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The Preacherman

Ireland Turns To Bankruptcy Tourism

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Ireland turns to bankruptcy tourism

Bankruptcy in Britain offers a way out for Irish entrepreneurs crushed by debt from heady property boom

Niall is 31 and manager of a successful fruit farm just outside Dublin. He is thinking of emigrating to England – not because he is out of work but because he is so heavily in debt that he wants to declare himself bankrupt.

He bought three houses as a buy-to-let sideline between 2004 and 2006. Although he earned a modest salary of €25,000 a year (less than £17,000 then), the banks gave him two mortgages of more than €300,000 and another one for more than €200,000 – a loan-book worth 32 times his salary.

The fantasy of becoming a property millionaire did not last long and now the farm manager is in negative equity to the tune of €250,000 and with a glut of empty properties on the market, he has no hope of meeting monthly repayments from rent.

The first house cost €215,000 and his mortgage is €1,284 a month. He rents it out at €800 a month – a loss of close to €500 a month. "If I sold it today, I'd get between €160,000 and €170,000. I'm down €100,000 apiece on the other houses. If I look forward 10 years I don't think I'll ever make my money back, so I want to get rid of it completely. It's a noose around my neck," says Niall, who asked that his name be changed to protect his identity.

Declaring himself bankrupt in Ireland is not a realistic option: bankrupts must wait 12 years before they are discharged from their debts. But under European Union law he can file for bankruptcy anywhere in Europe. If he relocates to London or Manchester he can be free of his debts within 12 months, courtesy of the "progressive" UK law.


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Niall said: "If I sell the houses now, the banks get the equity and I still owe the shortfall. If I go bankrupt, I don't owe the shortfall and the banks get the equity. The end result is the same thing for the bank.

"But if I keep going, my life will be a misery. Why should I do that for the banks, which to be honest, shouldn't have given me the mortgages in the first place – I only earn €25,000."

Nice! Couldn't you have realized that before?

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This is indeed correct. The same as you can port your pension out of the UK to an EU provider.

Forum shopping for insolvency/bankruptcy has been a game for years - certainly for corporate insolvencies, it is often a game as to who can get there first.

I did get irritated with "Niall" in the article - he still doesn't understand what equity is...... - he gambled, he lost......

Edited by Rachman

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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