Life After Debt: A critical analysis of the engagement/non-engagement of debtors with the Insolvency Service of Ireland Zachariah John Joseph Roche Thesis submitted for the Degree of Doctor of Philosophy Submitted to the University of Limerick Supervisors: Dr. Carmen Kuhling Dr. Martin Power Submitted to the University of Limerick September, 2018 Life After Debt: A critical analysis of the engagement/non-engagement of debtors with the Insolvency Service of Ireland Abstract The state established the Insolvency Service of Ireland (ISI) in 2013 to respond to an arrears crisis involving almost 150,000 mortgages. The ISI’s strategy has focused upon teaching financial skills to insolvent debtors over a period of supervision lasting up to 6 years, after which some debt is written off. After five years of operation, the ISI has only approved 4,672 arrangements, despite the continuation of the mortgage arrears crisis (Insolvency Service of Ireland 2018). This thesis critically investigates this low uptake from a qualitative perspective, with a focus on the ISI’s applications process. 22 semi-structured interviews were conducted, 18 with debtors who wished to join a debt arrangement, and 4 with Personal Insolvency Practitioners (PIP’s), experts who administer the ISI’s arrangements. By interviewing these participants, my thesis accesses the beliefs, meanings, and contexts of these two groups, who are compared and contrasted throughout. My findings concentrate on the problematic nature of the applications process as a whole, disagreeing with the ISI’s own explanation that the dearth of applicants is due to a lack of awareness of the service (Insolvency Service of Ireland 2014a). I explore this application process in a step-by-step manner aided by governmentality theory, guiding the reader through the process as though they were applying for debt relief. Throughout I identify problems with this process as they emerge, such as class disgust, sexism and an interview between the debtor and the PIP that has the character of a confession. PIP’s emphasise the personal responsibility of debtors, and are opposed to debtors easily joining debt programmes, and I critically reflect on the implications of these personal responsibility discourses. This tends to result in feelings of embarrassment, shame and humiliation – leading my indebted participants to construct alternative means of coping in the absence of the ISI. Most common among these are (in)voluntary social exclusion, whereby debtors withdraw from social life, as they are ashamed that their friends and family will see the consequences of their financial situation, in addition to harsh budgeting and / or using charities. Regardless, my indebted participants are adamant that they cannot go through the humiliating process of applying again, and actively discourage other debtors from engaging with the service. I conclude my thesis by reflecting on the original problem that the ISI was supposed to solve: the mortgage arrears crisis. There remain tens of thousands of mortgage holders in arrears, whose mortgages are now steadily being sold to vulture funds. While mass repossessions remain politically untenable, it is now likely that the ISI’s ‘soft’ approach to debt relief will not work and the ‘hard’ approach of the funds will finally resolve the legacy debts of the economic boom and the crisis which followed it. i Declaration I, Zach Roche, declare that this thesis is entirely my own work, in my own words, and that all sources I have used are fully acknowledged. Signed: _______________________________ ii Acknowledgements There are so many people who need to be thanked for their support over the last 3 years, without you finishing this thesis would have been impossible. First and foremost I would like to thank my supervisors Carmen and Martin, who were always supportive of me but were not afraid to give critical feedback when it was necessary. They were truly exceptional supervisors and I could not have asked for better. I would also like to thank my parents Maria and Eugene, who always supported and believed in me, and made a considerable difference during the bad times when I doubted myself and wondered if I was on the right path. To my very good friend Feargus Fawsitt, your advice and confidence in me has always been appreciated, probably more than you know. I look forward to hanging out more often in the future. I would like to thank Tom Boland (WIT), Ray Griffin (WIT), John O’Brien (WIT), Paul Clogher (WIT), Sindy Joyce (UL), Majka Ryan (UL), Keith Conway (UL), James Cuffe (UCC), and Kieran Keohane (UCC) for their exceptional insight on sociology, theology, theory and all things social science. I also wish to acknowledge the Economy and Society Summer School, run by the aforementioned academics. This school has always been a space of community and friendship for me, and many of the most difficult problems of my thesis were resolved by conversations I had at the school. I would also like to acknowledge the help I received from Dr James Carr and Dr Eoin Devereux who each read drafts of my work as part of the Department of Sociology’s annual reviews of my progress. Many changes in my thesis came as a result of their advice and feedback. Most importantly I would like to thank the debtors and personal insolvency practitioners who gave up their time to participate in my research as interviewees. Without their experiences, anecdotes, stories and narratives this research project would not exist, and I can only hope that I have fairly represented all of you. I wish to acknowledge the financial support I received, firstly the fee waiver I received in my first year from the University of Limerick’s Faculty of Arts, Humanities and Social Sciences, and secondly the full funding I received through the Irish Research Council’s Postgraduate Funding for the final two years of my PhD. This financial support enabled me to go to conferences I could never have attended, meet people I would never have seen, and maintain a quality of life that would otherwise have been impossible. iii Table of Contents Abstract ....................................................................................................................................... i Declaration ................................................................................................................................. ii Acknowledgements .................................................................................................................. iii List of Tables and Figures...................................................................................................... viii List of Appendices .................................................................................................................... ix Abbreviations ............................................................................................................................. x Chapter 1 Introduction ............................................................................................................... 1 1.1 Background and context .................................................................................................. 1 1.2 Research questions: Incorporating theory and literature ................................................. 1 1.3 Outline of Thesis .............................................................................................................. 6 1.31 Literature Review 1: A History of the Present........................................................... 6 1.32 Literature Review 2: Life After Debt......................................................................... 7 1.33 Theoretical Framework .............................................................................................. 7 1.34 Methodology .............................................................................................................. 8 1.35 Reflexivity.................................................................................................................. 9 1.36 Findings...................................................................................................................... 9 1.37 Conclusions .............................................................................................................. 11 Chapter 2 A History of the Present .......................................................................................... 12 2.1 Introduction .................................................................................................................... 12 2.2 The Start (and End) of a Golden Age ............................................................................ 13 2.21 The Rise of Neo-liberalism ...................................................................................... 15 2.22 The Financialization of the Western World ............................................................. 19 2.3 The Celtic Tiger ............................................................................................................. 28 2.31 Justifying the Tiger .................................................................................................. 33 2.32 Aftermath and Austerity .......................................................................................... 37 2.4 The Insolvency Service of Ireland ................................................................................. 42 2.41 Three New Arrangements .......................................................................................