Bankruptcy case study: Fending off banks was ‘full-time job’

“I’ll probably have a big party,” says Fiona of the moment she has been longing for since she was declared bankrupt two years ago.

“It’s like I can start over again – that’s what it’s like.”

Fiona – a pseudonym used at her request – is among almost 800 people who will formally exit bankruptcy today. For her – a woman in her early 40s who lives in Cork with her husband and two children – it will mark the final step in an ordeal that began with the purchase of her house in 2008.

“We didn’t take out a big mortgage. We didn’t over-extend. We didn’t go for the big house,” she recalls.

The couple bought the council house in which they had been living, taking out a mortgage of €187,000 which included the cost of renovating the property.

Intolerable pressure

Their interest rate, fixed for the first five years, was “probably the lowest in Ireland”, Fiona recalls, and meant their monthly repayments were initially €850 a month.

With Fiona having done a back-to-work scheme to train as a bookkeeper and her husband working as an office administrator in a bio-tech company, their finances were manageable.

Then the recession hit. Fiona’s work dried up. Taxes and charges began to mount.

“Then we came off the five-year fixed rate, so [the mortgage went] from €850 to €1,300 overnight. That was it. We were done.”

From then on, fending off the banks became “a full-time job”, Fiona says.

They would call her and her husband at home and at work every few days, applying what she felt was intolerable pressure.

When her husband finally left his job due to the stress, the couple decided to go the bankruptcy route. At first they debated whether to move to England, where bankruptcy was quicker and less onerous.

“We sat down and we said, is it worth moving to England? So we went through all the money and said, could we do it? Could we go there and go bankrupt? But we decided we couldn’t actually do it. I just couldn’t bring myself to live over there.”

The introduction of a new one-year bankruptcy term in Ireland left the couple "buzzing", Fiona recalls. Although she entered bankruptcy more than a year ago, she will benefit from transitional provisions that allow her to be discharged this week along with 792 others.

In total, she has spent two years in bankruptcy. The first of those years was “horrific”, she recalls. “I was lost. I didn’t know what I was doing,” she says.

In the second year, however, she took the advice of the Irish Mortgage Holders’ Association and trained as much as she could, taking courses in meditation, reiki and physiology. In September, she will begin giving classes herself, and she hopes to step up her efforts to set up her own business.

“We don’t have any financial pressure any more. We’ve nothing. We can do what we like. We’ll just go and do what we really want to do now.”