Bankcruptcy or PIA and retaining family home

Hi, just an update on my situation. I had the meeting with my PIP this morning. He recommended Bankcruptcy as my income was too low and intermittent to offer the bank any kind of a deal which I expected to be the case. His quoted an up front fee of €2750. It would certainly seem that this is the route to go down as because of my circumstances there is a good possibility I will be able to keep the family home. (I just have to find a way of raising the €2750).

I am aware that some people are applying for Bankcruptcy themselves, but the Irish insolvency website still recommends to garner professional assistance to navigate the bankruptcy process, any thoughts on this?..

Also I would normally be paying a preliminary tax for my part time work tax return, would I be better holding off on this preliminary tax and using it towards the PIPS fee as my tax bill from the revenue will be written off under my bankruptcy..is this correct?

Any thoughts or insight into any of the above would be greatly appreciated.
 
Hi Eyesgreen

The IMHO's website states that it provides a bankruptcy service free of charge (besides court fees). I can't see any advantage in paying the bones of 3k for a service you can get for next to nothing - especially as your bankruptcy looks reasonably straightforward.
I'm not sure about the Revenue question.
 
Last edited:
Hi Ep, yeah I was thinking this myself. I suppose it's the fear of being overwhelmed with the process. I've messaged the IMHO so hopefully I may be able to go through the process with their support, But I'm presuming their website is very busy so I'm thinking it could take a while before they're able to get back to me. On the ISI website it says revenue debt can be included in Bankruptcy so I'm taking this to be the case.
 
Hello Eyesgreen, you need to get a letter from a PIP stating that you cannot use any of the insolvency arrangements; this forms part of your bankruptcy application. circa 3K for the PIP's assistance seems extremely high. Hopefully you'll get help from the IMHO. I managed to get some assistance from a PIP on the bankruptcy forms (as there were interested in knowing more about the process and did it FOC for the experience), but I did most myself; the paperwork seems daunting at first but it's manageable. The staff in the examiners office (where you lodge your application) were really helpful and efficient in pointing out any errors I had made and informing me what I needed to do to amend them. Best of Luck.
 
I notice that there are big issues with going bankrupt currently as the courts cannot cope.
 
Hi thanks Stuboy, I've made contact with IMHO so hopefully I may be able to navigate the bankruptcy process with their help. I'm definitely not in a position to pay €2750 at present. So I'll have to see how this progresses. It can be daunting alright. It's an ironic position to be in when you can't afford to go bankrupt! Thanks for your very helpful advice, it's much appreciated.
 
Hi Eyesgreen

Make sure your car isn't worth more than what's currently allowable under the terms of bankruptcy.
 
That's definetly correct Bronte. The PIP I spoke to confirmed that that the Bankcruptcy courts are overwhelmed and that Bankcruptcy proceedings are expected to really shoot up over the coming year.
 
Hi, thanks EP, my car is worth around €2500-€3000 so hopefully this and my basic equipment needed for work will be within the assessed Bankcruptcy threshold.
 
Hi Eyesgreen

My family home is worth around €70,000 and the mortgage is €69000.

Your position is certainly not clear cut, given the very marginal equity in your family home. Valuations can be very subjective. It will cost you a minimum of €5,000 to buy out the Official Assignee's interest in your family home.(€5,000 is the minimum price that the Official Assignee has quoted to cover his legal costs etc.)

Given that there is no time limit in Ireland (unlike the UK where the Official Receiver has to make a decision within 3 years of the bankruptcy date) it is possible that the Official Assignee could wait, say, 5 years, before selling his interest to you. In that time if your house has increased in value to €90,000, it would cost you €20,000 to buy it out etc. The Official Assignee has a duty to maximise realisations for creditors.

I would suggest that you try an informal scheme first and try and achieve certainty. Given the facts of your case, a bankruptcy would not deliver a guaranteed outcome for you.

Jim Stafford
 
Hi Jim,

Thanks again for your help on this. Yes I am beginning to understand your point and my surety on Bankcruptcy is beginning to wane. Certainty on keeping my family home would be of great help in my situation.

Can an informal arrangement be agreed over a 5 year period similar to a PIP arranged deal or is an informal agreement an open ended arrangement?..and is the bank likely accept a much reduced offer?

For example in my situation the new monthly requested payment by Ulster Bank to meet the shortfall (from BTL sale) is around €650. If I was able to change my circumstances and offer the Bank €300 per month for 5 years as full and final settlement, in your experience would this be an attractive offer to the bank as opposed to Bankcruptcy ?

I'm a little unsure of what an "informal arrangement" actually entails. Is what I have outlined above typical and standard of an informal arrangement?..and finally would it be cheaper to as ask someone other a PIP to arrange an informal settlement and if so who other than a PIP is certified to offer this arrangement to the Bank. For example..a solicitor, an accountant?..ect..

Sorry for all the questions. I'm just trying to understand the present financial insolvency landscape. Many thanks for taking the time to offer all your advice.
 
Hi Eyesgreen

As Ulster Bank have not yet obtained judgment against you, this is the time to try and do a deal so that they do not incur the unnecessary costs of legal proceedings.

I am unable to talk, in a public forum such as this, what strategies individual banks have. Generally speaking, most banks are now prepared to enter into settlement agreements. The settlement agreements are generally drafted by the banks' solicitors, and would incorporate "windfall" clauses etc. You would need to obtain your own legal advice as to whether the agreement protected you. Generally speaking, the agreements would be very specific and would not be "open ended."

As mentioned previously, some PIPs are not authorised to negotiate informal schemes. Either an authorised PIP or an accountant could assist you with the negotiations. Having said that, it does appear that your situation is not complex, and you could engage directly and negotiate your own deal. I set out below the basic steps that you should take to negotiate your own deal:

  • Complete their SFS. In calculating your Reasonable Living Expenses use the information provided on the Insolvency Service of Ireland web site.
  • Given that you appear to be self employed, you need to provide copies of your accounts,
  • Provide them with a copy of your 2014 Income Tax return (which you will have to shortly submit anyway)
  • Provide them with copies of bank statements for the last 6 months for your personal banking account
  • Provide them with a valuation of your house.
  • Provide them with a copy of a recent mortgage statement.
  • Finally, submit your proposal e.g. €300 per month over 5 years

In practice, the banks are very attracted to a "lump sum" of cash provided by a relative, as they can then close the file quickly.

Jim Stafford
 
Jim,

Thanks so much for your advice. I will for now proceed further along this route of an informal agreement to see if there's a way of changing my circumstances to offer a realistic amount to the bank.

It does make more financial sense if possible to gain certainty of retaining my family home, particularly as you pointed out that it will probably cost around €20,000 in the long run to buy out the assignee (Not guaranteed). In a successful "formal agreement" I will pay the same €20,000 but will gain a much higher degree of certainty in regard to keeping ownership of the family home.

If I am unable to change my circumstances and agree a formal settlement then I may go Bankcrupt as a last resort. But I will investigate an attempt to offer a formal agreement first.

Invaluable advice Jim, many many thanks.
 
Complete their SFS. In calculating your Reasonable Living Expenses use the information provided on the Insolvency Service of Ireland web site.
Jim; just to advise that we require an honest SFS to be submitted in all circumstances i.e. actual cost to the borrower rather than insolvency figures. We have some level of flexibility in accessing "affordability" of repayments and while using the ISI figures as a reference we can make allowances where there is a reasonable explanation for excess expenditure. If I received in a SFS with expenses comparing with ISI figures and statements provided showed these expenses to be non-reflective of the actual expenditure I would return it for revision.
Fully agree that a "lump sum" is generally far more attractive that a higher figure over a term. Make sure that the source of the money is identified correctly. Proof is likely to be required before a settlement will be agreed. I.e. We would normally accept a letter from Acct/Solcr stating that funds are being provided by X and he is satisfied that they are available.

Eyesgreen - By all means use the threat of bankruptcy to ensure that your proposal is taken seriously. Ideally get a professional to submit your proposal for you. Be fully open with the information provided and have an alternative plan if the proposal is declined. If you can avail of a lump sum put forward your highest offer first. If refused and you come back with a higher amount you are bunched! Bank will simply think that you are negotiating and will frequently continue upping the ante to a point where you can't meet the required amount.
 
I wouldn't go bankrupt. Get a financial advisor. I'm at a more advanced stage but a similar situation to yourself. My bank talked about splitting the residual debt following a buy to let voluntary sale. I managed the sale, optimised what they could get and left all good contents to gain more in the sale. Saved the bank about 30,000 by the fact they did not have to appoint a receiver. I even got a grant to tidy up the estate and got a lot of residents in on the clean up act!! Bank then refused to engage on residual....house was sold....they never had manners to acknowledge the money transfer to them and instead after 4 months issued court proceedings. It's been in the High Court now since 2014, and I will fight the judgement they are seeking if it kills me. I have a defence and they may actually lose! I will never give up my PPR or go bankrupt. (PPR is with same bank). A simple moratorium on my buy to let for 6 months would have enabled me to get new tenants and keep going....they pulled the rug in their own panic...now I have no investment (pension) and a pile of 'dates' in the High Court!! Don't give up!!! Fight Fight Fight and negotiate. Private message me if you wish and I can give you details of a really good guy to deal with for advice. Lone. Star
 
Thanks 44brendan,

Unfortunately It is highly unlikely I will be able to gain a lump sum to offer to the bank. But I do see the logic in offering the highest amount first and sticking to it. The next few months will determine what I'm able to achieve. Thanks for your advice.
 
Hi Lonestar,

sounds like you have been through the mill. Also sounds like you have a case, as the bank agreed to allow you to negotiate the sale but then ceased negotiating. I hope your high court case is successful, it certainly sounds like you have been very reasonable in your efforts to negotiate a fair settlement so I wish you well in the high court.

I will do my best to negotiate my own situation. In the next few months it will play itself out. Best of luck Lonestar and thanks for the advice.
 
Best of luck to you eyes green!

Through the mill I guess....but still strong and have the will to keep going. I have an arguable defence and to date the bank have played the 'lets not bother replying to her replying-affidavit' and we'll press ahead for summary judgement downstairs in the high court. Worst they can do is a judgement on my PPR which as far as I am aware dissolves after 12 years. Meanwhile I will keep defending and researching and if the bank are happy enough lining the pockets of a glossy law firm then so be it....

Do you research and always seek out lots of advice ...
 
Hi, another update..further advice needed.

As aforementioned I have been advised by my pip to go bankcrupt. An advisor from IMHO has just advised me that I shouldn't go bankcrupt as there is equity(possibly €10-€15000) in my home and there is a chance I will lose it. (This is similar to what Jim Stafford) advised. Unfortunately I don't have the funds to offer an informal agreement or lump sum at present.
My question then seems:

Scenario 1: do I risk bankruptcy and hope for a good outcome on my home-and also if further equity builds up in my home during the 3 year term is it likely the court assignee will come to an agreement to allow me to buy it back?...and if so would he require a lump sum or a monthly payment?

Scenario 2: I just sit and wait and do nothing and hope that somewhere down the line I am able to acquire a lump sum to offer as full and final settlement.

The advisor from IMHO suggested that it is unlikely that the ulster bank will go to the expense of chasing my family home, but if equity builds up is it likely they will before the 12 year limit runs out? Risk bankcruptcy or wait it out...Any further advice at this juncture would be much appreciated...
 
Just to clarify the above post, there seems to be a lot of borrowers in my position that have low income and are able to sustain the home Morgage but do not have the funds (either through a pip or through an informal agreement) to make an offer to the bank on the unsecured debt and therefore have only the option of waiting to see what the bank will do or alternatively to go bankcrupt.

I therefore find myself in a stalemate position. Any further advice on the above post and what I should do now would be greatly appreciated...
 
Back
Top