Big debt write-downs from banks are not unusual, one consumer expert has said.
Brendan Burgess, Founder of askaboutmoney.com, was speaking as AIB is appearing in front of an Oireachtas Committee to discuss its debt write-down policy.
It comes in the wake of revelations that DJ Carey's €9.5 million debt to the bank was written down by an estimated 80%.
Mr Burgess told Newstalk Breakfast write-downs are standard.
"It's not unusual at all, all the banks take a very practical approach," he said.
"If somebody has no money and if somebody cooperates with the bank - for example... if somebody has investment properties and very large mortgages, and they agree to sell those investment properties, the shortfall is usually written off".
'No advantage'
Mr Burgess said there is no point in banks chasing people with no money.
"There's no advantage to the bank getting a judgement against me for the shortfall of €4 million if I've sold €6 million worth of properties and I have a €10 million mortgage," he said.
"There's just no advantage to them, they can't do anything with it".
euro money banknotes. Picture by: Alice Dias Didszoleit / Alamy Stock PhotoHe said the alternative is for a person to declare bankruptcy.
"I can go down tomorrow and be bankrupt anyway," he said.
"We have the most favourable legislation for borrowers in this country, and for debtors.
"We had terrible legislation for years - you could be bankrupt and it lasted forever.
"Now bankruptcy lasts one year; so if you're in a situation that you stupidly got involved in property investment or you a ran a business that went bad... you can rock down to the Bankruptcy Court, and one year later you're out the other side".
'A fresh start'
Mr Burgess said fresh starts can be good for people.
"There are a lot of business people out there who have a huge contribution to make, including those horrible people - property developers," he said.
"Property developers actually contribute a lot to the economy.
"When they've gone bust, it's no harm to let them get a fresh start.
"In America, it seems to be a badge of honour to have gone bankrupt once or twice in your life and get a fresh start," he added.
Listen back to the full interview below:
