them but unfortunately the majority have in the past. So we must take a bit of the blame for the mess we're in.

    But back to the OPs original question about can we declare bankrupcy right now I don't think we can.

    Individually as a person you can declare bankrupcy


  • Registered Users, Registered Users 2 Posts: 2,333 ✭✭✭jonnyfingers


    fliball123 wrote: »
    Individually as a person you can declare bankrupcy

    Correct. What I meant was right now I, personally, don't see it as a viable option.

    I would very much like to see the government setting up some sort of 'bankrupcy scheme' for those in negative equity. Something like a restructuring of the mortgage based on the current value of the house. To be honest I'd expect pigs to fly sooner than Cowen doing something like it.


  • Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    Correct. What I meant was right now I, personally, don't see it as a viable option.

    I would very much like to see the government setting up some sort of 'bankrupcy scheme' for those in negative equity. Something like a restructuring of the mortgage based on the current value of the house. To be honest I'd expect pigs to fly sooner than Cowen doing something like it.

    I'd object to the negative equity been wiped out. If they did, every tom dick and harry who are not in financial trouble will be doing it and will the value be re-assessed again when the prices rise?


  • Registered Users, Registered Users 2 Posts: 4,635 ✭✭✭maninasia


    fliball123 wrote: »
    I think its 12 years as Gurramok said..well I mean I kind of agree with him that everyone else will be picking up the tab but having said that he was already picking up the developers tabs with his tax when he was working

    I can see this scenario being played out before the end of the year

    What is somebody worrying about a credit rating when they owe 1/4 million quid. They will not be able to get a loan anyway in the future so the logical option is in front of their eyes.


  • Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭fliball123


    Correct. What I meant was right now I, personally, don't see it as a viable option.

    I would very much like to see the government setting up some sort of 'bankrupcy scheme' for those in negative equity. Something like a restructuring of the mortgage based on the current value of the house. To be honest I'd expect pigs to fly sooner than Cowen doing something like it.


    I wonder if the general public are aware of this option


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  • Closed Accounts Posts: 2,497 ✭✭✭omahaid


    I'm interested in this too, although not planning to do it. If I'm on the dole and owe €400k to the banks on a house now worth €100k, what good reason is there for me to NOT declare bankruptcy?

    Assume I have no other assets (car worth €500) and I can move back with my parents.


  • Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭fliball123


    maninasia wrote: »
    What is somebody worrying about a credit rating when they owe 1/4 million quid. They will not be able to get a loan anyway in the future so the logical option is in front of their eyes.


    Agree with you there


  • Closed Accounts Posts: 1,914 ✭✭✭danbohan


    fliball123 wrote: »
    Hi all first time posting but I would like a serious debate on this. I know many friends who are in the neg equity trap and was wondering what's stopping them turning to the bank and giving them the keys and then declaring bankrupcy??

    I mean the big developers can do it why not the average..Does anyone know why this isnt being done already?

    it would very much depend on if your friends want continue to live in this country or to emigrate say to uk ,they could then declare bankruptcy in uk which has much more benevolent system than ours here , people declare banrupcy in USA on a regular basis and rebuild their lives and credit ratings its not looked on in same negative way as here . people are going to default on their mortgages whether we like it or not and taxpayers in ireland will have pick up that tab along with all the other tabs .


  • Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭fliball123


    omahaid wrote: »
    I'm interested in this too, although not planning to do it. If I'm on the dole and owe €400k to the banks on a house now worth €100k, what good reason is there for me to NOT declare bankruptcy?

    Assume I have no other assets (car worth €500) and I can move back with my parents.


    If I was in your position I would tell mam and dad to put the tea on as you will be there for a while :) Good luck come back to this thread and tell us how you get on if you do it?


  • Registered Users, Registered Users 2 Posts: 57 ✭✭elnino35


    Correct. What I meant was right now I, personally, don't see it as a viable option.

    I would very much like to see the government setting up some sort of 'bankrupcy scheme' for those in negative equity. Something like a restructuring of the mortgage based on the current value of the house. To be honest I'd expect pigs to fly sooner than Cowen doing something like it.
    exactly, well said....The amount of money required to help out the worst hit with negative equity, would be like a drop in the ocean compared to that f**ckin Anglo bail out:mad:...but as you rightly say, hell will freeze over before Cowen & co give a damn


  • Closed Accounts Posts: 2,497 ✭✭✭omahaid


    fliball123 wrote: »
    If I was in your position I would tell mam and dad to put the tea on as you will be there for a while :) Good luck come back to this thread and tell us how you get on if you do it?

    Parents understand and are happy to take me back. Are my parents the only reason not to declare bankruptcy?


  • Registered Users, Registered Users 2 Posts: 7,619 ✭✭✭fliball123


    omahaid wrote: »
    Parents understand and are happy to take me back. Are my parents the only reason not to declare bankruptcy?

    as I say I would do it if I was in your shoes


  • Registered Users, Registered Users 2 Posts: 2,333 ✭✭✭jonnyfingers


    gurramok wrote: »
    I'd object to the negative equity been wiped out. If they did, every tom dick and harry who are not in financial trouble will be doing it and will the value be re-assessed again when the prices rise?

    True, this is why I'm an engineer and not an accountant. I'm an ideas man! I don't worry about the details!

    But in all seriousness a step in the right direction from the government would be nice to help those in trouble. Yes there is a circle of blame, you could argue that certain people could not afford the houses they bought, you could argue nobody forced them to pay over the odds for houses, you could also argue that the banks should not have given out silly mortgages, especially 100% mortgages. But after all that this is peoples' lives we're talking about. I want to see the government do something to help.


  • Closed Accounts Posts: 2,497 ✭✭✭omahaid


    fliball123 wrote: »
    as I say I would do it if I was in your shoes

    That answers my question then :D


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  • Registered Users, Registered Users 2 Posts: 57 ✭✭elnino35


    fliball123 wrote: »
    as I say I would do it if I was in your shoes
    provided mammy and daddy aren't in the same boat!!!:eek:


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