14/05/2013 Spotlight

now, many of us are bust. Homes bought at the peak of lost more than

50% of their value. The middle-class is bust.

Five years ago, people here broke off �8 million in bankruptcies. In

2012 it was closer to 1 billion. I don't want to go bankrupt.

Record numbers are filing for insolvency and the rate here is

writing faster than anywhere else in the UK.

You've got just over �11,000 worth of debt and that will take you nine

years to pay off. But not everyone is facing live in.

They are finding the banks can shrink their debt.

If you are running a bank, you are not going to be advertising it.

Our finance minister says Northern Ireland's biggest bank is making it

worse. Unless we are going to do something

radical, we are going to be completely inadequate. The debts we

have racked up are strangling our economy and there could be worse to

self-employed plumber, trying to make ends meet. He's got a big

mortgage but little work. This year is slow. I'm pricing a lot

of work but there are so many boys pressing against you and its

Like many people, Gary and his wife Louise bought a house at the height

of the boom in 2007. What is the job today? Power flush.They took out a

massive interest only mortgage. That has become a problem because work is

scarce. Everyone has been led to believe that you have to have a

house and this didn't happen overnight. I think it is British

culture. We were taught that you can't lose rix and water -- bricks

and mortar. Gary's problems are to do with his mortgage problems. He

hasn't wrapped up debts through credit cards or other loans. He is

trapped. He can't sell his house because it is worth less than he

paid for its mortgage. He is in negative equity. Just to put it in

perspective for us, roughly how much did it cost when you bought it.

has cost 240 and we took a mortgage for 190. So you have a mortgage for

190. 190 plus arrears so we are not far off 200. What is the latest

estimate of what the house is worth? One of the houses in the

street sold for 115 recently. that is �75,000 negative equity.

His problems began when his wife had to leave work after developing

breast cancer and had to leave. It meant the family income was cut.

thought, everyone told me we'd be OK and we would a payment break will

stop it was in the contract. She was seven months out of work before she

went back to work. They just said no because of the negative equity.

loss of income coupled with the downturn in Gary's business has

meant the family couldn't cope with the mortgage and they have given up

even trying to make their monthly payments. You have gone into

arrears? I am baked into arrears.It means the company that gave him the

mortgage could repossess Gary's home but that wouldn't mean he would be

free of the debt. If there was repossessed, he would still owe what

was left on the mortgage she took out. Gary doesn't know what to do.

It does get on top of you. Does. We are in the position to move and we

have done it. We didn't know this would happen.

Gary's situation is the story of Northern Ireland in 20 2013. Houses

have plummeted in value. There is a lot of water and of the bridge since

then. As prices have fallen further than anywhere else in the UK. Down

over 50% from the peak. It has been up to charity workers to deal with

the pain that it has caused. This is the man on the street, this

is every third person you meet. Depending on what their

circumstances are, what they were working at when things were good and

there was a lot of money and a lot of jobs and overtime, people did

chase the dream. With the collapse of the economy in recent times, in

the recession, a lot of people are left very overcommitted.

Gerard shares his workplace with citizens advice, which has seen

rises in people seeking help for debts. This is one of Northern

Ireland's debt hotspots. The number of people coming through its doors

have quadrupled over the last four years.

Probably the biggest amount of debt back then would have been 3000 or

�4000. We would have seen debt rise from the average amount of debt

could be �100,000 per person. Especially if you see people with

maybe two cars, a home and perhaps a second home they are renting out. We

have found where many have gone from thousand pounds income a week to

just a couple of hundred pounds. What is your reaction to people

saying they are �100 in debt? Typically, it doesn't raise and

eyebrow. They are recommending in many cases

that people declare themselves insolvent. Over 3200 people declared

themselves officially broke last access to the figures that show the

true extent of this problem. In the last two years, just under �1.7

billion has been written off in personal bankruptcies in Northern

Ireland. There are a handful of big visual losses in there but to put it

in perspective, the figure 2008 was �8 million will stop for years

later, it was almost one billion and at the heart of it is property gone

badly wrong. Across the border, a colossal amount of property debt is

being shouldered by ordinary borrowers. Is the story of

Ireland's economic collapse. But even in that context, one leading

economist there says the debt weighing on people in the Ireland is

shocking. The scale of the personal debt problem in Northern Ireland is

surprising. It is �1 billion of write-offs. It is without a shadow

of a doubt the single biggest financial issue facing the North.

How do you deal with the fact that you have almost �1 billion already

of debt written off? This is out of control.

It was a lending and spending spree that got us here but now properties

bought at the height of the market are worth nothing like they were.

Northern Ireland has seen the value of some homes cut in half.

The middle-class is bust and by that I mean it is the same in the North

as well, if you look at the balance sheet the middle-class. On one side,

the assets are houses which have collapsed in value and the liability

side of the debts of which remain fixed. And that is the personal

insolvency nightmare here. As with many in Northern Ireland, it

is a nightmare which Gary knows only too well. It has bought into the

brink bankruptcy. He is trying to negotiate with his mortgage provider

but said it is no use. Just before Christmas I realise I

had to do something done about this stop I type 2% to negotiate with me

but I am dealing with a call centre and they are just reading a script.

They can only answer using the script.

There are few answers. Financial advisers tell him to get himself

insolvent but he still doesn't want to do it.

Three financial advisers told me to walk away. What does that mean? Hand

the keys in and start again. I want to still do a deal. I want to keep

the house. I don't want to go bankrupt. That is the last thing I

want to do. For the majority, bankruptcy is a

life changing event. Being insolvent ribbons people's ability should

borrow and fewer people can spend. That hits the economy. It is a debt

spiral and is wobbly our finance minister. -- worrying our finance

minister. It depresses the economy further and

the more you do that the more people lose their jobs and are more likely

to become in solvent and the less money is spent so businesses find it

more difficult. And that is what is happening.

Advice worker Rosemary McDonald is finding increasing number of small

businesses going to the wall. These are people who might own the

local newsagents, a cafe, a small restaurant. They are the hardware

shop owners. The ideology is a after a year we are all right. These

people were never set up the game because they have been so battered

into the ground and they will not set up again.

Banks are now coming under scrutiny for the role they are playing in the

debts nightmare. There is concern that heavily indebted banks are

calling in what is into them at a time when they are supposed to be

lending will stop our finance minister believes Northern

Ireland's display is especially aggressive in trying to balance its

books. In some circumstances, in order to

try and repair the balance sheet, they were going after those

companies who were most likely to be able to work their way out of debt

if they were given time and saying, we want it from you now. There is an

asset which is earning you money at present. So it and get rid of it. If

us the money for it. Ulster bank says it can't lend

indefinitely to businesses which it believes aren't viable. However, our

finance minister has a radical suggestion for Ulster bank. He wants

it to be broken up and its bad debt - off to stop it squeezing hard up

clients for cash. They do have bad property loans. If you want to have

a being able to operate as a viable bank then you have got to somehow

separate out these bad property loans which strike their profits

down every year. It is a radical solution. Unless we do something

fairly radical we are going to stumble along with a banking system

which is totally inadequate. Given the importance of Ulster Bank to the

economy, that is going to curtail economic growth in the private

sector very badly in the future. future is a long way off for the

many people struggling with debt in Northern Ireland. They want rid of

it. The cleanest break is often to just go bankrupt.

Good morning. This person works for a charity

which shows people what to do when they get over their heads in debt.

There is not a typical person. she has agreed to bring us on a

visit to a client who has racked up a serious amount of debt, not

through property, but through credit cards and payday loans and has

decided to declare herself insolvent.

I had to give everything up. I have had to sell things. I had to pawn my

camera. How much did you get for it? �50. You had to pawn your camera to

buy food? Yes, but you have to eat. Her situation means she must hear

stark advice. You have got �11,000 worth of debt. That will take you

nine years to pay off. We do not believe that is a realistic time to

live on a tight budget. Our advice is contained in this letter. We

suggest our debt relief order. Uptake of debt relief orders is

rocketing. It is a new kind of mini bankruptcy. There are strict

conditions. It is for people who get off under �15,000. It is quite a

quick way to become debt free. It works very well. This person says

her debt relief order means she can pick up her life the past it. - -

free from past debt will stop - -. can start living again. I will feel

better about myself. I hear, and a meal. I do not want at things. - - a

haircut. But these arrangements are not suitable for bigger debts such

as mortgages. This adviser says he has never been easier. He aims to

keep people out of bankruptcy. typical client will have �30,000 or

�40,000 of debt. We will look at the income and the expenditure. We will

look to see if they have something available to offer to creditors,

should it be �200 per month. They pay at over five years. That is used

in full and final settlement of their debt. I have come to meet one

person who says he found life like this and tolerable. - -

intolerable. He was advised to take the IVA route. He wants to remain

anonymous. It sounded good at the time. After I year it was very

difficult to maintain the payments every month with the constant Big

Brother approach. Some of the questions went down to what you

spent on your lunch on a daily basis, what it costs to capture

here. - - what it costs to cut your ear. What pocket money you give to

your children. He said the payments were so demanding that he could not

afford them. They fell into arrears. As a consequence he was made

bankrupt a few weeks ago - the thing he tried to avoid. I spent two and a

half years in insolvency, culminating in bankruptcy. I would

never want to relive those years again. I have been declared

bankrupt. At this minute in time I feel more comfortable with my life.

I can take it forward. Other than the terrible stigma of having to

admit you are bankrupt. To sit in front of you anonymously shows that

the stigma is very real. Talking about the scale of your debts is not

just a stigma for people like him. Our politicians have been keeping

quiet about the billion pounds black hole we have discovered.

In the south this is the daily talk. In the north you could swear that

none of this is happening. Why would I inject into the economy of

Northern Ireland further uncertainty and further alarm Western Mark my

job is to build confidence in the economy. If you destroy confidence

you destroy the willingness of people to spend. You destroy their

willingness to invest. You destroy their willingness to start new

businesses. You make the situation worse. I want to make the situation

better. How do you deal with the problem is big? Official insolvency

is designed to happen element of Hannah spent, but with the scale of

the debt now in the system some say that approach has to be put aside

and instead lenders should be showing what is called debt

forgiveness. You have to have debt forgiveness. The idea that you went

me money and you do no credit checks and the reason you are lending the

money is because the man over there bulb went if you do not, and I go

off, and I come back in a few years time and say I lost my job and the

house is worth 50% less, the notion that you expect to get paid back in

full is ludicrous. Sammy Wilson agrees to an extent. As our soaring

debt levels show ordinary people have little hope of being back what

they all in full. It turns out he has even told banks in Northern

Ireland he wants to see debt forgiveness. That is an issue that

they were not madly keen on as I am sure you will understand. Who steps

do you forgive? - - whose debts. But it is an issue we must increasingly

look at. Debt forgiveness means sidestepping penalties caused by

insolvency. This is something anchors refer to as our rates down.

I cannot pay it. You went too much money. Let us do a deal. End of.

At the moment who gives debt forgiveness? We asked the big banks.

Each of them said they were willing to work with customers in trouble,

but after that information was then. One bank said it is not right down

any debts. Two other banks said in exceptional circumstances they do.

The others would not give a direct answer. We found out that those

other banks are doing it, but it is done quietly and behind closed

doors. There does appear to be a discrepancy in the way banks deal

with it. In some cases people are being left alone. Others who do not

all as much but have got a viable business are being tortured.

Ironically they are the ones who can test whether the storms. Without a

clear system for testing debt forgiveness it is all about who you

know. There are people who now claim they can get it for you. It seems to

be a sensational thing to say that banks are writing off debts. For

hundreds of years banks have been writing off debts. If you are in the

moneylending game it comes with the territory. If you are running a bank

you will not be advertising that that is what you are doing. So many

people are in difficulty in Northern Ireland that this company is doing

business arranging quiet get deals with Hanks. In the Dublin office he

is working with our rogue trader who has now joined him cutting deals.

In 1995 this man was jailed for causing the spectacular collapse of

a bank. He is now based in the Republic and says it is time for the

banks to get real. At some stage banks know that these loans are

never going to be repaid. The amount that was lent is just preposterous.

They are never going to be able to recover that sum of money. Something

has to be done. But involves an element of right down.

- - of write down will stop - -. These clients are getting debt

forgiveness and the rest are not. That is probably true. If you are

willing to communicate with the bank in a meaningful manner, and it has

to be professional, there is no point walking into a bank and asking

for everything. Back in the home that has caused so much trouble with

his lender, Gary does not have so much choice.

All the debt we have is because of this. All of this is a massive

debts. Yes.How does that feel? love the house. It is hard. Gary

says he is disappointed that banks and lenders seem to have one

approach for some and a different one for others like him stop if I

had a deal like that in the next few months it would relieve so much

pressure. Is it right that some get these deals and some don't? It is

not right. They can't pick and choose who they are going to help.

That is not right. This stalemate people like Gary find themselves in

underscores the need for a system of yet forgiveness. - - debt

forgiveness. You need to have an overarching

system which speaks to the smaller people, the people who got into

negative equity because they were trying to do the right thing. The

people with 10,000, they are the economy. They make the economy work.

But it is exactly those all who may be in for one more shock. News last

week that there had been a slight increase in house prices here was

greeted as a sign that horrors might be starting the journey out of

negative equity. - - that borrowers might be starting.

They have six years to pursue that. I suspect what they are doing is

waiting to see if and how the circumstances of the client will

improve in order that they may be a chance that they may get some of the

money back. This insolvency worker agrees. He says he has seen the

unfortunate consequence of recovery before. There will be an increase in

insolvencies. It will be six months after we see the recovery. That is

because predators begin taking action at that stage. Hopefully not.

For those who have already felt the full force of insolvency, what they

have lost and married, they say they have gained in wisdom it is not

worth worrying about it. Do not worry about the stigma. You have to

start living again. You cannot be like me and to shut yourself away.

People say that he has lost his car. But once you have crossed that

bridge life moves on. Like so many with debt problems in Northern

Ireland Gary is living more in hope than expectation. I still hope to