Paper millionaires falling fast -- without a safety net

Remember the lady on Liveline this week saying that she had paid over €100k in stamp duty last year and was now destitute? The Sindo has more:

I think this is far more widespread than we believe. Many people are self employed and almost none qualify for social welfare should their business dry up unless they have virtually no assets. This applies to many architects, solicitors, IT people as well trades people many of whom were self employed during the Celtic Tiger years but for whom business has now dried up. €200 a month from Vincent de Paul is terribly difficult for a family to live on no matter if they do own their own home (and it does not have to be a pile in Wiklow to disqualify).Yet self employed people do pay a PRSI levy, what this is meant to insure against I have no idea when it does not qualify them for regular benefits…

Could someone elaborate in what circumstances exactly is an unemployed person NOT entitled to social welfare?

It surely is ridiculous that people pay PRSI and not be entitled to unemployment benefit.

welfare.ie/EN/Publications/SW4/Pages/s8.aspx#8.2

self employed are only entitled to job seekers allowance NOT benefit.

Yet they still pay PRSI

They don’t pay employers PRSI that’s a bnig difference in overall controbution

A lot of contractors etc have the option of being employees of a comapny or being class S directors, most opt for class S as they don’t the have to make an employers contribution and can maximise expenses etc against tax. In these cases, just like mortgage rate fixing, you takes your chances . . .

If the self employed had saved the 11.75% of earnings which is the difference berween the PRSI paid for an employee and paid for a self employed person many of them would have rainy day savings which would be more than they would get in Job Seekers benefit.

The problem is that many of them do not have rainy day savings (“deposits are dead money”) - they have ‘assets’ in the form of bank shares :unamused: or property :unamused: . These are calculated to their cash equivalent or expected income stream based on their value. In addition, any other income in the household (whether from someone related to them or not) is taken into account in the JA calculation, so they do not have a hope. Having been caught by this before, I don’t intend to be caught again!

Just to make this clear for thickos like myself, is the basic issue here that they’d actually have to flog the house and other property for whatever they can get, presumably end up being declared insolvent if unable to pay all the debts, and then approach the social welfare officer (presumably at that stage to apply both for dole and housing). But for as long as they have the house, they can’t get dole as the house will be valued as whatever it worth.

By contrast, wouldn’t a laid-off PAYE worker get unemployment benefit for a period (I think about 18 months) without needing a means test - the fact that they’d paid contributions would be enough. Now, at the end of that 18 months if still unemployed they’d need to get a means test to get unemployment assistance. Presumably that would put them in the same boat as the couple in the article - whatever property they have would be taken into account.

But (if I’m getting the point) the difference is that a self-employed person gets hit the minute their work goes. A PAYE worker has a buffer of a year and a half before they hit the wall, because they pay a class of PRSI that gives comprehensive cover.

I think it’s nine months for PAYE on JB. And the assets I’m talking about are investment properties.

But essentially, I think your reading is the same as mine - they would have to offload the ‘investment’ at whatever they can get for it to reduce their means to qualify. Hence Ann and Peter in the article above have assets that are worth x, so should be generating y in income, but the assets in the real world have a negative worth. Add in a range rover that is worth less than the car loan outstanding and negative equity on the PPR. They have spent every penny they earned and more.

To me, it is not a question of sympathy, as they were foolish in the extreme to run up the debts they have run up. But they were not the only foolish ones. The banks loaned them money. And I don’t doubt that they genuinely have no cash for food and what credit they had has been withdrawn.

As a self-employed person, I have always been horrified at the risks my peers have taken. Many seem to regard themselves as in permanent employment as they have always been able to get another contract and have no savings, indeed, are a year behind on pension/tax (are paying last years bills out of this years earnings. Yet the bling lifestyle goes on (and these are people with families, not singletons or DINKYs).

Don’t think the PPR is counted as income schuhart, just the investment properties.

Am I missing something or do they ‘only’ owe 350k? Even if they sold the gaff at 50% of what they paid for it would they not be in the clear?

Sell the whole lot and move into a rental 3 bed semi somewhere. If you are still destitute you deserve to have your basic needs looked after until you get back on your feet.

I was astonished by this article - it said they earned 110k between them - how in fucks name could they sustain the livestyle they appeared to have, even in boom times? Kids, range rover, 1.2m house - how in fucks name did they manage - they must have been playing a very tight (but clearly dangerous) game

**Paper Millionaires Aid

Theme Song

Let’s Release That Equity**

(Lyrics adapted with apologies from Christy Moore - u2wanderer.org/disco/lyrics.php?id=473)

I’m not stupid, I’m not lazy
I just want something for nothing; it’s all I can get
Without the equity that I can release
I’ll never be able to keep up with the jet set

And I’m here today with a message
from the ladies of leisure and the men in the bank
Of this misery, this property wastage
This erosion of house equity is quite rank

I want to buy a house
I want to buy Gucci
I want to buy a fur coat
I want to buy a jet ski
I want to buy a car
I want to buy a TV
I want to buy anything
Anything I please

I want to buy it
You can help me
We can make it work
Release that equity, release that equity

Let’s release that equity
Let’s release that equity

North and South of the Liffey
Four hundred thousand, that’s the average price
Four hundred thousand, I won’t take less
Less than it’s worth simply won’t suffice

But we need a plan for property
Not for the poor and not for the rabble
Let’s take hold of this moment
Let’s reinflate that bubble, reinflate that bubble

I want to buy a house
I want to buy Gucci
I want to buy a fur coat
I want to buy a jet ski
I want to buy a car
I want to buy a TV
I want to buy anything
Anything I please

I want to buy it
You can help me
We can make it work
Release that equity, release that equity

Let’s release that equity
Let’s release that equity
Let’s release that equity
Let’s release that equity

(Fade, then lunch in the Unicorn)

The JA/JB paradox is a kinda freakish bastard child of the economic collapse - it is a phenomenon almost entirely new. At what other point in our history has someone needed welfare while simultaneously “owning” 6 properties? Such a preposterous notion is only possible in the post CT world. Before that, the idea that someone with this much apparent wealth could claim state benefits would have struck many people as obscene and thus a means test was entirely appropriate. So I think it is not so much a fundamental flaw in the system as a fundamental absurdity thrown up by the property bubble. It will pass as all the other absurdities of the bubble will.

Meanwhile, you can put me firmly in the “they have no one to blame but themselves” camp.

If this is true then I have to say that despite what you might think of the decisions of the parents, it is pretty sad to think that this woman has to practically beg for food for the childrens lunches. Bertie Ahern, hang your head.

I’m pretty sure the €166 a month child allowance should be keeping them in lunches at least.

I don’t have children so I don’t know what you get from the state to help support them but my point is that there are innocent victims caught up in all of this.

yea, real innocent

The inncoent children sickofitall, I don’ think the kids were out buying apartments in Bulgaria.