:00:10. > :00:17.now, many of us are bust. Homes bought at the peak of lost more than
:00:17. > :00:23.50% of their value. The middle-class is bust.
:00:24. > :00:31.Five years ago, people here broke off �8 million in bankruptcies. In
:00:31. > :00:34.2012 it was closer to 1 billion. I don't want to go bankrupt.
:00:34. > :00:39.Record numbers are filing for insolvency and the rate here is
:00:39. > :00:43.writing faster than anywhere else in the UK.
:00:43. > :00:50.You've got just over �11,000 worth of debt and that will take you nine
:00:50. > :00:54.years to pay off. But not everyone is facing live in.
:00:54. > :01:00.They are finding the banks can shrink their debt.
:01:00. > :01:03.If you are running a bank, you are not going to be advertising it.
:01:03. > :01:07.Our finance minister says Northern Ireland's biggest bank is making it
:01:07. > :01:11.worse. Unless we are going to do something
:01:11. > :01:14.radical, we are going to be completely inadequate. The debts we
:01:14. > :01:24.have racked up are strangling our economy and there could be worse to
:01:24. > :01:44.
:01:44. > :01:49.self-employed plumber, trying to make ends meet. He's got a big
:01:49. > :01:54.mortgage but little work. This year is slow. I'm pricing a lot
:01:54. > :02:04.of work but there are so many boys pressing against you and its
:02:04. > :02:04.
:02:05. > :02:14.Like many people, Gary and his wife Louise bought a house at the height
:02:15. > :02:15.
:02:15. > :02:18.of the boom in 2007. What is the job today? Power flush.They took out a
:02:18. > :02:24.massive interest only mortgage. That has become a problem because work is
:02:24. > :02:27.scarce. Everyone has been led to believe that you have to have a
:02:27. > :02:34.house and this didn't happen overnight. I think it is British
:02:34. > :02:40.culture. We were taught that you can't lose rix and water -- bricks
:02:40. > :02:44.and mortar. Gary's problems are to do with his mortgage problems. He
:02:44. > :02:48.hasn't wrapped up debts through credit cards or other loans. He is
:02:48. > :02:53.trapped. He can't sell his house because it is worth less than he
:02:53. > :02:57.paid for its mortgage. He is in negative equity. Just to put it in
:02:57. > :03:05.perspective for us, roughly how much did it cost when you bought it.
:03:05. > :03:15.has cost 240 and we took a mortgage for 190. So you have a mortgage for
:03:15. > :03:20.190. 190 plus arrears so we are not far off 200. What is the latest
:03:20. > :03:27.estimate of what the house is worth? One of the houses in the
:03:27. > :03:31.street sold for 115 recently. that is �75,000 negative equity.
:03:31. > :03:40.His problems began when his wife had to leave work after developing
:03:40. > :03:44.breast cancer and had to leave. It meant the family income was cut.
:03:44. > :03:49.thought, everyone told me we'd be OK and we would a payment break will
:03:49. > :03:55.stop it was in the contract. She was seven months out of work before she
:03:55. > :03:59.went back to work. They just said no because of the negative equity.
:03:59. > :04:02.loss of income coupled with the downturn in Gary's business has
:04:02. > :04:06.meant the family couldn't cope with the mortgage and they have given up
:04:06. > :04:14.even trying to make their monthly payments. You have gone into
:04:14. > :04:18.arrears? I am baked into arrears.It means the company that gave him the
:04:18. > :04:22.mortgage could repossess Gary's home but that wouldn't mean he would be
:04:22. > :04:29.free of the debt. If there was repossessed, he would still owe what
:04:29. > :04:36.was left on the mortgage she took out. Gary doesn't know what to do.
:04:36. > :04:41.It does get on top of you. Does. We are in the position to move and we
:04:41. > :04:48.have done it. We didn't know this would happen.
:04:48. > :04:52.Gary's situation is the story of Northern Ireland in 20 2013. Houses
:04:52. > :04:58.have plummeted in value. There is a lot of water and of the bridge since
:04:58. > :05:01.then. As prices have fallen further than anywhere else in the UK. Down
:05:01. > :05:07.over 50% from the peak. It has been up to charity workers to deal with
:05:07. > :05:11.the pain that it has caused. This is the man on the street, this
:05:11. > :05:14.is every third person you meet. Depending on what their
:05:14. > :05:19.circumstances are, what they were working at when things were good and
:05:19. > :05:25.there was a lot of money and a lot of jobs and overtime, people did
:05:25. > :05:31.chase the dream. With the collapse of the economy in recent times, in
:05:31. > :05:34.the recession, a lot of people are left very overcommitted.
:05:34. > :05:38.Gerard shares his workplace with citizens advice, which has seen
:05:38. > :05:43.rises in people seeking help for debts. This is one of Northern
:05:43. > :05:46.Ireland's debt hotspots. The number of people coming through its doors
:05:46. > :05:52.have quadrupled over the last four years.
:05:52. > :05:57.Probably the biggest amount of debt back then would have been 3000 or
:05:57. > :06:00.�4000. We would have seen debt rise from the average amount of debt
:06:00. > :06:06.could be �100,000 per person. Especially if you see people with
:06:06. > :06:13.maybe two cars, a home and perhaps a second home they are renting out. We
:06:13. > :06:18.have found where many have gone from thousand pounds income a week to
:06:18. > :06:24.just a couple of hundred pounds. What is your reaction to people
:06:24. > :06:29.saying they are �100 in debt? Typically, it doesn't raise and
:06:29. > :06:34.eyebrow. They are recommending in many cases
:06:34. > :06:44.that people declare themselves insolvent. Over 3200 people declared
:06:44. > :06:46.
:06:46. > :06:52.themselves officially broke last access to the figures that show the
:06:52. > :06:56.true extent of this problem. In the last two years, just under �1.7
:06:56. > :07:04.billion has been written off in personal bankruptcies in Northern
:07:04. > :07:09.Ireland. There are a handful of big visual losses in there but to put it
:07:09. > :07:13.in perspective, the figure 2008 was �8 million will stop for years
:07:13. > :07:20.later, it was almost one billion and at the heart of it is property gone
:07:20. > :07:24.badly wrong. Across the border, a colossal amount of property debt is
:07:24. > :07:30.being shouldered by ordinary borrowers. Is the story of
:07:30. > :07:33.Ireland's economic collapse. But even in that context, one leading
:07:33. > :07:41.economist there says the debt weighing on people in the Ireland is
:07:41. > :07:46.shocking. The scale of the personal debt problem in Northern Ireland is
:07:46. > :07:52.surprising. It is �1 billion of write-offs. It is without a shadow
:07:52. > :07:58.of a doubt the single biggest financial issue facing the North.
:07:58. > :08:04.How do you deal with the fact that you have almost �1 billion already
:08:04. > :08:07.of debt written off? This is out of control.
:08:07. > :08:11.It was a lending and spending spree that got us here but now properties
:08:11. > :08:16.bought at the height of the market are worth nothing like they were.
:08:17. > :08:20.Northern Ireland has seen the value of some homes cut in half.
:08:20. > :08:24.The middle-class is bust and by that I mean it is the same in the North
:08:24. > :08:29.as well, if you look at the balance sheet the middle-class. On one side,
:08:29. > :08:35.the assets are houses which have collapsed in value and the liability
:08:35. > :08:40.side of the debts of which remain fixed. And that is the personal
:08:40. > :08:45.insolvency nightmare here. As with many in Northern Ireland, it
:08:45. > :08:49.is a nightmare which Gary knows only too well. It has bought into the
:08:49. > :08:54.brink bankruptcy. He is trying to negotiate with his mortgage provider
:08:54. > :08:59.but said it is no use. Just before Christmas I realise I
:08:59. > :09:07.had to do something done about this stop I type 2% to negotiate with me
:09:07. > :09:10.but I am dealing with a call centre and they are just reading a script.
:09:10. > :09:15.They can only answer using the script.
:09:15. > :09:21.There are few answers. Financial advisers tell him to get himself
:09:21. > :09:28.insolvent but he still doesn't want to do it.
:09:28. > :09:32.Three financial advisers told me to walk away. What does that mean? Hand
:09:32. > :09:36.the keys in and start again. I want to still do a deal. I want to keep
:09:36. > :09:41.the house. I don't want to go bankrupt. That is the last thing I
:09:41. > :09:45.want to do. For the majority, bankruptcy is a
:09:45. > :09:50.life changing event. Being insolvent ribbons people's ability should
:09:50. > :09:55.borrow and fewer people can spend. That hits the economy. It is a debt
:09:55. > :10:01.spiral and is wobbly our finance minister. -- worrying our finance
:10:01. > :10:04.minister. It depresses the economy further and
:10:04. > :10:09.the more you do that the more people lose their jobs and are more likely
:10:09. > :10:13.to become in solvent and the less money is spent so businesses find it
:10:13. > :10:19.more difficult. And that is what is happening.
:10:19. > :10:25.Advice worker Rosemary McDonald is finding increasing number of small
:10:25. > :10:29.businesses going to the wall. These are people who might own the
:10:29. > :10:35.local newsagents, a cafe, a small restaurant. They are the hardware
:10:35. > :10:38.shop owners. The ideology is a after a year we are all right. These
:10:38. > :10:43.people were never set up the game because they have been so battered
:10:43. > :10:46.into the ground and they will not set up again.
:10:46. > :10:49.Banks are now coming under scrutiny for the role they are playing in the
:10:49. > :10:53.debts nightmare. There is concern that heavily indebted banks are
:10:53. > :10:56.calling in what is into them at a time when they are supposed to be
:10:56. > :11:00.lending will stop our finance minister believes Northern
:11:00. > :11:06.Ireland's display is especially aggressive in trying to balance its
:11:06. > :11:12.books. In some circumstances, in order to
:11:12. > :11:15.try and repair the balance sheet, they were going after those
:11:15. > :11:21.companies who were most likely to be able to work their way out of debt
:11:21. > :11:25.if they were given time and saying, we want it from you now. There is an
:11:25. > :11:31.asset which is earning you money at present. So it and get rid of it. If
:11:31. > :11:36.us the money for it. Ulster bank says it can't lend
:11:36. > :11:41.indefinitely to businesses which it believes aren't viable. However, our
:11:41. > :11:46.finance minister has a radical suggestion for Ulster bank. He wants
:11:46. > :11:56.it to be broken up and its bad debt - off to stop it squeezing hard up
:11:56. > :12:00.
:12:00. > :12:04.clients for cash. They do have bad property loans. If you want to have
:12:04. > :12:08.a being able to operate as a viable bank then you have got to somehow
:12:08. > :12:17.separate out these bad property loans which strike their profits
:12:17. > :12:20.down every year. It is a radical solution. Unless we do something
:12:20. > :12:30.fairly radical we are going to stumble along with a banking system
:12:30. > :12:30.
:12:30. > :12:37.which is totally inadequate. Given the importance of Ulster Bank to the
:12:37. > :12:46.economy, that is going to curtail economic growth in the private
:12:46. > :12:49.sector very badly in the future. future is a long way off for the
:12:49. > :12:59.many people struggling with debt in Northern Ireland. They want rid of
:12:59. > :13:01.
:13:01. > :13:10.it. The cleanest break is often to just go bankrupt.
:13:10. > :13:17.Good morning. This person works for a charity
:13:18. > :13:23.which shows people what to do when they get over their heads in debt.
:13:23. > :13:26.There is not a typical person. she has agreed to bring us on a
:13:26. > :13:32.visit to a client who has racked up a serious amount of debt, not
:13:32. > :13:40.through property, but through credit cards and payday loans and has
:13:40. > :13:50.decided to declare herself insolvent.
:13:50. > :13:51.
:13:51. > :14:01.I had to give everything up. I have had to sell things. I had to pawn my
:14:01. > :14:01.
:14:01. > :14:11.camera. How much did you get for it? �50. You had to pawn your camera to
:14:11. > :14:16.
:14:16. > :14:22.buy food? Yes, but you have to eat. Her situation means she must hear
:14:22. > :14:27.stark advice. You have got �11,000 worth of debt. That will take you
:14:27. > :14:34.nine years to pay off. We do not believe that is a realistic time to
:14:34. > :14:42.live on a tight budget. Our advice is contained in this letter. We
:14:42. > :14:47.suggest our debt relief order. Uptake of debt relief orders is
:14:47. > :14:57.rocketing. It is a new kind of mini bankruptcy. There are strict
:14:57. > :15:00.
:15:00. > :15:10.conditions. It is for people who get off under �15,000. It is quite a
:15:10. > :15:17.quick way to become debt free. It works very well. This person says
:15:17. > :15:27.her debt relief order means she can pick up her life the past it. - -
:15:27. > :15:32.
:15:32. > :15:42.free from past debt will stop - -. can start living again. I will feel
:15:42. > :15:51.
:15:52. > :16:01.better about myself. I hear, and a meal. I do not want at things. - - a
:16:01. > :16:06.haircut. But these arrangements are not suitable for bigger debts such
:16:06. > :16:16.as mortgages. This adviser says he has never been easier. He aims to
:16:16. > :16:17.
:16:17. > :16:23.keep people out of bankruptcy. typical client will have �30,000 or
:16:23. > :16:27.�40,000 of debt. We will look at the income and the expenditure. We will
:16:28. > :16:37.look to see if they have something available to offer to creditors,
:16:38. > :16:38.
:16:38. > :16:42.should it be �200 per month. They pay at over five years. That is used
:16:42. > :16:45.in full and final settlement of their debt. I have come to meet one
:16:45. > :16:55.person who says he found life like this and tolerable. - -
:16:55. > :16:59.
:16:59. > :17:06.intolerable. He was advised to take the IVA route. He wants to remain
:17:06. > :17:10.anonymous. It sounded good at the time. After I year it was very
:17:10. > :17:18.difficult to maintain the payments every month with the constant Big
:17:18. > :17:22.Brother approach. Some of the questions went down to what you
:17:22. > :17:30.spent on your lunch on a daily basis, what it costs to capture
:17:30. > :17:37.here. - - what it costs to cut your ear. What pocket money you give to
:17:37. > :17:41.your children. He said the payments were so demanding that he could not
:17:41. > :17:48.afford them. They fell into arrears. As a consequence he was made
:17:48. > :17:54.bankrupt a few weeks ago - the thing he tried to avoid. I spent two and a
:17:54. > :17:57.half years in insolvency, culminating in bankruptcy. I would
:17:57. > :18:06.never want to relive those years again. I have been declared
:18:06. > :18:13.bankrupt. At this minute in time I feel more comfortable with my life.
:18:13. > :18:20.I can take it forward. Other than the terrible stigma of having to
:18:20. > :18:26.admit you are bankrupt. To sit in front of you anonymously shows that
:18:26. > :18:30.the stigma is very real. Talking about the scale of your debts is not
:18:30. > :18:40.just a stigma for people like him. Our politicians have been keeping
:18:40. > :18:43.
:18:43. > :18:48.quiet about the billion pounds black hole we have discovered.
:18:48. > :18:58.In the south this is the daily talk. In the north you could swear that
:18:58. > :18:59.
:18:59. > :19:05.none of this is happening. Why would I inject into the economy of
:19:05. > :19:13.Northern Ireland further uncertainty and further alarm Western Mark my
:19:13. > :19:18.job is to build confidence in the economy. If you destroy confidence
:19:18. > :19:22.you destroy the willingness of people to spend. You destroy their
:19:22. > :19:26.willingness to invest. You destroy their willingness to start new
:19:26. > :19:32.businesses. You make the situation worse. I want to make the situation
:19:32. > :19:36.better. How do you deal with the problem is big? Official insolvency
:19:36. > :19:40.is designed to happen element of Hannah spent, but with the scale of
:19:40. > :19:45.the debt now in the system some say that approach has to be put aside
:19:45. > :19:49.and instead lenders should be showing what is called debt
:19:49. > :19:56.forgiveness. You have to have debt forgiveness. The idea that you went
:19:56. > :20:01.me money and you do no credit checks and the reason you are lending the
:20:01. > :20:06.money is because the man over there bulb went if you do not, and I go
:20:06. > :20:12.off, and I come back in a few years time and say I lost my job and the
:20:12. > :20:17.house is worth 50% less, the notion that you expect to get paid back in
:20:17. > :20:21.full is ludicrous. Sammy Wilson agrees to an extent. As our soaring
:20:21. > :20:26.debt levels show ordinary people have little hope of being back what
:20:26. > :20:31.they all in full. It turns out he has even told banks in Northern
:20:31. > :20:38.Ireland he wants to see debt forgiveness. That is an issue that
:20:38. > :20:48.they were not madly keen on as I am sure you will understand. Who steps
:20:48. > :20:49.
:20:49. > :20:53.do you forgive? - - whose debts. But it is an issue we must increasingly
:20:53. > :21:03.look at. Debt forgiveness means sidestepping penalties caused by
:21:03. > :21:06.
:21:06. > :21:16.insolvency. This is something anchors refer to as our rates down.
:21:16. > :21:23.
:21:23. > :21:27.I cannot pay it. You went too much money. Let us do a deal. End of.
:21:27. > :21:31.At the moment who gives debt forgiveness? We asked the big banks.
:21:31. > :21:38.Each of them said they were willing to work with customers in trouble,
:21:38. > :21:44.but after that information was then. One bank said it is not right down
:21:44. > :21:50.any debts. Two other banks said in exceptional circumstances they do.
:21:50. > :21:53.The others would not give a direct answer. We found out that those
:21:53. > :21:58.other banks are doing it, but it is done quietly and behind closed
:21:58. > :22:07.doors. There does appear to be a discrepancy in the way banks deal
:22:07. > :22:15.with it. In some cases people are being left alone. Others who do not
:22:15. > :22:23.all as much but have got a viable business are being tortured.
:22:23. > :22:28.Ironically they are the ones who can test whether the storms. Without a
:22:28. > :22:33.clear system for testing debt forgiveness it is all about who you
:22:33. > :22:38.know. There are people who now claim they can get it for you. It seems to
:22:38. > :22:44.be a sensational thing to say that banks are writing off debts. For
:22:44. > :22:48.hundreds of years banks have been writing off debts. If you are in the
:22:48. > :22:52.moneylending game it comes with the territory. If you are running a bank
:22:52. > :22:56.you will not be advertising that that is what you are doing. So many
:22:56. > :23:02.people are in difficulty in Northern Ireland that this company is doing
:23:02. > :23:12.business arranging quiet get deals with Hanks. In the Dublin office he
:23:12. > :23:15.
:23:15. > :23:19.is working with our rogue trader who has now joined him cutting deals.
:23:19. > :23:24.In 1995 this man was jailed for causing the spectacular collapse of
:23:24. > :23:28.a bank. He is now based in the Republic and says it is time for the
:23:28. > :23:38.banks to get real. At some stage banks know that these loans are
:23:38. > :23:39.
:23:39. > :23:42.never going to be repaid. The amount that was lent is just preposterous.
:23:42. > :23:52.They are never going to be able to recover that sum of money. Something
:23:52. > :23:56.
:23:56. > :24:06.has to be done. But involves an element of right down.
:24:06. > :24:07.
:24:07. > :24:14.- - of write down will stop - -. These clients are getting debt
:24:14. > :24:20.forgiveness and the rest are not. That is probably true. If you are
:24:20. > :24:25.willing to communicate with the bank in a meaningful manner, and it has
:24:25. > :24:33.to be professional, there is no point walking into a bank and asking
:24:33. > :24:39.for everything. Back in the home that has caused so much trouble with
:24:39. > :24:44.his lender, Gary does not have so much choice.
:24:45. > :24:54.All the debt we have is because of this. All of this is a massive
:24:55. > :25:07.
:25:07. > :25:13.debts. Yes.How does that feel? love the house. It is hard. Gary
:25:13. > :25:18.says he is disappointed that banks and lenders seem to have one
:25:18. > :25:22.approach for some and a different one for others like him stop if I
:25:22. > :25:26.had a deal like that in the next few months it would relieve so much
:25:26. > :25:32.pressure. Is it right that some get these deals and some don't? It is
:25:32. > :25:39.not right. They can't pick and choose who they are going to help.
:25:39. > :25:44.That is not right. This stalemate people like Gary find themselves in
:25:44. > :25:50.underscores the need for a system of yet forgiveness. - - debt
:25:50. > :25:56.forgiveness. You need to have an overarching
:25:56. > :26:01.system which speaks to the smaller people, the people who got into
:26:01. > :26:07.negative equity because they were trying to do the right thing. The
:26:07. > :26:13.people with 10,000, they are the economy. They make the economy work.
:26:13. > :26:16.But it is exactly those all who may be in for one more shock. News last
:26:16. > :26:21.week that there had been a slight increase in house prices here was
:26:21. > :26:31.greeted as a sign that horrors might be starting the journey out of
:26:31. > :26:35.
:26:35. > :26:39.negative equity. - - that borrowers might be starting.
:26:39. > :26:45.They have six years to pursue that. I suspect what they are doing is
:26:45. > :26:49.waiting to see if and how the circumstances of the client will
:26:49. > :26:56.improve in order that they may be a chance that they may get some of the
:26:56. > :27:00.money back. This insolvency worker agrees. He says he has seen the
:27:00. > :27:05.unfortunate consequence of recovery before. There will be an increase in
:27:05. > :27:15.insolvencies. It will be six months after we see the recovery. That is
:27:15. > :27:17.
:27:17. > :27:22.because predators begin taking action at that stage. Hopefully not.
:27:22. > :27:27.For those who have already felt the full force of insolvency, what they
:27:27. > :27:34.have lost and married, they say they have gained in wisdom it is not
:27:34. > :27:41.worth worrying about it. Do not worry about the stigma. You have to
:27:41. > :27:46.start living again. You cannot be like me and to shut yourself away.
:27:46. > :27:53.People say that he has lost his car. But once you have crossed that
:27:53. > :27:59.bridge life moves on. Like so many with debt problems in Northern
:27:59. > :28:09.Ireland Gary is living more in hope than expectation. I still hope to
:28:09. > :28:12.