E
emma09
Guest
Home|360|200|160
Rental 1|290|100|190|10k
Rental 2|245|180|65|€11k
Or borrowings|40|
Total|935|480|455
Income 44k
spouse: 20k
2 young children
Home|360|200|160
Rental 1|290|100|190|10k
Rental 2|245|180|65|€11k
Or borrowings|40|
Total|935|480|455
Income 44k
spouse: 20k
2 young children
E
emma09
Guest
First Income - 44K
Spouse - 20K Employed since last year
Other Income
Rental Prop 1 - 800 p/month
Rental Prop 2 - 950 p/month
Estimated Value of Investment Property
Property 1 Value - 100000 - Mortgage Originally 260000 - with arrears 290000
Property 2 Value - 180000 - Mortgage - 245000
Residential Property
Property Value - 200000 - Mortgage 360000
Total Approx Negative Equity - 415,000!!
Other borrowings
Cr Card 1 - 20,000
Cr Card 2 - 8200
Cr Union - 11,000
A lot of these loans to pay off mortgage / each other - spouse unemployed for almost 2 years -
Currently Paying
Invest Prop 1 - 500 ea month ( Stopped making payments since June 2012)
Invest Prop 2 - 420 ea month ( tracker - interest only)
Residential - 1000 ea month ( Reduced payments for 6months - arranged with bank )
Other loan Payments
Cr Card 1 - 500 ea month
Cr Card 2 - 50 ( arranged with bank)
Cr Union - 700
Savings - 2000
Children - 2 under 10 years
Life / Health Insurance /home insurance
Approx 500ea month
Approx expenses each month
Food400
Petrol200
Kids/Leisure200
Misc100
School100
Utility180including cable/internet/2 mobiles
NPPR 400 Each Year
Household - 300 Each Year
2 Cars -
2 Insurances - approx 800 each
2 car tax - approx 300 each
Need the car - not an option to sell cars - old .. wont get much out of them anyway!
My question is:
I have stopped making payments to 1 investment property as I was getting no where with them regarding reduced payments. The rent was coming @ 800 per month and I was making payments of 500. But each month they added on arrears and now my total mortgage has gone up from 260K to approx 290K in arrears even after paying 500 each month. I have requested "Voluntary surrender" of the property. The bank is not too pleased with this and is forcing me to make payment. I requested them to take reduced payments but they dont want to do that.
The remaining rent went to pay towards NPPR/ Household Tax / Home Maintenance/prop.management fees/revenue/Letting agent/accountant etc.
What are my options? The property is in negative equity of approx 190K. I will not be able to make any payment towards this loan once I sell it as I will have NO extra income coming from the property.
What will happen to this loan - which will effectively become "personal loan"? Am I right in thinking that?
The second investment property is on interest only with another bank. But in Negative Equity too. So is our residential property (In arrears of approx 6K - before we arranged reduced mortgage).
What is the worst case scenario for us handing back the keys of the Investment Property. Any suggestions?
I have had couple of tough years and we are getting back to some sort of normality but this property is pulling us down each month and at this stage I definately do not see keeping it as a viable option. But I am afraid that banks will force us to pay them 190K - which we definately are not in a position to do. Any helpful suggestions .. please. Thanks
Spouse - 20K Employed since last year
Other Income
Rental Prop 1 - 800 p/month
Rental Prop 2 - 950 p/month
Estimated Value of Investment Property
Property 1 Value - 100000 - Mortgage Originally 260000 - with arrears 290000
Property 2 Value - 180000 - Mortgage - 245000
Residential Property
Property Value - 200000 - Mortgage 360000
Total Approx Negative Equity - 415,000!!
Other borrowings
Cr Card 1 - 20,000
Cr Card 2 - 8200
Cr Union - 11,000
A lot of these loans to pay off mortgage / each other - spouse unemployed for almost 2 years -
Currently Paying
Invest Prop 1 - 500 ea month ( Stopped making payments since June 2012)
Invest Prop 2 - 420 ea month ( tracker - interest only)
Residential - 1000 ea month ( Reduced payments for 6months - arranged with bank )
Other loan Payments
Cr Card 1 - 500 ea month
Cr Card 2 - 50 ( arranged with bank)
Cr Union - 700
Savings - 2000
Children - 2 under 10 years
Life / Health Insurance /home insurance
Approx 500ea month
Approx expenses each month
Food400
Petrol200
Kids/Leisure200
Misc100
School100
Utility180including cable/internet/2 mobiles
NPPR 400 Each Year
Household - 300 Each Year
2 Cars -
2 Insurances - approx 800 each
2 car tax - approx 300 each
Need the car - not an option to sell cars - old .. wont get much out of them anyway!
My question is:
I have stopped making payments to 1 investment property as I was getting no where with them regarding reduced payments. The rent was coming @ 800 per month and I was making payments of 500. But each month they added on arrears and now my total mortgage has gone up from 260K to approx 290K in arrears even after paying 500 each month. I have requested "Voluntary surrender" of the property. The bank is not too pleased with this and is forcing me to make payment. I requested them to take reduced payments but they dont want to do that.
The remaining rent went to pay towards NPPR/ Household Tax / Home Maintenance/prop.management fees/revenue/Letting agent/accountant etc.
What are my options? The property is in negative equity of approx 190K. I will not be able to make any payment towards this loan once I sell it as I will have NO extra income coming from the property.
What will happen to this loan - which will effectively become "personal loan"? Am I right in thinking that?
The second investment property is on interest only with another bank. But in Negative Equity too. So is our residential property (In arrears of approx 6K - before we arranged reduced mortgage).
What is the worst case scenario for us handing back the keys of the Investment Property. Any suggestions?
I have had couple of tough years and we are getting back to some sort of normality but this property is pulling us down each month and at this stage I definately do not see keeping it as a viable option. But I am afraid that banks will force us to pay them 190K - which we definately are not in a position to do. Any helpful suggestions .. please. Thanks
Brendan Burgess
Founder
- Messages
- 52,122
The simplest option for you is to go bankrupt in the UK.
These figures are simply unmanageable. Handing back the keys on one property won't solve the problem for you.
You could try a Personal Insolvency Arrangement
When the new law is passed, you could apply for a Personal Insolvency Arrangement. The banks would have to approve this and may not do so. In which case, you are back to the bankruptcy option.
A potential PIA might be as follows:
Sell the two investment properties and pay the proceeds to the lenders. This would leave you with around €300k of unsecured debt and negative equity of €60k on your home.
Your active mortgage could be reduced to €200k and the balance of €260k deferrred. Interest would be charged on the deferred balance and if your home was ever sold, you would use the proceeds to pay off both the active loan and the deferred balance.
The PIA would last for 5 years, during which time you would spend most of your available income after essentials on paying down the unsecured debt. At the end of the 5 years, the balance would be written off.
You would end up after 5 years in severe negative equity but with no other debts.
I really think you should both go to the UK and go bankrupt. You could start again back in Ireland towards the end of next year with no liabilities at all.
These figures are simply unmanageable. Handing back the keys on one property won't solve the problem for you.
You could try a Personal Insolvency Arrangement
When the new law is passed, you could apply for a Personal Insolvency Arrangement. The banks would have to approve this and may not do so. In which case, you are back to the bankruptcy option.
A potential PIA might be as follows:
Sell the two investment properties and pay the proceeds to the lenders. This would leave you with around €300k of unsecured debt and negative equity of €60k on your home.
Your active mortgage could be reduced to €200k and the balance of €260k deferrred. Interest would be charged on the deferred balance and if your home was ever sold, you would use the proceeds to pay off both the active loan and the deferred balance.
The PIA would last for 5 years, during which time you would spend most of your available income after essentials on paying down the unsecured debt. At the end of the 5 years, the balance would be written off.
You would end up after 5 years in severe negative equity but with no other debts.
I really think you should both go to the UK and go bankrupt. You could start again back in Ireland towards the end of next year with no liabilities at all.
Brendan Burgess
Founder
- Messages
- 52,122
Questions
Who are the lenders for each individual property? This is important as you need 50% of secured creditors to approve any deal. So any lender with 50% of your lending could veto a deal.
You also need to get the approval of 65% of all your creditors. So any combination of creditors with 35%, could veto it.
What interest rates are you paying on each loan? If they are cheap trackers, they might be more open to doing a deal. The lender on your home would not agree to reduce the mortgage to €200k on a cheap tracker. They would be better off if you sold the house so that they could lend on the money again at the SVR.
Who are the lenders for each individual property? This is important as you need 50% of secured creditors to approve any deal. So any lender with 50% of your lending could veto a deal.
You also need to get the approval of 65% of all your creditors. So any combination of creditors with 35%, could veto it.
What interest rates are you paying on each loan? If they are cheap trackers, they might be more open to doing a deal. The lender on your home would not agree to reduce the mortgage to €200k on a cheap tracker. They would be better off if you sold the house so that they could lend on the money again at the SVR.
Brendan Burgess
Founder
- Messages
- 52,122
I don't think that this is a good idea. You should be acting in good faith. I would think that the rent from a property should be paid in full to that lender and should not be used to pay costs of other properties or your living costs.
They are not "adding on arrears". They are charging you interest on your loan. If you are not paying that interest, the loan balance is rising. If you are paying the interest, the loan balance is remaining the same.
It has not risen by €30,000 due to arrears. Are you sure that this is the right balance?
It might be worth your while familiarising yourself with how mortgages and arrears are calculated
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emma09
Guest
Go bankrupt in UK....
This would mean I will have to leave my full time permanent job and my husband who got work after tough 2 years...and move to UK with approx 2000 savings which is nothing with 2 young kids. What will we do in UK? How will we manage in UK?
This would mean I will have to leave my full time permanent job and my husband who got work after tough 2 years...and move to UK with approx 2000 savings which is nothing with 2 young kids. What will we do in UK? How will we manage in UK?
Stockmaster
Registered User
- Messages
- 25
I agree with Brendan, but I think you need to get help and try to get a write down on your mortgages, you should contact newbeginning for help. there is contact details at the end of their page, search for it in google as I am not able to post the web link yet
Brendan Burgess
Founder
- Messages
- 52,122
Hi emma
There is no easy solution. There is no solution which does not involve hardship and paid. You can't just hand back the keys on some property or other and assume that everything will be fine.
If you don't go to the UK, you will be effectively in huge debt and negative equity for the rest of your life.
Many people have emigrated looking for a job. One can go ahead first and get fixed up. It's not idea. It's not easy. But after 18 months, you will be debt free.
Brendan
There is no easy solution. There is no solution which does not involve hardship and paid. You can't just hand back the keys on some property or other and assume that everything will be fine.
If you don't go to the UK, you will be effectively in huge debt and negative equity for the rest of your life.
Many people have emigrated looking for a job. One can go ahead first and get fixed up. It's not idea. It's not easy. But after 18 months, you will be debt free.
Brendan
Brendan Burgess
Founder
- Messages
- 52,122
Hi boy
Good point. Bankruptcy in Ireland is worth considering.
The downsides are
1) Won't be able to apply for about a year until the legislation is in force
2) Three years instead of one year in the UK
3) A payment order could be made for up to a further 5 years.
If someone absolutely can't go to the UK, then the Irish option is better.
Brendan
Good point. Bankruptcy in Ireland is worth considering.
The downsides are
1) Won't be able to apply for about a year until the legislation is in force
2) Three years instead of one year in the UK
3) A payment order could be made for up to a further 5 years.
If someone absolutely can't go to the UK, then the Irish option is better.
Brendan
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emma09
Guest
Brendan
I still don't understand why or how can I go bankrupt. I am sorry maybe I am being completely stupid in thinking that bankruptcy both in UK and Ireland is impossible for us as both myself and my husband are PAYE workers and not running a business.
Bankruptcy options:-
Sell 2 investment properties which is fine with us.
Our home..in negative equity too...what happens to that ? Do we have to sell that too and basically be homeless? If we go to UK...where do we live with 2 young children? Will we be entitled to any social welfare in UK?
If we stay in Ireland d will we get any help from Irish state welfare....rent etc ?
I still don't understand why or how can I go bankrupt. I am sorry maybe I am being completely stupid in thinking that bankruptcy both in UK and Ireland is impossible for us as both myself and my husband are PAYE workers and not running a business.
Bankruptcy options:-
Sell 2 investment properties which is fine with us.
Our home..in negative equity too...what happens to that ? Do we have to sell that too and basically be homeless? If we go to UK...where do we live with 2 young children? Will we be entitled to any social welfare in UK?
If we stay in Ireland d will we get any help from Irish state welfare....rent etc ?
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emma09
Guest
Also meant to ask...if we stay in Ireland do we both need to leave our jobs and become unemployed ..do we give up perfectly good jobs which would be extremely hard to find again in 3-5 years...considering we are nearly 40!!!
Emma, declaring bankrupty does not require you to be unemployed-they are different things. Unemployment = no job, no income. Bankrupcy = not being able to pay back money borrowed. You could have an imome of 100,000's and still be bankrupt. The trustee in bankrupcy would just allow you reasonable living expenses, for the whole period of you bankruptcy, which will be much longer in Ireland, than the UK. Finally, I cant see you being able to keep the your house. Assuming you have an income, the trustee would have to allow you money for rent.
First off you cannot go bankrupt in Ireland, only very rich people can do that.
Secondly the new Insolvency bill which has been written by the banks, well I wouldn't be relying on that either.
So what are your options. The banks are not being real, they are pushing the can down the road. How do you force them to get real. Maybe you cannot. But you have to take control.
Option 1. Give up your jobs. Then you cannot afford anything and then the banks will have to deal with you. They will not do anything until you do something. If you continue to play ball all you are doing is digging a bigger hole for yourself. This hole is one of mounting debt, family fights, depression and a never ending cycle of who to pay next and how am I going to get the money for the next bill. I imagine this is where you are at currently. No doubt your relief at your husband getting a job meant you thought for a while you were getting back on track. Unfortunately with your debts on track you are not.
Option 2. UK bankruptcy.
This is the option I would take. 12 to 18 months and start again. Yes give up the good jobs. So what. Yes it's a hardship for a while, but what's 18 months where there is some light when where you are now I can see no end to misery. Personally I'd be happy to walk away from the financial mess you are in and give up my good job and go get a cleaning job or work in a pub because anything is better than where you are at.
Option 3. New insolvency bill. This is a myth perpetrated by the government that it will solve things. Not a chance. So far one person (David Hall) has called a spade a spade.
Option 4. You get your banks to agree to you selling the 2 investment properties and letting you off the negative equity. So far no one has demonstrated that banks are willing to do this.
Emma would you be better off on the dole? Do you have any money to pay, say your next bill ? Is shopping for groceries difficult.
There is a very interesting story at the moment of the Roscommon couple who are about to lose their home. A lot of people should read that. To summarise, if you cannot pay your mortgages, eventually the bank will take everything they can. They will wait, give you false hope (where you Emma are right now with them pretending to play ball by allowing you interest only etc) but they will come after you the minute you have anything.
Sorry if this is negative. It actually isn't because you actually have options and all you need is the strength to take the option.
Secondly the new Insolvency bill which has been written by the banks, well I wouldn't be relying on that either.
So what are your options. The banks are not being real, they are pushing the can down the road. How do you force them to get real. Maybe you cannot. But you have to take control.
Option 1. Give up your jobs. Then you cannot afford anything and then the banks will have to deal with you. They will not do anything until you do something. If you continue to play ball all you are doing is digging a bigger hole for yourself. This hole is one of mounting debt, family fights, depression and a never ending cycle of who to pay next and how am I going to get the money for the next bill. I imagine this is where you are at currently. No doubt your relief at your husband getting a job meant you thought for a while you were getting back on track. Unfortunately with your debts on track you are not.
Option 2. UK bankruptcy.
This is the option I would take. 12 to 18 months and start again. Yes give up the good jobs. So what. Yes it's a hardship for a while, but what's 18 months where there is some light when where you are now I can see no end to misery. Personally I'd be happy to walk away from the financial mess you are in and give up my good job and go get a cleaning job or work in a pub because anything is better than where you are at.
Option 3. New insolvency bill. This is a myth perpetrated by the government that it will solve things. Not a chance. So far one person (David Hall) has called a spade a spade.
Option 4. You get your banks to agree to you selling the 2 investment properties and letting you off the negative equity. So far no one has demonstrated that banks are willing to do this.
Emma would you be better off on the dole? Do you have any money to pay, say your next bill ? Is shopping for groceries difficult.
There is a very interesting story at the moment of the Roscommon couple who are about to lose their home. A lot of people should read that. To summarise, if you cannot pay your mortgages, eventually the bank will take everything they can. They will wait, give you false hope (where you Emma are right now with them pretending to play ball by allowing you interest only etc) but they will come after you the minute you have anything.
Sorry if this is negative. It actually isn't because you actually have options and all you need is the strength to take the option.
Not a lot to add to this except one comment, not a hope in hell would I give up a job if I had one in the present climate and the possible future one, given your ages as well and small children. It's fine to say work in the pub, corner shop etc, you won't actually get a job there unless you have previous experience of that either. If there is any solution that does not involve giving up your job that is the one I would go for, social welfare is going to have to be cut so whether or not you would be better off on it at the moment is irrelevant in my opinion, the future will be tougher.
Brendan Burgess
Founder
- Messages
- 52,122
Hi Emma
Steve Thatcher has written a series of excellent points on the topic of UK bankruptcy.
UK bankruptcy is not an easy option but it's so much easier than the existing and proposed Irish options.
I think that people like you who would benefit from UK bankruptcy but don't want to or can't go to the UK, should be lobbying your TDs to change the Personal Insolvency Bill to allow you go bankrupt at home.
Going bankrupt in the UK
How to go bankrupt in England - Steve Thatcher
A comparison of Irish and UK bankruptcy procedures Steve Thatcher
Where is the best place to go bankrupt in the UK? Steve Thatcher
Establishing your COMI in the UK - Steve Thatcher
Case studies of people who have gone bankrupt in the UK - Steve Thatcher
Steve Thatcher has written a series of excellent points on the topic of UK bankruptcy.
UK bankruptcy is not an easy option but it's so much easier than the existing and proposed Irish options.
I think that people like you who would benefit from UK bankruptcy but don't want to or can't go to the UK, should be lobbying your TDs to change the Personal Insolvency Bill to allow you go bankrupt at home.
Going bankrupt in the UK
How to go bankrupt in England - Steve Thatcher
A comparison of Irish and UK bankruptcy procedures Steve Thatcher
Where is the best place to go bankrupt in the UK? Steve Thatcher
Establishing your COMI in the UK - Steve Thatcher
Case studies of people who have gone bankrupt in the UK - Steve Thatcher
terrontress
Registered User
- Messages
- 138
If you are €455k in negative equity and going to the UK for a year lets you walk away from that, surely that is the same as earning €455k in one year and paying off the debt.
Do you earn €0.5m per year between you?
Giving up two jobs does not seem so difficult in that context.
Furthermore, there is lots of work in London at present.
Do you earn €0.5m per year between you?
Giving up two jobs does not seem so difficult in that context.
Furthermore, there is lots of work in London at present.
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emma09
Guest
Brendan and others..thanks for all your replies...
Someone suggested we can take cleaning jobs...not going that root. We did not spend years studying and working hard and then end up as cleaners. I wouldn't call myself stuck up person but we all have certain lifestyles that we can't just change. I don't mean we still continue to dine &wine in same style but still we have to keep certain dignity for ourselves.
Someone suggested rely on social welfare...again above reasons apply..we will avoid it as much as possible to look for handout from welfare system
This brings us back to my original proposal which was to sell 1 investment property which is approx 200k in negative equity and keep the home and 2nd investment until the market changes. If only bank agrees to this and after all our bills and expenses paid anything leftover...I could pay them 50 to 100 euros a month for rest of my life. I know it won't pay the full 200k but surely that's better option where we are left with almost nothing..then rely on the state for rent allowance ...and other such benefits.
If bankruptcy allows you to walk away from ALl of our debts...both financially and morally wouldn't it be a better option and at least we still continue to make small payment to the bank...however small the amount is.
Someone suggested we can take cleaning jobs...not going that root. We did not spend years studying and working hard and then end up as cleaners. I wouldn't call myself stuck up person but we all have certain lifestyles that we can't just change. I don't mean we still continue to dine &wine in same style but still we have to keep certain dignity for ourselves.
Someone suggested rely on social welfare...again above reasons apply..we will avoid it as much as possible to look for handout from welfare system
This brings us back to my original proposal which was to sell 1 investment property which is approx 200k in negative equity and keep the home and 2nd investment until the market changes. If only bank agrees to this and after all our bills and expenses paid anything leftover...I could pay them 50 to 100 euros a month for rest of my life. I know it won't pay the full 200k but surely that's better option where we are left with almost nothing..then rely on the state for rent allowance ...and other such benefits.
If bankruptcy allows you to walk away from ALl of our debts...both financially and morally wouldn't it be a better option and at least we still continue to make small payment to the bank...however small the amount is.
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emma09
Guest
Apologies for spelling errors.. using phone ...out walking with kids!!! Since that's the only fun thing I am able to do this all summer .....
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