Meeting Payments but is it sustainable or advisable? Should we default?

Personal and income details
Income self: Working with spouse in an unofficial capacity - no official income.
Income history: I am out of work since April 2012
Income partner/spouse:
Back to Work Enterprise Allowance €1,400 per month
Self Employment: €2,600 per month variable

Income history: Previously employed: me, Unemployed: him, for 2 years after his construction business folded.
number of children 3 dependent
Amount of Mortgage Interest Supplement received 0 Not entitled
Home loan €450,000
Lender: EBS
Amount outstanding: €380,000
Value of home: €370,000ish
Interest rate: SVR
Monthly repayment €2,200
Amount in arrears €0


Investment property -
Lender: KBC
Amount outstanding: €60,000
Value of home: No real idea - probably €70,000
Interest rate:
Monthly repayment €500
Amount in arrears €0
Monthly rent received €480

Other loans and creditors -
Overdraft : €5,000
Term loan number 1: €300 monthly 6 months remaining (originally 5 years)
Term loan number 2: €500 monthly 10 months remaining (originally 3 years)
Credit Card 5 in total:Minimum payments only being made
Me: BofI €5,000
BofI 2 €10,000
MBNA €10,000
Spouse:
BofI €8,000
MBNA€16,000

Family Loans from Sister and Mother, €15,000 X 2

Other savings and investments 0


How important is retaining the family home to you? Very Important. We have been paying a mortgage now for over 20 years and still don't own a house. Never missed a payment. 23 years remaining on current mortgage.

We are meeting our obligations in terms of repayments - sometimes I don't know how and are very much inclined to pay all our debts. We also guard our good ICB rating as we don't want the new business blocked from access to credit down the line. However I know that with current levels of personal debt, we wouldn't get a loan anyway.

The high level of personal debt may be unsustainable and it certainly is taking it's toll on the family. We just feel that we have been struggling so long and we never have any disposable income and we just want to get back to a normal life where you can plan a family holiday or go out to celebrate a birthday. Not extravagant things just simple ambitions. But mainly not to wake up worrying about money every day. We're tired.

Income
BTWEA €1,400 per month - how long does this last?
Self Employment: €2,600
Children's allowance: ???

Total: €4,000

number of children: 3 - you mentioned 4 on the other thread, but that's ok I understand people are trying not to be identified !

Home
Mortgage: €380,000
Value: €370,000
NE: 10K
Interest rate: - what is the interest rate?
Monthly repayment €2,200
Term remaining: 23 years
Ages: 41 & 46 ? = 64 + 69 no possibility of extending the term

Investment property
Mortgage: €60,000
Value €70,000
Equity: 10K
Interest rate: ???
Term?
Monthly repayment €500
Monthly rent received €480
Subsidy - how much is it costing you?

Other loans & Credit cards (minimum payments only on credit cards - what are the minimum payments on each?)
1. Overdraft : €5,000
2. Term loan number 1: €300 monthly 6 months remaining (originally 5 years) - how much is this loan?
3. Term loan number 2: €500 monthly 10 months remaining (originally 3 years) - how much is this loan?
5. BofI €5,000
5. BofI 2 €10,000
6. MBNA €10,000
7. BofI €8,000
8. MBNA€16,000
9. Family Loan 1 €15,000
10. Family Loan 2 €15,000

Total: €84,000 plus about another 7K = 91K. Though 30K is family.

Outgoings
Mortgage: €2,200
Investment: €
1. € 0
2. € 300
3. €500
4.
5.
6.
7
8.
9. € 0
10. € 0

Total: € 3,000

Good news

I'll start with this today, you actually own nothing, and what you don't have they cannot take. Are there any business assets? Also you seem to have a good business that is making money, not a lot but not bad for a starting business.

Bad news

Your debt is unsustainable and we don't even have the full figures.

Advice

Don't borrow any more money from family no matter what.

You are in a position to negotate with the credit card companies. I would expect that they will play ball. Particularly if you cease making any payments. But you need to engage with them. Presumably loans 1 to 3 are business related? What bank is that?

You need to look at selling the 'investment' it looks like another drain on your finances, as in you be liable for tax at the higher rate and have a very low mortgage so not much mortgage interest relief. And if you're not registered with the PRTB and not declaring the rental income etc, then this is another time bomb. You can decide to tell the truth on that on here or not. But if you are not registered and not declaring the income you're going to be given out to.

Comment

You're either making up the figures for income or you're constantly living on borrowed money

Is the business going to make enough for you all to live on, would it do so if you had no debt.

Your questions

We also guard our good ICB rating

If you renege on debt your'e going to lose this. People often focus at all costs on robbing peter to pay paul to keep the ICP rating, but by doing so they can often end up in a worse situation

as we don't want the new business blocked from access to credit down the line. However I know that with current levels of personal debt, we wouldn't get a loan anyway.

You don't want any more credit, even if they gave it to you, what you have right now is not serviceable

Struggling can you do your best to fill out more information so that others will comment on your situation. I know it's difficult but do your best.

Personal Responsibility affects others e.g. kids.

Bronte said:

I hadn't realised you'd posted a comprehensive post in the money makeover until yesterday. In relation to this thread here, you've tried to do the right thing it seems to me, maybe you shouldn't have gotton into debt to pay creditors, but that's easy to say now. Is all your debt solely attributable to this? Did you get all your credit cards in order to pay off suppliers? Obviously Struggling you don't have to answer that if you don't want to.

I have great admiration for people in business who have done their upmost in trying to keep going. I'm wondering why you were not a limited company, with all the protections that can give you?

You're wondering now is this struggle worth it, but you seem to have a good business going forward, you mentioned your ages, but you're both still relatively young, everybody is having a difficult time currently, but it doesn't mean the good times (not the mad ones !) will come again, especially for those who work hard and persevere. Ireland needs people like you and your husband, to make a good business, to employ people to get the economy going again. But it's going to be difficult, it's a bad recession, not sure if it's as bad as the eighties.

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Hi Bronte,

No, I can't say there wasn't some personal spending added into the credit card bills. Nothing mad but definately there e.g. weekend away in a hotel etc. occasionally. But in general the cards were to help cash flow with the intention that they would be paid off (and they were, repeatedly through term loans) only to be run up again as there simply wasn't enough coming in to cover our costs.

I guess we always felt this was temporary and we would work our way out of it.I'm very nervous of giving up the struggle and wrecking our credit record as the new business may need credit down the line - though I hate the thought of ever taking out a loan again. The mortgage is loan enough. But I understand that businesses need capital to grow.

But - and this is the thing - I don't feel it's temporary anymore. We are to the pin of our collar for the last 5 years and there doesn't appear to be any let up in the next 5. Do I trade ours and our childrens happiness and wellbeing and continue servicing the huge debt to our detriment? Or will it benefit us later. We are just tired of living in a state of constant anxiety and continual deadlines for bills.

I would dearly love to sit down with someone experienced in the area with no vested interest who could look at our whole situation and say. "Keep going as you are" OR "This is what you need to do". Just an informed perspective.

S.

bronte said:

income

btwea €1,400 per month - how long does this last? til april and then 75% of that figure for a further year.
self employment: €2,600
children's allowance: €280 - i didn't count that as it goes on esb etc.

total: €4,000

number of children: 3 - you mentioned 4 on the other thread, but that's ok i understand people are trying not to be identified ! 4 kids but one is 23 - not dependent.

home

mortgage: €380,000
value: €370,000
ne: 10k - could be less. Probably not more. Best guess
interest rate: - what is the interest rate? i think 4.5%
monthly repayment €2,200
term remaining: 23 years
ages: 41 & 46 ? = 64 + 69 no possibility of extending the term - no but wouldn't wish to!

investment property

mortgage: €60,000
value €70,000
equity: 10k
interest rate:?
Term?
Monthly repayment €500
monthly rent received €480
subsidy - how much is it costing you? €80 per qtr mgmt fees and shortfall of mortgage

other loans


overdraft : €5,000
term loan number 1: €300 monthly 6 months remaining (originally 5 years)
term loan number 2: €500 monthly 10 months remaining (originally 3 years)

credit card - minimum payments only

1. Bofi €5,000
2. Bofi 2 €10,000
3. Mbna €10,000
4. Bofi €8,000
5. Mbna€16,000

family loan 1 €15,000
family loan 2 €15,000


we also guard our good icb rating - wrong ??

As we don't want the new business blocked from access to credit down the line

. However i know that with current levels of personal debt, we wouldn't get a loan anyway.

.

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Hi Struggling, I wasn't finished until now so you've replied too soon, so if you go right back through it all that would be great.