The Insolvency Service of Ireland started taking applications
for its new personal insolvency measures this week. I get the impression that
there was nobody beating the door down, nor a long queue forming. That’s no
surprise but not for the reasons that you hear many commentators making.
Nothing affects people quite like debt, historically it has a dark and sinister
undertone that the majority of people keep as far away from as possible. The
financial tsunami that we have experienced in Ireland means that it is
affecting far more people than it ever has done in the past. Many people will
find it easier to talk about a lump that they have found somewhere on their
body than be willing to talk about their struggles to pay or not pay their
bills. Unfortunately that is the way that it has always been.
There is no doubt that the new legislation has been met with
consternation, confusion and a certain amount of resentment because of the
limitations that it imposes. Equally so there is no questioning that it has
spectacularly under-delivered in relation to the most important aspect –
bankruptcy. But it still represents real opportunity for those who use it
correctly, whether that is by implementing one of the measures or by using the
options that are available as a bargaining tool.
Unless you learn about the options available, educate and
empower yourself to use them where applicable, it is impossible to make
informed decisions about your path forward. Debt brings with it huge social and
personal cost. Look around you, you can see it everywhere. We cannot control
what the government does with budgets and austerity measures to put the country
back on track but you can regain control over your personal situation. Granted
it will take a little time and any new insolvency legislation does take time to
bed in. Look at the United Kingdom, there was the same consternation, confusion
and resentment when the legislation was changed ten years ago but now it is an
efficient system that allows people to start again. It has it's critics but it
works!
Right now Ireland is at the start of that cycle and it may
well take five years to bed in, as it did in the United Kingdom but everyone
has the right to avail of the legislation and in my opinion, should.
So whilst most commentators will tell you that the new
legislation is an unmitigated disaster, with the exception of the bankruptcy
component, I'd say that it can work. But if you don't understand it, don't
educate yourselves about the options available, the Insolvency Service of
Ireland will sit idle. Please don't allow that to happen.
Debt is quite simply an affordability issue
•
If you can afford to pay, you should
•
If you can't afford to pay, you simply can't and
a solution has to be found.
With the education that is required in this area, there also
needs to be a fundamental shift in the way that people approach mortgage debt
and the family home. In part, this is included in the new legislation. Some
simple examples, A couple living in a three bedroom house on their own with no
children who cannot afford to pay the mortgage should simply downsize to a
property that they can afford to pay for. If you are living beyond your means,
for your own financial and healthy well being, you have to make a change. Much
is being made of protecting the family home at all costs. In many cases this is
ridiculous, split mortgages, warehoused sums and 20 year claw backs are a waste
of time. Everybody owes it to themselves to achieve a realistic, sustainable
solution. All mortgage debt is secured, banks will expect to receive back all
of the money that they have secured on your property. Who can blame them? But
they as well as you have never experienced the degree of difficulty that individuals
are now facing.
Rest assured, there is always a solution, Don't Panic.
Author :: Nick Leeson Principal
