Personal Insolvency Act or Bank agreement

H

Hunimus

Registered User
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Who can advice me?

My income:

Salary €2100 mth

Maintenance €400

Child benefit €130

Rental income €500

Total 3130



Arrears in house €80000

Mortgage outstanding €203000

House value? Maybe €250.000 maybe €300.000

Loan to expire Nov. 2022


I Have been offered agreement from bank: Capitalisation of arrears and extension of time of 10 years.

Monthly payment : €1388 which is sustainable

PIP has suggested I go with a PIA solution. I have no other debts.

Ex partner - joint owner in house - is going bankrupt.


PIP is claiming that I would be more secure in a PIA arrangement than with just the agreement with bank when having to face the OA – Official Assignee when they are going to claim their half in the equity in the house. It all depends on value of house I suppose. But what way would the OA treat me different being in an PIA agreement

I suppose I will be solvent with the bank agreement and insolvent for six years with the PIA agreement. So will the OA not ask of me to buy their half in the six year period? Stall the sale of house.

If house gets valude to €300.000 = €100.000 equity would mean I have to buy out the OA for €50.000. If I haven’t that kind of money I will have to sell house.

My main question is would a PIA agreement protect me from the OA?


Thanks for reading. Very hard to get advice in this complex case.
 
Given that the bank has offered you a sustainable mortgage, I do not understand how your PIP could advise you that you would qualify for a PIA. In order to qualify for a PIA you need to be unable to meet your debts as they fall due. However, if you accept the bank's deal, you will be able to meet your debts. (Effectively, you have to exhaust the bank's MARP process entering a PIA.)

The PIA would not protect you from the Official Assignee. The initial period of the Protective Certificate protects you for only 70 days from legal proceedings. The period of 70 days passes by very quickly. Even if you had a 5/6 year PIA, the Official Assignee could still obtain an order for the sale of the house.

Jim Stafford
 
thank you so much for answering.
I have now been advised from a financial adviser NOT to sign agreement with bank until I know what the OA is going to do.
but I have started paying the money.
I am after learning that the official assignee can demand half the rent if you are renting out the house.
I wonder if that also apply to the rent-room-scheme revenue has introduced to help people in mortgage trouble. live in house myself and rent out couple of rooms to get money to help paying mortgage. If OA takes half of that I won't be able to fulfill the new mortgage agreement.
It doesn't make sense but I suppose The OA is only interested in getting half of the equity.
Thanks for reading
Anette.
 
Jim would be more up to date than me on this! However, this house is in joint ownership and your ex partner is insolvent. If he goes bankrupt, this will bring his share of the positive equity in the house into the picture. You will need to buy out his share in order to get both the house and the HL transferred into your sole name. I can't see how the bank can offer you a long term agreement without taking his impending bankruptcy into consideration. have they been informed of this? Also, what has your PIP advised you on the consequences of your ex-partners bankruptcy? You don't seem to be getting good and complete advice on these issues. Also as Jim mentioned, you are solvent and should have no need of a PIP.
 
Thank you so much for answering.
Bank do know of My ex partners bankruptcy but they got fed up waiting for it to happen. It is Revenue making him bankrupt and they have put a judgement order on the house 2 1/2 years ago.
My pip has adviced me to seek legal advice which I did yesterday. Solicitor said - if I want to hold on to house- that I would need to get an engineers report on house pointing out all bad things - like house not build to planning to try and devaluate the house as much as possible. There are a few planning issues which does make the house impossible to sell at the moment only to a cash buyer, she said. Things like boundary problem, no parking provide at front road. Also things like timber windows in whole house needs replacing, to get quote for that. Other than that i cant see what else i can do than wait for the Official Assignee.
PIP wants to know soon which direction i want to go, so i will probably chose the bank agreement.
Thanks for reading it is very complex stuff for me.
 
Hunimus said:
PIP wants to know soon which direction i want to go, so i will probably chose the bank agreement.
Click to expand...
In my opinion this is not good advice. If you are paying an element of capital reduction on the property you are increasing the equity in the property which 50% would be owned by your ex-partner. This would come into play in any future insolvency. Also, he may at some stage look to realize the equity in the property himself. You may be in a position to claim a higher share of the property based on your contributions, however this can prove very messy. If the house is unsalable that's another issue, but the solicitor is correct in asking you to get a current value for the property to establish both the existing value and the level of current equity both of you have in the property.
 
I know, so should i just hold on paying the bank til i know more about what the OA is going to do?
I could definitely use the money on preparing this.
Thanks again for your answers.
 
Your main difficulty here is whether you can hang on to your current home. Yes, you can afford the extended repayments. However, it does appear likely that at some stage the 50% equity relating to your ex will be required to meet his debts. In that scenario you will be asked to buy out this equity or alternatively sell the property. This difficulty is compounded by the fact that you are uncertain about the bankruptcy. Maybe you should consider selling the property up the line and in the interim just meeting interest element of the mortgage. Your solicitor should be in a better position to give you a more focused opinion and of course you will need to take all options, both financial and personal into account in coming to a decision.
 
Anette

Sometimes the difficulty with receiving proper advice on this forum is that the people who respond to queries do not have all of the relevant information to properly advise. Sometimes "Original Posters" such as yourself do not appreciate the importance of key information. The fact the Revenue have a judgment mortgage on your partner's share of the house changes everything. How much is the judgment mortgage for? If it is for more than, say €100,000, then the Official Assignee may have little interest in the house.

I do not understand why your advisor has advised you to wait and see what the OA will do. We can predict with reasonable certainty what the OA will do. The OA has spoken at numerous conferences/seminars and has set out the practical steps that he takes. He acts in an open, fair and transparent manner. His main duty is to maximise the return to creditors. The biggest issue with the OA when it comes to family homes is that there is no time limit on him for dealing with the family home. In the UK the Official Receiver must deal with the family home within 3 years. In Ireland, the OA could decide not to make a move on the family home for, say, 20 years!

The difficulty you have is trying to predict what the Revenue will do with the judgment mortgage. I would need to see your partner's sworn statement of affairs to try and predict what steps they might take. If the Revenue were your partner's only creditors, then they could be clever and "walk away" from the judgment mortgage in a bankruptcy, and therefore "force" the OA to realise the equity and distribute it to them.

One alternative is for you to "buy" out the Revenue's judgment mortgage. The Revenue have to act commercially, and they might "sell" their judgment mortgage to you. If your partner owes "millions" to the banks, then the Revenue would be much more interested in "selling" their judgment mortgage. If you owned the judgment mortgage, then the OA would have little interest in the house.

Jim Stafford
 
Thanks so much for your reply.
I did show my solicitor the judgement order but she didn't mention it during our meeting.
Ex partner owes the revenue around €700,000. The bank €40000 and other companies €260,000
Just talked to him and he is willing to send his sworn statement of affairs to you if you have an address.
He is in court again for the bankruptcy 2. March
Should I contact the revenue before that and ask them would they sell the judgement order. I don't know what kind of money that would be. I have nothing at the moment.
I do have a mother in Denmark though who has some money after sale of small house. Problem is she is dement and it is hard to make arrangements with her.
Thanks again Jim

Anette
 
Anette

For a detailed review of what happens the family home in a bankruptcy you may read the following article on our website:

http://www.frielstafford.ie/personal-insolvency/what-happens-the-family-home-in-a-bankruptcy/

Based on your partner's other debts. the Revenue are unlikely to walk away from their judgment mortgage in the bankruptcy, as "their" equity would be shared with the other creditors. Accordingly, you should approach them to "buy out" their judgment mortgage. This process will not happen overnight, as the Revenue will probably await the outcome of the OA's review etc. So take your time in formulating an offer to the Revenue. Given the practical and costly difficulties with enforcing judgment mortgages, you should be able to negotiate a modest discount on their "equity".

Jim Stafford
 
Jim wouldn't the judgement mortgage against the husband just sit against his equity. So if they get a judgement for 200,000 say but there is €100,000 equity in the property held 50/50. Their judgement can only sit against €50,000. The OP still has €50,000 equity in the property.
If that is right there is no equity in the property from the partner which could be used to discharge his other debts.

The point all have missed here is that there probably is no equity anyway.
OP said mortgage €200,000, arrears €80,000, house could be worth €300,000.

In that case with all outlined above the OP maybe only has to find €10,000 to buy out OA. If the house is valued at €250,000, she could pay the €5,000 he demands where there is no equity.

Then the Rev judgement sits there until she sells, but it may be worth nothing depending on what the house is valued at.

My reading is that if this is unless the house is worth more than the combined sum of both mortgage and arrears,(bearing in mind they are capitalising these to a grand total of €280,000, then there will be nothing for the Rev to secure their judgment against as all equity will be taken up, and then soley in OP's name once she buys OA's interest for €5k.

That settles it doesn't it?
 
44brendan said:
In my opinion this is not good advice. If you are paying an element of capital reduction on the property you are increasing the equity in the property which 50% would be owned by your ex-partner..
Click to expand...

Do you or any of the others in this area know for sure how the 'equity' works out where one partner makes all the capital payments, surely by now there have been decisions, say in the bankruptcy cases?

If you guys don't know, than how can you advise clients. Is this not covered somewhere in the 'new' insolvency legislation or on the Insolvency service of Ireland's website/guidelines.
 
Hunimus said:
If house gets valude to €300.000 = €100.000 equity would mean I have to buy out the OA for €50.000. If I haven’t that kind of money I will have to sell house.
.
Click to expand...

Where are you getting 100K of equity.

Value 300K
Mortgage plus arrears 283K
Equity: 17K


Does the OA know about the rent from the rooms? Your ex surely is not privy to your financial circumstances and he surely has not been required to detail your income etc to the OA.

You have someone advising you. Before you pay any mortgage you would need to know the following:

a) what exactly revenue can do about their judgement mortgage
b) what rights the OA has now and in the future (20 years from now) will have on equity in the house in circumstances where currently there is basically zero equity and you would pay the full mortgage.

To my mind if you pay off everything you should be entitled to all the equity.

Ideally, it would be better if your ex was taken off the deeds and off the mortgage.

Can't believe how this area is such a minefield.
 
|Mortgage outstanding is 203,000. The standard is that this balance includes any payment arrears. Repayment arrears are never separated from the mortgage balance.
 
44brendan said:
|Mortgage outstanding is 203,000. The standard is that this balance includes any payment arrears. Repayment arrears are never separated from the mortgage balance.
Click to expand...

That's not clear to me.
 
Last edited:
My new mortgage with bank agreement is €203,000. Hopefully there will be very little equity once i get the engineers the engineers report and valuation.
 
Ok so that is now clear, the mortgage amount. So there is equity of between 50K and 100K.

You seem to be hinting at something underhand about bringing down the value, be very careful, the banks are not stupid.
 
Anette

Jim Stafford said:
Based on your partner's other debts. the Revenue are unlikely to walk away from their judgment mortgage in the bankruptcy, as "their" equity would be shared with the other creditors
Click to expand...

I thought I would clarify the above statement. If enough of the Revenue debt is Preferential (and given that the total debt appears to be €700,000, it is likely that at least some of the debt is Preferential) then Revenue could decide to "walk away" from their judgment and allow the OA to realise the equity and distribute the net proceeds to them.

To answer Bronte's query, if you make substantial capital payments on the mortgage between now and the time the house was sold in a bankruptcy, then your share of the equity would increase. Your share of the equity would also increase if you paid for capital improvements e.g. extension etc.

Jim Stafford
 
I still wonder about the revenues judgement mortgage. Will that not go away with my ex partners bankruptcy and me buying out the OA
Yes this is minefield. Really appreciate everyone's posts.
Thanks!
 
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