Sentences to ponder

by on April 18, 2013 at 5:06 pm in Economics, Law | Permalink

Irish homeowners applying for debt writedowns will have to give up satellite television, foreign holidays and private school educations for their children under a strict new insolvency law introduced to tackle the country’s debt crisis.

On Thursday Ireland’s Insolvency Service set out monthly spending limits for people seeking debt deals from their creditors, highlighting the impact austerity is having on Irish spending habits. A single person will be allowed just €247.04 a month for food, €57.31 for heating and €125.97 for “social inclusion and participation”, an expenses category that includes tickets for sporting events and the cinema.

…In most cases, people seeking debt deals will also have to give up private health insurance and their cars, although they will be able to keep their vehicles if they do not have access to public transportion.

From the FT, here is moreThe Irish Times has an ungated version.

Alexei Sadeski April 18, 2013 at 5:26 pm

This is good humor. Rather wish it were only the Satellite / Cable TV instead of so many other modern essentials (no car?!), if only for the hilarity alone.

Yet more anecdotal evidence that the US has amongst the most progressive economic policies in the OECD.

Yancey Ward April 18, 2013 at 7:45 pm

I am not sure this is much different than you might see in a deficient tax payment situation in regards to the American IRS. In both cases, the debtor is beholden to the civilian government.

jmo April 18, 2013 at 9:14 pm

Two things:

1. To owe back taxes you have to have made money that you didn’t pay taxes on. Not the case with mortgage debt.

2. Back taxes are dischargable in bankruptcy so the IRS can’t squeeze too hard.

Yancey Ward April 18, 2013 at 9:50 pm

My point is that Ireland has basically nationalized the big banks. The debts are largely owed the Ireland’s government now.

Also, I don’t think it so easy to discharge tax debts in the US.

prior_approval April 18, 2013 at 10:53 pm

‘To owe back taxes you have to have made money that you didn’t pay taxes on.’

1. Or, until recently, have your mortgage written down.

‘Back taxes are dischargable in bankruptcy so the IRS can’t squeeze too hard.’

2. Willie Nelson would like to hear more about this – please do go on. Or just read through this – http://www.irs.gov/publications/p908/index.html

Dan Weber April 19, 2013 at 1:00 pm

Taxes and student debt are two big categories that generally aren’t dischargeable by bankruptcy.

ohwilleke April 18, 2013 at 9:42 pm

The IRS payment plan standards, the Chapter 13 bankruptcy standards (which partially incorporate by reference those IRS standards), the limitations on garnishment and execution outside of bankruptcy in the U.S., and the eligibility requirements for Medicaid nursing home care are all more generous than the standards that the Irish insolvency system proposes.

On the other hand, a point that isn’t so clear in the quoted material is that Ireland does not have pre-bankruptcy foreclosures of residential real estate at all, while in the U.S. foreclosures are so routine that they can often be accomplished non-judicially and with minimal due process. The only foreclosure option in Ireland before this was an involuntary bankruptcy.

(Also, jmo is incorrect, the dischargeability of taxes in bankruptcy in the U.S. is not so simple. Many IRS debts are priority debt and/or non-dischargeable and exactly which are and are not is a quite technical area of practice.)

Gordon Mohr April 18, 2013 at 6:04 pm

A kinder, gentler serfdom. Just ’til you’re back on your feet.

MC April 18, 2013 at 7:06 pm

More like indentured servitude.

Howl April 18, 2013 at 8:40 pm

Not having cable TV is just like indentured servitude.

Chris April 18, 2013 at 10:09 pm

Presumably you can have broadband internet, which is kinda like cable tv, but nerdier.

TomUK April 19, 2013 at 4:18 am

Quite – as a 20-something with a PC connected to my TV, my tongue-in-cheek answer is “What is cable/satellite TV?”

A few of my friends here in England don’t even have their TVs connected to aerials for terrestrial (free channels), preferring instead to channel everything through their PlayStation 3.

dan1111 April 19, 2013 at 2:47 am

People who borrowed too much money and can’t pay it back can enter into an agreement that lets them off the hook, but only if they keep their spending at slightly below the drunken sailor level. Yes, that is just like slavery.

Mike Hunter April 19, 2013 at 10:23 am

“… but only if they keep their spending at slightly below the drunken sailor level.”

You must live in a cardboard box.

MC April 19, 2013 at 1:49 pm

Hey, I didn’t say it was a bad thing…

collin April 18, 2013 at 6:29 pm

Interesting idea but in the states the ship has long since sailed. On the other hand, did they set salary maximums for the banks who wrote the loans? It takes two to tango.

Dismalist April 18, 2013 at 7:21 pm

What are the bankruptcy laws? Are they not incentive compatible? Why not?

Osual April 18, 2013 at 7:57 pm

Nasty for bankrupts. At least 5 years of indentured servitude.

Alan April 18, 2013 at 7:54 pm

I am sick of the indigent and reckless being molly-coddled. You want to gamble with real estate, you live with the consequences. If you want to raise money, sell your children. To restaurants.

Ray Lopez April 18, 2013 at 10:46 pm

You can live like a king on 800 Euro = USD 1k in the Philippines. Feed a family of four in fact. Time for another Great Migration to accompany the Great Stagnation (a new kind of Great Famine) in Ireland.

Ray Lopez April 18, 2013 at 10:48 pm

In fact, the average wage for a family of four is roughly USD 4k a year, or $300 a month, in the Philippines. So you can feed a family of 12 with 800 Euro/month, and families of 12 are not uncommon among the poor.

Millian April 19, 2013 at 6:03 am

No, it’s not as bad as the Great Famine. Like, seriously.

Dangerman April 18, 2013 at 11:23 pm

This proposal seems rather modest to me.

Jess April 18, 2013 at 8:00 pm

Giving up satellite television? Wow they are serious!

Nikki April 18, 2013 at 8:30 pm

What is there to ponder? Money is fungible, people take advantage, it needs to be fixed, so it gets fixed. As someone who is constantly on the giving side of friend-level money-borrowing relations, I find this perfectly sensible.

JJ April 18, 2013 at 9:43 pm

If this had been spun as paternalism instead of punishment (it’s both. “Austerity” is always a bit of both.) I wonder if instinctive reactions would be different.

happyjuggler0 April 18, 2013 at 10:35 pm

€125.97 for “social inclusion and participation”, an expenses category that includes tickets for sporting events and the cinema.

“Oh honey, we need to keep paying our mortgage debt, otherwise we won’t be able to spend more than €125.97 per month going to the movies and football games. Our government is run by a bunch of meanies.”

Go Kimgs Go! April 19, 2013 at 12:17 am

Zero Marginal Homeowners?

Jimbino April 19, 2013 at 12:19 am

Can’t they just become priests and nuns like they used to? The world loved Irish priests until it found out they were abusing kids the world over.

Stephen April 19, 2013 at 12:46 am

I’m having trouble seeing the problem here. Bankruptcy is inherently a state run process because the benefits of bankruptcy accrue to everyone over the long run. ie creditors greatly reduce their collection costs and debtor families don’t get thrown out onto the street.

What’s not to like?

yoyo April 19, 2013 at 2:34 am

Any incentive for work?

Andreas Moser April 20, 2013 at 6:14 am

When one reads the actual article, it sounds much more flexible than the quote above suggests.

what is health insurance May 13, 2013 at 10:04 am

Since healthcare costs vary from state to state, silver premiums will also
vary depending on the state. The contemporary lifestyle is more about convenience and busy schedules.
First it’s cheaper to pay the fine than to buy the insurance for
almost all companies.

health insurance private May 14, 2013 at 2:59 am

Without Medicare Advantage, seniors will be back on Traditional Medicare and have more chronic
conditions which require more medical care.
With a financial disincentive, health insurance agents in Chicago are reluctant to services their
business due to the loss in income. This leverage allows the PEO to obtain the best possible coverage at the most affordable cost.

Gertrude May 15, 2013 at 6:45 am

If you don’t meet your insurance company’s precertification requirements, this
oversight may cost you a lot of money. This is a lot cheaper than the costs
if a major medical problem comes up. You will discover discounts on
health related products and services and become a self-advocate for
improved health and better health care.

health insurance May 15, 2013 at 9:29 pm

Third, if you need a little help, call in an independent expert.
Given this huge potential in the market, the health insurance products are becoming top preference
of insurers including life insurers. Make normal deposits into this
account in order that you have the ability to pay for your insurance deductibles if something disastrous occurs.

private healthcare quotes May 15, 2013 at 9:59 pm

For payment options, they also offer both monthly EFT and quarterly bills.

Term life insurance quotes Ontario are determined by the
status of your health. On the main page is a button where you can ‘Get an Individual or Family Quote’.

Comments on this entry are closed.

Previous post:

Next post: