Experts preach the benefits of professional help, writes Dave Boland of the Sunday Business Post.

It may be a well-worn cliché , but there is usually no more effective practitioner that a poacher turned gamekeeper. This is the situation that Denis Healy, managing director of Denis Healy Financial Limited has engineered for himself. A former banker and wealth management specialist, he is now a Personal Insolvency Practitioner (PIP), a Qualified Financial Adviser (QFA) and a licensed debt management company – one of a only a handful of such specialists in the country.

This has given him a unique perspective on the thorny issue of debt of resolution in Ireland. Healy feels that while the personal insolvency legislation has opened certain doors for people, it also forces them down certain paths. For example, in the likely scenario where a bank will not vote for a personal insolvency arrangement, the next step for PIP would be bankruptcy. “We look at things differently,” he said.

“We carry out a root and branch analysis of everything people have and there comes a point where you can’t get blood out of a stone anymore. But bankruptcy should be a last ditch effort, because in the case of a bankruptcy, the banks will come away with less in the end”.

Healy has significant experience dealing with the historic debts carried by the Irish SMEs, which are dragging down otherwise viable businesses (the debts that economist Morgan Kelly has identified as the next big crisis for the Irish economy). For example, he recently helped an SME client to repudiate an unsustainable lease, then negotiated some write off bank debt, parked another portion, and negotiated a sustainable payment going forward.

“We achieved all this without the guy having to be PIPed,” said Healy, identifying one of the unseen aspects of SME closure – the fact that, since SME owners tend to have a symbiotic relationship with their companies, corporate insolvency can easily engender personal insolvency.

However, there are tens of thousands of personally insolvent individuals who have never owned a company in their lives. These, Healy believes, can benefit from a similar approach to that applied to corporate debt, whereby individuals can negotiate with their creditors to create a sustainable repayment regime and offer some light at the end of a very dark tunnel.

“If you lumber someone with the reality that every penny they will ever get will go into paying historic debt, then they will have no hope at all,” he said.

“But if you give people a chance, organize a write off and take away a bit of the pain, you can bring the rest of the debt back to sustainability.”
“It’s part of the psychology of debt. If you leave people on the treadmill, they won’t do anything and everybody loses. That’s why there has to be a carrot for both sides – and the carrot for the bank is they can get more back from this process than they can from bankruptcy. The carrot for the individual is that they can get some sleep at night.”

While indebted individuals will naturally be consumed by the issue, Healy is clinical when it comes to the process of debt resolution. However, he believes that it is not in everybody’s best interest to become involved in the insolvency regime – rather, he espouses the notion of skillful negotiation instead.

“The unfortunate thing about banks writing off debt is that some of the bigger debts are been written down and written off, while the small guys are getting squeezed,” he said. “My attitude is give the smaller guys the same expertise as the bigger guys. Why do the rich get richer? It’s because they can afford to have professionals around who can help them.”

This is the sort of help that Healy is committed to bringing to a wider audience – and is already paying dividends. While official figures are hard to come by, with confidentiality agreements in place between creditors and debtors, Healy claims that banks are dealing with individuals to reduce debt on an informal basis – helped, of course, by the fact that the nuclear option of bankruptcy now exists to focus the minds.

“With bankruptcies, everybody gets less,” he said. “I find that I can command a lot more respect because of the PIA options that are out there, and I always advise people on issues like PIAs and bankruptcy but where there is a negotiable settlement possible, we will always try that option first.”