Central Bank pilot scheme to include some write-downs for distressed borrowers

techdiver

A major new initiative has been agreed with the banks and the Central Bank to alleviate the debt burden of over-stretched borrowers.

The new structure, which will operate on a pilot basis from next month, will include a write-down of debts.

The Central Bank said the purpose of the initiative is to secure co-operation between mortgage lenders and unsecured lenders such as credit card companies and credit unions.

The idea is that it will alleviate stress on borrowers who are continually being pressurised to repay multiple lenders.

The bank said the aim of the scheme is to achieve ''sustainable and fair outcomes'' without the need for people to enter the full insolvency process''.

Full article - http://www.rte.ie/news/business/2013/0508/391130-central-bank-borrowers/

So mortgage holders will get debt written down to achieve "sustainable and fair outcomes", whilst maintaining "ownership" an asset!

It's good to see that prudent people are going to be screwed over whilst people who are have unsustainable debt will be rewarded.

What ever happened to the concept of "if you can't pay for it you don't keep it". This could set a dangerous precedent, with person A seeing person B getting debt write down for not meeting their financial commitments, whilst not even loosing their homes!

I know people can fall on hard times, but a debt write down without any consequences is going too far! The lesson to be learned in Ireland is that poor financial decisions will be rewarded! Roll on the next property bubble! :rolleyes:

Plus looking at the details it looks as if the credit unions are going to get squeezed in this process.

shanered

That one issue I noticed being mentioned, is that unsecured loans such as credit union loans will be cut compared to the bigger institutions, which is a move to attack credit unions, which I could always see falling under the cross-hairs mainly because of the independence.
It also mentioned that the pilot scheme is being run by allowing a "average selection of random debt holders" or something along those lines, about 700+ people will be selected.
I wonder who these lucky buggers will be and how they were selected!?!

Pete_Cavan

techdiver wrote: »

Full article - http://www.rte.ie/news/business/2013/0508/391130-central-bank-borrowers/

The Central Bank said the purpose of the initiative is to secure co-operation between mortgage lenders and unsecured lenders such as credit card companies and credit unions.

The idea is that it will alleviate stress on borrowers who are continually being pressurised to repay multiple lenders.

The bank said the aim of the scheme is to achieve ''sustainable and fair outcomes'' without the need for people to enter the full insolvency process''.

Surely those with unsustainable debts with multiple lenders are those who should be entering the full insolvency process!? If you have run up debts with multiple lenders, including banks, credit unions and credit card companies, which they cant afford to pay it is an indication that this person is extremely negligent when it comes to financial matters and should face the consequences of this. They should go through the insolvency process and have their names published on the register affecting future applications for loans. Someone with a big mortgage, a credit union loan for a car as well as credit card debt, none of which they can afford to repay, are the last people who should get a write-down - they are the reason we have an insolvency process.

If we are to go down the road of write-downs, the people only who should get debt write-downs are those with one unsustainable loan but otherwise healthy finances. I mean, a young family who bought a house at the height of the boom and will never pay off the full mortgage but have good paying jobs and would be able to repay a mortgage based on a reduced principle. If they have a mortgage on a house for €325,000, €75,000 could be written off meaning they repay €250,000. That is at least better than the bank selling the house for €100,000 and forcing the family out of their home. It might not be fair on their neighbours but if it means the bank take a smaller hit then it is a better outcome.

Cody Pomeray

shanered wrote: »

That one issue I noticed being mentioned, is that unsecured loans such as credit union loans will be cut compared to the bigger institutions, which is a move to attack credit unions, which I could always see falling under the cross-hairs mainly because of the independence.
It also mentioned that the pilot scheme is being run by allowing a "average selection of random debt holders" or something along those lines, about 700+ people will be selected.
I wonder who these lucky buggers will be and how they were selected!?!

700 golden tickets wrapped up in bank bonds on the open market