Lifting the lid on bankruptcy
A Sligo seminar was told of an 'avalanche' of cases to come
Bankruptcy. It's a word that, for generations in Ireland, was shrouded in shame. But that may all be about to change.
No longer, it seems, will the Shane Filans and Ivan Yeats of this world be the only ones taking the last-ditch option when it comes to debts.
A seminar in Sligo heard predictions of "an avalanche" of bankruptcies to come.
More bankruptcy petitions are now coming before the High Court. The numbers may not yet be huge.
But according to barrister Vincent P Martin, B.L., bankruptcy will become commonplace in Ireland.
He told the seminar: "Bankruptcy is the NAMA for the little people."
One solicitor remarked that for many people, bankruptcy may be "the only show in town."
For creditor banks, that's a frightening scenario.
In an interview with The Sligo Champion, Mr Martin said: "People have to eventually recover.
"I should say people should pay every last penny they can pay. But due to the high level of indebtedness in Ireland, people cannot pay money they don't have.
"You can't get feathers from a frog."
However, he also said bankruptcy was a very serious decision.
And people should not threaten "to pull the lever" unless they were serious about following it through.
There were also restrictions. Assets were taken over by an Official Assignee. Debts must exceed assets by at least €20,000.
And debtors must have have made reasonable efforts to deal with creditors through an insolvency arrangement. About 40 mostly middle-aged people attended the Sligo seminar.
Held upstairs in the Radisson Blu Hotel, it was one of 30 throughout the country organised by the group New Beginning.
Some of those present were from Sligo; others were from farther away.
It's clear that for some, debt still carries a stigma.
A feature of these events is that debtors do not always attend the seminars taking place in their local area.
One man at the Sligo seminar fretted his photograph might be taken.
Others, while eager to seek a way out of their trouble by asking questions, were not keen to talk about their specific circumstances.
But one consequence of the current recession may be the onset of a new attitude to debt and bankruptcy.
Already in Ireland, the term for bankruptcy has been reduced from 12 to three years.
Mr Martin pointed out that in the U.S., bankruptcy was almost "a badge of honour," the route to a new start, a New Beginning.
Bankruptcy was but one issue dealt with during the seminar.
Other topics covered were ways with dealing with banks and the various options for debtors, the Mortgage Arbitration Resolution Process, personal insolvency and dealing with personal insolvency practitioners or PIPS.
The Personal Insolvency Practitioner appointed for Sligo is accountant Sean Mulhern, of Mulhern Leonard Accountants.
Mr Martin told those present that New Beginning was committed to a national recovery.
But he insisted this depended on personal recovery.
He added: "The place to solve it longterm is not in the courts."
Of course, money management of any kind, even when it comes to debt, can be good for accountants, lawyers and financial advisers.
Although New Beginning provides free information and guidance on ways of dealing with debt, it is not a registered charity.
And professionals who it may eventually put people in touch with will have to be paid.
Mr Martin explained that New Beginning's founding principle was to provide legal representation free of charge to people in court who couldn't afford it.
Often, it was to represent those facing repossession of their family home.
He continued: "We still hold true to that today but the game has moved on.
"It has moved to financial expertise and other people such as qualified financial advisers and chartered accountants. It's also necessary to have a barrister and solicitor in the High Court.
"You need a professional team. You need support and it cannot be done with unpaid staff and volunteers."
Asked about the cost of bankruptcy using New Beginning, he said it would be about €3,000.
This included about €1,000 in court fees and €450 in VAT.
He said the scale of the problem in Ireland was unprecedented.
160,000 mortgages were in trouble.
Half of all loans to small and medium enterprises were in trouble.
The result is emigration, economic stagnation and unemployment.
Economic recovery was not even.
He added: "Ordinary Ireland remains broken.
"Unmanageable debt is a millstone around our neck."