Swimming in a sea of debt - Debt Relief or PIP?

I have been swimming in a sea of debt since the down turn and have been doing my best to try and clear various debts bit by bit. I have finally realised that the best way forward may be to seek some sort of relief or arrangement.

At the moment, I am reduced to what I would call the ‘biggies’ which are as follows:

• A mortgage on an unfinished house (self-build) of €300K with another 80K required to finish the house and make it habitable. This is a tracker mortgage which I have been paying in full every month.
  
  
• A debt to a AIB Commercial Services from a failed business that I had for 88K plus interest. I have a €10 a week instalment order against this. AIBCS have a judgement against this registered on the above partially completed property. This arrangement is in place nearly 7 years.
  
  
• A debt to AIB for €30K (a personally guaranteed overdraft from the business) which is also being repaid at a rate of €10 per week through Cabot. This arrangement is in place over two years.
  
  
• A debt to Cabot for €16K (the residual from a personally guaranteed business asset which was seized and sold to reduce the debt). This is being repaid at the rate of €100 per month.
  
  
• A debt to Deutche Bank for €50K approx. (once again the residual from a personally guaranteed business asset which was seized and sold to reduce the debt). There is no repayment being made on this and none has been sought.
  

I have cleared other bank loans, credit card debt, Credit Union loads, personal loans to family and outstanding finance over the last few years. I have also been trying to repay the above as well.

I am separated from my wife now for over five years and we are trying to work out a separation agreement and divorce however the outstanding debt is making this difficult. I am trying to work out if we would qualify for some form of debt relief and I am looking for feedback on this. Both of us are working. My ex earns 26k gross per annum plus €10,400 in child support from me. I am self-employed and my 2015 and 2016 balancing statements were similar with an income of approx. €78K. I have no savings as I have been using every penny to address the debt.

My questions are as follows:

• Are we candidates for some form of debt relief?
  
  
• Does the fact that I am currently servicing all of the debts mean that the financial institutions will sit tight and bide their time to get their dues?
  
  
• For how long is a personal guarantee valid?
  
  
• In a situation like this is a financial institution liable to seek a fresh judgement once the current one expires?
  
  
• Based on the very low repayments to AIBCS and the zero repayments to Deutche Bank would it be better to try and negotiate a reduced settlement offer?
  

My main concern is the AIBCS judgement registered against the property. If I could get some resolution on this I think I could make progress against everything else.

I got myself into this situation and I have tried my best to rectify it and dig myself back out again but at the moment its getting difficult. I live at home with my parents My ex lives at home with her mother. We have no other property yet are saddled with a mortgage on a property that neither one of us can live in. This was to be a PPR.

If at all possible I want to try and keep the property and pay the mortgage. Due to an investment policy maturing next year I would have enough money to just about finish it however I appreciate this may not be as straightforward as I think.

Both of us want to proceed with the formal separation but the debt is making it very complicated.

All advice is welcomed with thanks and apologies for the length of this post.

Colm Horton said:

• Are we candidates for some form of debt relief?

• Does the fact that I am currently servicing all of the debts mean that the financial institutions will sit tight and bide their time to get their dues?

• For how long is a personal guarantee valid?

• In a situation like this is a financial institution liable to seek a fresh judgement once the current one expires?

• Based on the very low repayments to AIBCS and the zero repayments to Deutche Bank would it be better to try and negotiate a reduced settlement offer?

Click to expand...

Answer 1: Probably
Answer 2: Yes
Answer 3: Depends on how the guarantee was worded. Chances are you are on the hook until the loan is paid back or written off.
Answer 4: AIB might, the others less likely.
Answer 5: Possibly, but all angles should be looked at, not just negotiation. More like imposition of a settlement.

Some questions at this stage, btw the AAM troops are rallying, and there will probably be more questions:

How much would the PPR be worth if it were finished?
Are we correct in thinking that the outstanding amount of the PPR mortgage is €300k?
Which debts are in your name only? Her name only? Both names?

Thanks for the speedy reply and in answer to your questions:
I estimate that the PPR will be worth between 400k and 425k once complete. I have a formal valuation being carried out this Wednesday so will know more then.
To be precise, on the 31st December 2016 the outstanding amount on the PPR mortgage was €295K
The Mortgage, the €88k debt to AIBCS and the €30K debt to AIB (being serviced through Cabot) are joint debts. The remaining two debts totalling €66k are in my name only.

Here is a suggestion. The quickest way of your wife disentangling herself from you would be to declare herself bankrupt. She will probably go ballistic at the suggestion, so maybe have a solicitor or a marriage mediator present if you wish to put this possibility on the table. Her credit rating is shot anyway so no point in worrying about that. Bankruptcy lasts for a year, and it will make little difference to her current or future living standards. I'm not sure how RLEs are calculated if the bankrupt is living with a parent, she might have to pay the ISI the surplus over RLEs for 3 years. But it is a surefire way of legally relieving her of the mortgage, the €88k to AIBCS, and the €30k to AIB/Cabot. The moment the bankruptcy starts she is no longer responsible for these debts.

Once you are only responsible for yourself it will become easier to make decisions and achieve a resolution. The maturing of the investment policy provides an ideal carrot with which to make a settlement offer to all of your creditors. Not all of it mind, you need to keep something in reserve. Maybe offer to settle for 20% of the outstanding, which would be about €37k. Don't try to do this by yourself. You will need somebody with experience to liaise with the lenders on your behalf.

Separation/Divorce settlement. From your wife's perspective, it would be better for her to do her bankruptcy and then come after you for a divorce settlement. Let her do it, and deal with it when it happens. You may yet end up losing the house as part of a divorce settlement so don't put too much into it until the dust has settled. Good luck! You'll get there.

The definintion of insolvency is that you cant pay your debts in full as thry fall due. IIf you haven't already done so I would suggest you contact a Personal Insolvency Practitioner to see what your options are and possibilities of a bebt write off/write down - by law you have to look at the alternative debt solutions anyway before you go bankrupt. Have a look at backontrack.ie which has a list of PIPs based around the country.