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The country’s respected, middle-class professionals are in trouble. Big financial trouble.
They went on a borrowing binge during the property bubble and these investments have gone sour.
The upshot now is a tsunami of debt defaults.
Up to now the problem has been managed.
Banks were less aggressive, maybe fearing that aura around professionals.
Interest-only deals still had some time to go, and it had been hoped the debtors could have traded out of their difficulties.
But banks have changed tack and are now insisting on contractual terms being observed to end temporary deals.
Repossession is being threatened.
All this means that GPs, vets and accountants are staring bankruptcy in the face. Others are contemplating a Personal Insolvency Arrangement (PIA) under the Personal Insolvency Service.
However, most professionals are precluded from practising if they are declared bankrupt.
The situation with a PIA is less clear, as this came about through relatively new legislation.
That is why so many of their professional bodies and regulatory authorities are now eager to change the rules to allow members to continue to practise while going through what could be up to five years of bankruptcy.
Many of those who have ended up seeking the help of the Irish Mortgage Holders Organisation would have three investment properties.
These were taken out on interest-only payment terms. Typical rents of €850 a month are covering the interest-only payment of €700 a month.
But these deals are coming to an end, and newly aggressive banks are demanding their pound of flesh.
Bankruptcy and personal insolvency now beckon for thousands of the country’s most-respected professionals.
– See more at: http://www.independent.ie/opinion/columnists/charlie-weston/borrowing-binge-to-fund-property-investments-has-led-to-tsunami-of-debt-30623233.html#sthash.EFNNiBmM.dpuf