Bank debt hasn’t gone away and many people continue to struggle with it, according to Willie Prior, a founder of Phoenix Project Ireland. Formed in 2008, its aim is to give professional support to distressed borrowers and to help people who are encountering legal, financial and emotional difficulties arising from debt. The charitable organisation runs mainly on donations.

“We have been busy in the last year. We were contacted by 6,000 people and over 10% would have been farmers,” says Prior.  

I asked to talk to one who has been through the process and came out the other end, and spoke to a farmer who had just got a bank deal (see case study).   

As well as legal and financial experts, Phoenix Project has a tax expert and someone who focuses on social welfare and housing.

“We also have a stress councillor on hand, as people deal with the stress differently,” adds Willie Prior.

Solicitor Julie Sadlier says that in many cases banks are not willing to give permanent deals and continue to prolong peoples’ problems, as they gather information without looking to finalise a solution.

“Our focus in on reaching solutions for people. We try to help everyone by independently looking at their financial situation and help them present the information in a way that banks need and understand,” Julie told me.  

“One of the fears we have is that lessons have not been learned. Banks are still giving bonuses for new borrowing and we are concerned that the same problems will reappear before the old ones are sorted out,” adds Sadlier.    

David Kavanagh works with the Phoenix Project for two days a week. A certified financial planner (CFP), he feels that a lot of people are continuing to struggle with debt.  

“The fact is that banks generally are most unwilling to give a farmer with valuable land assets a debt write down on non-farm debt, such as a buy-to-let or commercial property, without bringing the farm and its repayment capacity into play,” says David.

“In many cases, farmers who got involved in property deals never fully realised that the banks would want all assets, including the farm, on the table when these property deals went wrong. Property asset values nose-dived, rents fell or disappeared, the loans defaulted in many cases and legal letters were issued by the banks,” he adds.

The first thing he says is for people to be fully engaged and open with the banks from the start.

“Most banks look for a sworn statement of affairs and it needs to be carefully prepared, because if the bank establishes that it’s not correct your credibility and trust will be very difficult to rebuild. It will mean that striking a deal will be a much bigger battle,” he says.

“Make sure that the people you are dealing with are experienced debt negotiators, are qualified and approved by the Central Bank to act as debt intermediaries. These are unprecedented times and new rules are in play. Your traditional adviser may not always have the skills, knowledge or experience to be best placed to assist you. Your debt adviser must devise a strategy with you and explain all the steps along the way and what difficulties you may encounter on this journey.

“You need to feel comfortable with this strategy and that it will deliver a solution that you can live with and then move on with your life. You also need to agree a price for your adviser’s services and get regular updates on how ‘the meter is running’”.

The keeping intact of the farm is paramount to all farmers, but this may be very difficult in some cases.

Finally, David stresses that “the presentation of you plan must give your lenders a full picture of your overall finances and it needs to be presented in a manner that sends a signal to the bank that you are serious about resolving matters”.

• The Phoenix project will be at the Ploughing (block 2, row 15 and stand 163) again this year and encourage farmers to come in for advice.  

Visit www.phoenixproject.iefor more information, call 1850-203-040 or email support@phoenixproject.ie

Case study

I can’t explain the relief when the bank deal came though. After three years of financial pressure and sleepless nights, I could finally put it all behind me. The idea behind buying the investment properties was to ensure my parents were looked after in retirement, when they handed the farm over to me.

The properties were purchased just before the boom, before prices came crashing down, and there was no problem getting the money for them off the bank. They were in a provincial town and proved difficult to let out. They were not even paying the interest on the mortgage. It went on for a year or two before the bank started putting pressure on us to repay the existing loans. The farm was not part of the security for the properties, but you could quickly see that the bank was looking at it as a way to get its money back. 

I came across the Phoenix Project at the Ploughing in 2011 and had a few brief meetings with them. When the pressure really started to come on in 2012, I went back to them. Around that time, I didn’t socialise and had sleepless nights whenever I got another letter from the bank.

You just didn’t feel like talking to anyone about it. They started to correspond with the bank on my behalf, which in itself was a huge relief. The message was that I was not walking away and wanted to repay what I could. 

I sat down with David Kavanagh of the Phoenix Project and over six months we did out a very detailed financial plan showing exactly what the farm was capable of paying back to the bank over five and even 10 years.

Most of the land I was farming is leased, so if even a small block was sold it would undermine the viability of the farm. I had left a good job to come farming and could start to see all the hard work I put in slip away. 

The first plan we presented to the bank was rejected. So we kept the lines of communication open. We re-did the plan and presented it to them again.

They had already put receivers into the investment property and in the end we were able to secure a write off of over €100,000 and I got my life back. I know I am not alone in the situation, as many farmers were affected either by investing in bank shares or properties when times were good. After coming out the other end, the best advice I can give is to get help. It would have been impossible for me to get a deal on my own.

The other thing is to keep the communication open with your bank. You might not feel like replying to them when you get another letter, but it’s important to keep talking to them.  

Southern Farmer