UK bankruptcy a good deal for insolvent Irish
Image via Wikipedia...I am not sure what the reasoning is behind the Irish law other than to discourage people to use bankruptcy to avoid their debts. There may be some historical reason for this I am not aware of, but the Irish have gone through some real down cycles in the past.
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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The Irish real estate debacle is one of the more serious ones in Europe and probably rivals Spain's. Those looking for a second home in Ireland can probably find some real bargains right now.
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