Insolvency or other solution?

K

Kavanagh

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Hello. I'm in a difficult situation in my personal circumstances and I'm at my wits end trying to find piece of mind or certainty around my future. I'm hoping I'm can get some non judgemental advice and hope for my future.

I bought a house with my now ex-boyfriend some years and then we split up. It was a messy break up and he now lives in Canada (legally). Foolishly when we split up, I left the home and rented elsewhere. Unbeknownst to me he rented the house out and moved to Canada. Eventually he stopped paying his share of the mortgage and the bank came after me.

Here's the bit that makes my case more unusual than most. I've a good job and career. I tried to negotiate a deal with the bank but ultimately mortgages are joint and severally liable. They don't care if one person is no longer around, they just want to be paid. I offered to voluntarily surrender keys and asked about doing a deal on the negative equity (about 250k). They offered no solutions other than suggesting I buy out the mortgage with a friend or family member.

I realised I wasn't getting anywhere. None of the agencies that are set up for those in trouble could help as I was in an unusual position. They all said take the approach of wait and see.

Eventually the house was repossessed. Now I'm being pursued for the negative equity in full while my ex has been left alone.

I've no idea what to do next. As this has been going on a long time, I'm now happily married and expecting my first child. I live in rented accommodation with my husband. I have a good job but my salary couldn't possibly cover the mortgage in full. My husband obviously had no interest in being involved in the property.

What are my options? I'm completely overwhelmed with the insolvency options. My job is highly stressed and Id rather quit than continue to work a 60 hour week to be giving it all away to service a debt. Should I try negotiate direct with the bank outside of the insolvency process? Should I ignore the situation? Could the sheriff break into where I live now (rented accommodation) and seize my husband's goods because we are married?

Id like to reach a reasonable solution with the bank so that I can begin to have certainty on my future. This has been going on for almost 10 years now in total and my health has really suffered this past year.

Any advice on what I should do?
 
Kavanagh,

It would make sense to talk to an Insolvency Expert.
From the thread it is hard to know how to advise , we need to know shortfall on repo/salary etc .
You need to see what arrangement can be made to cover the shortfall, remember you are STILL allowed to live.

If you want name of recommended adviser , send me note and I will have them talk to you on general options, at least then you will have a road map to start.
 
Kavanagh said:
Id like to reach a reasonable solution with the bank so that I can begin to have certainty on my future. This has been going on for almost 10 years now in total and my health has really suffered this past year.
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Your situation is not unique. Unfortunately you are in a position where your are jointly & severally liable for the residual debt. However, while noting your stress and the difficulties you have encountered in dealing with the bank, you have not mentioned what action to date the bank have taken against you. When did you last make a payment to the loan or acknowledge it in writing? Have the bank issued proceedings? If not, why have they delayed? have you approached any financial advisors to work with the Bank?
The reality is that the bank are looking for a solution here and may be prepared to accept a reasonable offer to go away!! The debt may well be statute barred! Check this out with a financial advisor. Ok they can take you to Court, but other than obtaining judgment there may be little available to them if they applied for an installment order. You live in rented accommodation so their ability to progress a judgment against assets is zero. No way would a sheriff break-in to any accommodation. A sheriff cannot act without a judgment being obtained. Even so his powers in terms of seizing goods are extremely limited. Effectively nil as you are unlikely to have anything of value and he will not seize household goods/appliances, particularly where there can be a dispute over ownership.
Don't panic over your position. Ideally get yourself a good advisor who will deal with the Bank on your behalf. This is a problem, but definitely not worth getting yourself into bad health over!!
 
Thank you for the supportive words.

The house has been repossessed and has a shortfall of €200,000 negative equity. My salary is €80,000. I stopped making payments when I realised the bank weren't willing to work something out with me and I was throwing money at something that was going to result in repossession and proceedings anyway.

As I said originally the thought of being on a PIA and continuing to work in a high pressured job that has me working 60 hours a week many weeks (and I'm expecting) has me worried. From reading about the PIA it could mean I'm only taking home less than 25% of my salary with the rest going to the bank. I rather just stop working.

Meanwhile my ex gets away and I'm liable for everything. I'd leave the country myself only my husband doesn't want to. Thankfully he has been supportive throughout this. Without him I'd be lost.
 
Any PIA action would be at your request. If you need more specific advice you will need to respond to my questions raised above and complete the financial makeover template on this forum.
 
Thanks, I had to look for the template. Details as follows:

When did you last make a payment to the loan or acknowledge it in writing?
A few years back. I pleaded with the bank on numerous occasions to accelerate the process so that we could reach a solution

Have the bank issued proceedings?
House repossessed

have you approached any financial advisors to work with the Bank?
Yes a solicitor has said he will represent me. I have spoke to a financial advisor but it wasnt suggested that she represents me

Income details
Net monthly
PAYE employee. €3,500 per month after tax
Married. (Debt relates to me and not my husband.)

Do you need a car for work or do you use public transport? Car
Number of children 0- 2 years old: None but expecting

Home loanLender: Would rather not say but it is a major Irish bank
Amount outstanding: €550,000
Value of home: €350,000
House was repossessed in 2015

Summary of discussions and agreements with the banke.g. in Marp since Jan 2011 .
Met with bank times and cooperated for a number of years. Ex did not. Bank confirmed I was a cooperating borrower but said they could not negotiate until the house was surrendered or repossessed. Once I stopped paying, I was no longer considered a cooperating borrower
Sought help from MABS, financial adviser and solicitor


No other loans, bar a credit card which is kept up to date.

Other savings and investments standard private sector pension

Do you expect any lump sums in the medium term future? No


How important is retaining the family home to you? Which of the following best describes your situation?
Living in rented accommodation. House repossessed



Any other relevant information

What is your preferred realistic outcome? For example: "I will never be in a position to repay the home loan. So I want to sell the house and deal with the shortfall"

An agreement to pay off a fair portion of the shortfall which does not result in me having to give up my career or job. Not willing to continue to work if 75% of my take home pay is used as a repayment. Willing to pay this off longer than a standard PIA or bankruptcy if it means the repayments are reasonable and I can start to get my future back
 
It depends on which bank you owe the shortfall to. If it's AIB / EBS / Haven, the IMHO / Grant Thornton could work on a full and final lump sum PIA - whereby you'd get a lump sum from a family member and pay it in full and final settlement, involving a write off of 80+%.

Other banks - such as BOI - have a public policy of not doing any write debt write downs (but I'm not sure if they may be more pragmatic in private)

Other banks may be pragmatic and may take a lump sum PIA.

The advantages of the lump sum PIA are:
(1) Certainty - your problem ends there and then.
(2) You can continue earning without worrying about losing most of your salary.
(3) Bankruptcy and all that it entails is avoided.
 
Great!!
Now lets have a look at your options:
1. Lump sum offer:- In my view this would be the ideal solution. If you can get say 20k from family members etc and offer this in full settlement of your liability on the loan. If you can't you can't.
2. Apply for a DSA;- Not a PIA as your debt is unsecured. This would involve meeting with a PIP and them negotiating a repayment over a maximum 5/6 year term. Balance of loan to be W/O. You would be allowed reasonable living expenses, plus future childcare costs plus your rent share. It's not really draconian and end result is that you will be debt free in maximum 6 years. Look up the Insolvency services web-site for more information. [broken link removed]
3. get your solicitor or advisor to write to the bank with a similar repayment proposal over say 5 years. I.e. they would indicate that you are considering insolvency if this is not acceptable.
4. Do nothing and wait. It appears that Judgment proceedings have not commenced against you. This would only be the start of what would be a long process. You have time on your side. However best option is to take the initiative rather than waiting for the Bank to act!!

Best of luck!
 
44Brendan

A Third Party Lump Sum PIA - as I suggested - is applicable to both Secured and Unsecured debt of between 20K and 3 million and is therefore an option for Kavanagh.

As I've already written, Grant Thornton are currently working with a friend of mine on a Lump Sum PIA on a shortfall amount (Outstanding mortgage minus price house was sold for).
 
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A PIA is for situations where there is both secured debt and unsecured debt. In this case there is only unsecured debt so a DSA is the appropriate solution. A DSA has a maximum duration of five years but does not have to be that long. Given that the poster has a good income, the bank is likely to want a DSA of the full term so as to recover more money. 44Brendan gave good advice: it is worth trying for an informal deal first while having the DSA in your back pocket if the negotiations are going nowhere.
 
The lump sum option - whether informal, PIA or DSA - is usually most people's preferred option (especially, like in the above example, if the person is in receipt of a good income). The third party lump sum PIA is the equivalent to the UK lump sum IVA - which many Irish people went to the UK for. Irish people are now staying at home and attempting the lump sum PIA. We considered a lump sum UK IVA when we were there - looking back it was probably a mistake not to have gone for it. 2 friends of mine are currently applying for an IVA in the UK (90% write down) and their very experienced UK insolvency specialist is optimistic that it will be accepted.

It would be soul destroying paying back a sizeable portion of your income over a 5 year period. The other significant disadvantage of the 5 year DSA is that if one inherits during this time frame the bank can move on the inheritance.

Third party lump sum is the only game in town if you ask me.
 
Thanks for the comments, I am grateful for your replies. It sounds like I need to investigate the lump sum option as it's the only solution that allows me get on with my life. I don't come from a wealthy background but I guess we could work something out.

epicaricacy said:
It would be soul destroying paying back a sizeable portion of your income over a 5 year period. The other significant disadvantage of the 5 year DSA is that if one inherits during this time frame the bank can move on the inheritance.
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It's more than that though. It would be similar to some kind of debt slavery. I'm not young anymore and I'm at a crucial stage of my life regarding family and my future. 5 years and I'm well beyond child bearing age and I'd have nothing to show.

Wish me luck. If anyone is interested I'll provide feedback on how it goes.

Thank you again for your comments.
 
Kavanagh said:
Thanks for the comments, I am grateful for your replies. It sounds like I need to investigate the lump sum option as it's the only solution that allows me get on with my life. I don't come from a wealthy background but I guess we could work something out.

It's more than that though. It would be similar to some kind of debt slavery. I'm not young anymore and I'm at a crucial stage of my life regarding family and my future. 5 years and I'm well beyond child bearing age and I'd have nothing to show.

Wish me luck. If anyone is interested I'll provide feedback on how it goes.

Thank you again for your comments.
Click to expand...

I hear you Kavangh.

My wife and I went to the UK as we wanted the fastest solution possible. We were both in our 40s and didn't want to waste any more time and didn't want the uncertainty of it hanging over us like the sword of damocles. Bankruptcy in this country is still a nightmare - with the 5 year income attachment order.

If it happened to us now, we would go with the lump sum PIA. If you are lucky enough to owe the money to AIB / EBS / Haven - The IMHO / Grant Thornton arrangement is the way to go as their fees are covered by the banks.

If it's a different bank, use an experienced PIP to propose the deal - whether informal (preferable) or formal.

It's always a good idea to receive the lump sum from a third party as the third party can make it a condition that the lump sum is only available if the bank agrees to the write of the shortfall. Implicit in the third party lump sum payment is that you will have to pay the person back and therefore won't be able to pay anything to the bank.

Good luck
 
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