Issue: Personal Insolvency Bill
Comment: I must say I have great problems with the details of this bill. In particular I am referring to the Minimum Expenses Guidelines which were announced. At the launch the head of the Insolvency Service stated that it is unlikely that people would be allowed to retain 2nd cars, go on holidays or even maintain medical insurance.
The figures included in the Minimum Guideline, would appear to be extremely unrealistic in my opinion. I am particularly concerned that banks will insist, in the negotiation process with a client, on applying the minimum expenditure guideline and use it as a pressure point on clients. In other words, they may turn around and say that this is the sum they are allowing you for your day to day expenses and that they want the balance.
At all costs I would advise borrowers experiencing difficulties, to negotiate a voluntary arrangement with their bank and only enter into the insolvency process if it is absolutely the last resort for them.
Issue: Local Property Tax confusion continues
Comment: Confusion over house valuations for the property tax has continued unabated. This is only to be expected, when you devise a valuation system that is as seriously flawed as this one. I discussed this in detail with Keith on this morning’s show, along with a variety of other issues relating to the tax and rather than repeat myself here I would suggest that you listen to my podcast https://financialconsultants.ie/podcast-david-mccarthy-on-galway-talks-25042013/
With so many issues in relation to the Local Property Tax, this morning David McCarthy answers some of your questions. He also discusses the Personal Insolvency Bill.
Issue: Concerns expressed over potential increase in house repossessions.
Comment: Apparently the Government is making changes to legislation which will close off a loophole that has existed here for the last few years as a result of a High court ruling.
This loophole meant that lenders could not move to repossess properties in connection with loans that were taken out before a certain date.
Concern has been expressed recently that, once legislation has been changed, there could be a rush of applications for repossessions. Whether or not this will be the case, remains to be seen.
I would certainly hope that cases that come before the courts will be monitored closely by the Government to ensure that lenders, who are trying to repossess property, are behaving overzealously.
Issue: Investment in Gold looses its ‘Shine’.
Comment: For many years Gold traded well below $1000 per ounce. Since 2000, Gold has had this perpetual ‘bull run’. Recently we have seen the price drop to a level where it currently trades at circa $1350 per ounce. This was after touching nearly $2000 an ounce in 2012.
As I have constantly warned people before, Gold is a commodity and is influenced by a variety of factors not just supply and demand. Like any commodities investing in Gold should only be considered by a sophisticated investor that understands the market.
The idea that Gold, is a safe alternative to a bank deposit, is seriously flawed.
This morning David discusses the Personal Insolvency Bill, House Repossessions and Investments in Gold.
Question: I went guarantor some years ago for my son’s mortgage. He is now substantially in arrears and I am concerned from recent press reports, that they will pursue me for the amount owing. I am in my late 60’s and very concerned of what could happen.
Answer: Unfortunately it is quite apparent at the moment that some banks are following up on letters of guarantee in relation to situations such as yours. It is essential that you engage with the lender along with your son, regarding the difficulties that he is experiencing. In a situation such as yours, it is important not to ignore any correspondence you receive from the lender. It may be possible to come to some sort of arrangement that suits your circumstances.
Question: What guide should I use to value my house for fire insurance?
Answer: The insurance companies use The Society of Chartered Surveyors rebuilding cost guide, for this purpose. If you access their website at scsi.ie, you will find the rebuilding cost per square foot for the area of the country you reside in and this will allow you to calculate (utilizing the square footage of your home), the correct value.
It is important not to undervalue your house as, it can result in the value of a claim being reduced accordingly.
Issue: High level of people without Wills.
Comment: When a client visits me initially, as part of an overall review, I usually ask whether or not they have a will made. It never ceases to surprise me the number of people who have not made a Will and this is reflected throughout all age groups.
Making a Will is a very cost affective procedure and is extremely important in assisting your family, in the event of your death, to deal with your estate.
David gives advice to listeners having financial difficulties, discusses parents going guarantor for mortgages that are in arrears, how to value your home for fire insurance and the importance of Wills.