Ross Maguire: No reversal of fortune until we rid nation of unsustainable debt
People had been unable to fight the banks, but now we have the weapon of personal insolvency
Published 01/09/2013 | 05:00
THE ninth of September 2013 will be an important date in our nation's war on debt. This is the date when the first applications for personal insolvency will be made.
Ever since the commencement of hostilities in 2007, we have suffered loss after loss. We were told by our leaders that the war would be won and won quickly, and we were exhorted to do our patriotic duty.
The people followed, as truly as any people ever did, only to be bitterly disappointed. In 2010, the State took upon itself further massive debts, leading to the handing over of control of our country later that year. Some 300,000 of our people have been lost to emigration, another 450,000 languish in unemployment, and debt stalks every town and hamlet in the land.
There has been recent talk of green shoots.
Here we must be clear – until we rid the country of unsustainable debt, there will be no reversal in our fortunes. Debt is our problem – it is the enemy.
But the time to fight back is upon us.
Every general knows that in order to wage war, an army must have supplies. To date, the problem for us has been the almost complete absence of arms. For where a family, having purchased a modest family home in Dublin, owe €500,000 and where their ability to pay has long since fallen below that, what can they do? Their only option has been to beg for mercy. And tens of thousands of Irish people have begged, and continue to beg.
But enough of mercy.
Did our forefathers expect, a century after their sacrifice created our State, that 200,000 Irish families would be cut adrift and reduced to begging? Was that their vision for the future? Did they expect that the national Government would receive instructions from foreign capitals and be beholden to financiers?
On September 9 next, the war can change course if we have the courage to go into battle.
The obstacle is no longer lack of resources, for we are now armed to the teeth. The guerrilla warfare waged by New Beginning in challenging banks in the courts can be now replaced with open battle.
For the first time, borrowers can make proposals to their creditors using the services of Personal Insolvency Practitioners (Pips). Those Pips will examine in detail the borrower's financial circumstances and devise a plan with the borrower, which returns him or her to solvency. The law mandates that the plan involves every effort to protect the family home and the tools of the borrower's trade. It cannot be a stop-gap measure – it must be final and conclusive.
During the process, the borrower will no longer have to lie awake at night worrying about the future. From the moment the deal goes into place, the borrower becomes solvent and able to continue with their lives as functioning economic actors.
This is the reversal in our fortunes we crave.
There is, of course, the possibility that the banks will refuse to do the deals that need to be done. But if they do we will have our big guns ready and waiting – the mighty canon of bankruptcy.
There is one thing that banks fear most and that is a benign bankruptcy regime. For in bankruptcy the banks get obliterated. And in three years the borrower walks free.
During bankruptcy, life can go on as normal. If the borrower has a job he continues to have a job, and if there is a family home, bankruptcy does not have to mean loss of that home.
A trade union is only powerful because of its power to strike. That does not mean it needs to strike – in fact the option of strike is the exception rather than the rule.
It is the same with bankruptcy. The threat of it means that the banks lose control and will be forced to do deals. Those deals will be borrower-led deals, deals devised and promoted by the borrowers and deals believed in by borrowers.
Once the banks get more in the deal than in bankruptcy, the deals will be accepted. In other jurisdictions there is overwhelming acceptance of such deals.
The costs of the process will be borne by the banks. This is mandated by the legislation.
There is talk among some commentators, talk that is promoted by the banks, that the insolvency system is overly harsh, that there is a register, that it is better to continue to beg for the mercy that will, or may, be handed out by the lenders.
This is the talk of cowards.
There is talk of strategic defaulters and of moral hazard.
This is the talk of treachery.
We are a nation born like many others from the sacrifice of our founders. It is a shameful fact that we have capitulated in the face of adversity – but the past is the past. We are now duty bound to future generations of Irish people and to the Irish nation itself to rid ourselves of these chains of debt and to build a new Ireland, which is built on solid foundations.
The green shoots we all crave are the beginning of something new, the end of winter and the rebirth of our country. But a country is ultimately its people and solvent individuals are the most potent green shoots of all.
As our people and families return to solvency, the tide will turn in our favour, sovereignty will be restored and the unfettered control of Irish destiny will be returned to where it properly belongs.
Ross Maguire is SC for New Beginning, a group that campaigns on behalf of distressed mortgage holders