Debt Forgiveness

roro2

gaius c wrote: »

I don't mean to be rude by just zeroing in on one part of your post but I don't quite get what you mean here?

The way PIP works is:
1. Person applies.
2. Person approved.
3. House and any other valuable assets repossessed and sold.
4. Outstanding debt looked at. If it can be re-structured, fine. If not, then the debtor pays what they can, i.e. salary minus spending guidelines.
5. If they earn less than the spending guidelines (have you seen them? They are quite generous), then they are effectively off scot-free and will be discharged from PIP once the period is up.

Sure, they lose their home (or homes in the case of BTL's-I suspect we're going to see a lot more of this than people realise) but they also lose the debt and move on with life.

They don't lose their home though. The family home is protected with the debt potentially reduced based on ability to pay. Other assets are sold.

The Corinthian

gaius c wrote: »

5. If they earn less than the spending guidelines (have you seen them? They are quite generous), then they are effectively off scot-free and will be discharged from PIP once the period is up.

I've not read the PIP guidelines, but had been led to believe them draconian. Of course, I was led to believe that from people posting here, so more fool me, I suppose.

My understanding was that PIP meant the government would cover the debts, while what I proposed was that the bank would be taking the, quite manageable, hit. If this was wrong, then fair enough.

roro2 wrote: »

If the banks require more capital because of some sort of negative equity write-off scheme, or escalating arrears, Basle III regulations, or any other scenario... it will be public money.

Again, how much of the reported losses by the banks over the last few years have been accounting write-downs? How much, especially if such a scheme was limited only to those who cannot afford to pay, would it actually cost the banks?

If you've been following the maths in the last few posts, you'll find that they can easily cover it. Your 'if' scenario is no longer really very realistic.

roro2 wrote: »

They don't lose their home though. The family home is protected with the debt potentially reduced based on ability to pay. Other assets are sold.

That is a get-out-of-jail-free card.

I think I'll go buy myself a home I can't afford so I can get it for free too, through this scheme.

gaius c

roro2 wrote: »

They don't lose their home though. The family home is protected with the debt potentially reduced based on ability to pay. Other assets are sold.

There's some nicey nice language surrounding the bill but all assets on are the table. They have to be or else it will be a defaulters charter.

If it's a case that a household are in arrears and there's neg equity, sell the house first to reduce the overall debt and then look at whether the household can afford to repay the outstanding debt after providing their own needs (shelter, food, etc). If they genuinely can't repay (A), then fair enough but if they are misrepresenting their own position or are using the money they don't pay the bank to maintain lifestyle (B), then they should really be jailed for fraud.

There's a lot more of option B than people realise. Look at Brendan Kelly in Dalkey. Look at Caroline Lennon-Nally with her €100 a week "grooming expenses". Look at the folk Pat Kenny has on his show like Geoff Scargill with his 5 BTL's all on interest only and "waiting for a deal". And dare I say it, look at Pat Kenny himself and all the great & good of our society who mortgaged themselves to the hilt during the bubble.

roro2

The Corinthian wrote: »

I've not read the PIP guidelines, but had been led to believe them draconian. Of course, I was led to believe that from people posting here, so more fool me, I suppose.

Such as posters incorrectly laying out the 5 steps of PIP based on what they think they should be, including repossession of the family home, rather than what they actually are. :rolleyes:

Banks can only report losses when there has been an impairment event specific to an account that suggests they will not be fully repaid, such as an account going to arrears - a loss provision is then made, basically an estimate of how much they will likely loose on that account. So the losses to date in the banks have occured when there has been such impairments on specific mortgages. There is already question marks over whether there is sufficient capital to withstand future losses, with mortgage arrears the key risk, without any new debt write-offd based on negative equity rather than borrowers ability to repay. How you can say the questionable maths in this thread shows that the banks have sufficient capital to "easily" afford such a scheme is beyond me.

The Corinthian

roro2 wrote: »

Banks can only report losses when there has been an impairment event specific to an account that suggests they will not be fully repaid, such as an account going to arrears - a loss provision is then made, basically an estimate of how much they will likely loose on that account.

That's not actually true. They can write down a potential loss, which then appears as an accounting loss, even though it has not and may never occur. Much of the losses in the last few years have actually comprised of such write downs.

How you can say the questionable maths in this thread shows that the banks have sufficient capital to "easily" afford such a scheme is beyond me.

If you actually point out how this maths is questionable, I'm all ears. To date you've only dismissed it without any such argument.