Penrose bill promises to give bankrupts a fighting chance
Published 27/04/2015 | 02:30
There is one thing that may halt the growing numbers of threatened home repossessions this year - TD Willie Penrose's private member's bill on bankruptcy. Right now the banks are not budging on deals, preferring instead to evict and punish the defaulting homeowner. This bill has the potential to twist the gun pointed at the homeowners' heads back at the banks - forcing them to deal practically with each situation and possibly saving some 30,000 families from the ultimate stress of losing their home.
People don't want to be bankrupt. Nor do they want to lose their homes.
However, until now the banks did not have to listen to their customers. They had the monopoly on the conversation and the deals. But if Mr Penrose's bill makes it through the Dáil, then he could save a whole lot of misery across the country.
The banks are still acting like teenagers. They are refusing to talk to their customers. Ultimately, much of what they do does not even make sound business sense - in many cases, they would prefer to repossess a home than salvage a financial contract, even if there is a negative cost.
I personally know this, for in 2011 the banks refused consent for me to sell my home for a cash offer of €500,000. Instead, they preferred to repossess and sell my home for less than €170,000 two years later. Does that appear to be a sound financial decision? Hardly.
Passing Mr Penrose's bill gives those failing homeowners a fighting chance - and we, more than any nation, love to give the underdog a fighting chance.
But that is only the start. Make bankruptcy a real option - a one-year process - and that does two things.
First, it allows home owners to fight on a level playing field with the banks. Deals will be done. But there is a clear secondary benefit to the bill - for people who do have to take this nuclear option.
Bankruptcy is not for the ridding of debt. Bankruptcy is for the means of recovery.
Let that thought sink in. Anyone who looks bankruptcy in the eye will understand me perfectly - and indeed some 448 other poor unfortunates travelled this path last year, the first year of the new, so-called progressive Irish insolvency laws.
When I became bankrupt last year I had a meeting with the Insolvency Service. I was in the almost pre-euphoric state before the jump (or push). It was only afterwards that the cold reality of my situation sunk in. Whatever debts I had accumulated prior to that date were erased. Whatever debts I might accumulate in the coming years were all my own. These two pillars of reason seemed balanced and fair.
Then, crash, I hit the cold water; whatever assets I might accumulate would be taken off me and given to my creditors. And not only would they be taken over the three years of my sentence, if I was successful in gaining employment again, the Insolvency Service could and indeed would (they stressed this point) get a judgment against future earnings for the next five years.
So, I was looking into eight years bobbing around in the cold water, if bobbing was the action that might describe my sorry state.
I have spoken with Personal Insolvency Practitioners up and down the country since this time. They all, to a professional, advise their clients not to get any work during this enforced sentence.
So, in one fell swoop not only are people denied the real object of bankruptcy - that of recovery - the country is also penalised as many entrepreneurs idle away some of the prime earning years of their life.
Regulating bankruptcy makes sense.
It has the potential to give homeowners a chance to negotiate where possible and it allows those who are truly goosed a chance to recover again.
That way, everyone benefits - even the banks.