New Beginning for distressed debtors in Cork
It’s probably to be expected.
The advocacy group is one of a number of agencies now working with mortgage holders weighed down with debt, the legacy of the Celtic Tiger and the crash that followed, which has manifestly altered society in ways we are only now appreciating.
The small office on Union Quay in the city centre represents a new departure for New Beginning, but as co-founder Ross Maguire explains, it is simply about meeting demand in a country where the number of mortgage holders in serious arrears seems to increase by the week.
Seated alongside Eugene Carney, formerly of AIB, and Ron O’Mahony, ex-PTSB, Maguire outlines how they expected between 10 and 15 clients a week, based on the experiences of the Dublin centre, and in the first few weeks of operations that figure was matched or exceeded. Only in the week when temperatures hit a yearly high did people stop flowing in to the Union Quay premises in the city centre.
“There is nothing like this in Cork at the moment,” Maguire argues.
“In general they are coming in stressed and looking for direction and advice and someone to talk to about it. One of the things we are seeing are clients who have been charged a lot for very little and no results.”
The previous day, New Beginning had visited the county registrars’ court in Cork, where they were representing some of those on the list. That the list had approximately 85 cases on it indicates the scale of the problem.
Maguire says: “It just shows you how serious financial institutions are in bringing these things to as head.”
O’Mahony says of their first few weeks in Cork: “First impressions are we seem to be coming across a lot of separated people with marriage difficulties, and PHDs [private dwelling homes] and investment properties. There is a complete spread in age group.”
Each story is different, with specific challenges. Separated couples may want to approach their difficulties in different ways — for example, based on clients seen so far in the Cork office, women may want to hold on to the property and males might want to “put their head in the sand and disappear”. In some cases men can make an application for bankruptcy in the UK and leave the woman behind.
Almost two thirds of clients to the Cork office have been women and according to O’Mahony, they are “more pragmatic — they look at the broader picture”. Not everyone can open up about mortgage arrears problems in a controlled way, and according to Carney, “there is a certain proportion of venting”. Maguire believes that ultimately, this is counter-productive, however understandable it may be. “It terms of sorting out your problems, that bitterness is not going to help.”
Maguire says there are three stages to the process: Direct negotiations with the bank; insolvency measures with personal insolvency practitioners (PIPs); and bankruptcy. New Beginning experts attend court with clients and firstly, try and secure an adjournment for as long as possible to facilitate alternative restructuring. Often, that adjournment is won after proving that the financial institution did not fully comply with the mortgage arrears resolution process.
“My sense is in 70% [of cases] we can retain [the property]. It’s all about income. Take the average person — if they have an average income a deal can be done to save a family home, provided it’s a relatively normal home.” This is achieved typically by wiping out unsecured debt and then seeking alternatives to the arrears, such as through a split mortgage.
Maguire says “90% will involve debt write-down”. Although obviously not every banking institution is a big fan of this prospect. He is in no doubt that it is “middle Ireland” that is most caught in the mesh of debt and mortgage arrears. Getting out of it will require “huge will” from government and innovative thinking.
“The recovering economy is a very important part of the solution. It’s time to do the deals and banks being willing to do the deals.
“If you have one creditor it’s easier but if you have multiple creditors it’s like trying to herd mice — it’s impossible to get them all in the one place. Alternatively, what we would do is concentrate of the PDH.” In other words, stop paying other debt. “An unsecured creditor has no power, all they have is someone ringing you up and annoying you. Stop paying unsecured creditors.”
Amusingly, the trio describe non-communication and co-operation between different sections of the bank, or even within banks. “The one thing a bank hates most is not that they aren’t getting paid, but that you are paying someone else.”
Maguire believes one of the solutions is a private rented sector with controlled rents, as in Germany, and corporate landlords. He adds that as housing is a human necessity, “it should not be left to the market”.
* New Beginning is holding free seminars on July 3 in Limerick, July 10 in Waterford, and July 17 in the Gresham Hotel.
