In the meantime, AIB contacted the MRS to say that she had two weeks to pay capital and interest or appoint an agent to sell the house or they will take action. Worth nothing that no repayments were ever missed or even late for this loan although I am aware the 5 years interest only which she had wasn't as originally intended (the house is in her name).
It sounds to me as if AIB have been very reasonable with you on this, if I understand it correctly. You have a cheap tracker which should be on capital and interest. They allowed you to pay interest-only for 5 years which has cost them a huge amount of money.
You have no prospect of paying off the capital so they are right to ask you to sell the property.
I have posted the text of the
AIB "Voluntary sale for less" scheme It applies to a home loan, but they may do it for an investment property. In that case they have agreed to pay the legal and auctioneering fees.
Your options
1) Agree to the voluntary sale
You will have a smaller shortfall.
They probably won't write it off, but they won't chase it either.
You could apply for a DSA but I am not sure that there is much point in doing that.
2) Hand back the keys
You will just have a bigger deficit.
Probably won't matter that much but if they do pursue the deficit e.g. by registering a judgement against your home, it would be worse.
In general, you want to work with your creditors. If there is any future court cases and you have acted in good faith and reasonably at all times, you will be in a better position.
3) Apply for a PIA
BoS could veto it, but if they don't you could be debt-free after 5 years (or possibly less)
AIB probably couldn't veto it.
|secured bit|unsecured bit
BoS |230|230
AIB|120|76
Total|350
120/350 = 34% which is very close to the 35% they need to veto it.
I think that the best option would be:
1) Agree to the voluntary sale - asking them to pay the costs of sale
2) When it is sold apply for a PIA as follows
Sell all properties including the family home.
Pay any excess income to the creditors over 2 years.
After you sell the AIB property, this will be the situation
|secured bit|unsecured bit
BoS |230|230
AIB|0|80
BoS want to be out of the market and I think that they would not veto this. As they have the majority of both secured and unsecured creditors and over 65% of the total creditors, AIB could not veto it , even if they wanted to.
Messy alternative which allows you keep the family home
Sell the AIB property
Apply for a PIA which involves keeping the family home which would mean keeping the mortgage as is, so you still have a mortgage of twice the value of the property.
BoS will probably veto that as they want out of the market.
But anyway, if you can get rid of a house worth €150k and a mortgage of €290k even if it is a tracker, you should do so.
You would get a fresh start after two years in my favoured approach.
Come to think of it, BoS might approve a PIA term of 1 month. You have no surplus income so why bother chasing you?
Alternative plan or the new best option
Speak to BoS now and tell them the story. Tell them that you will sell all the houses now rather than under a PIA. This should maximise their value.
If you sell all the houses, BoS will have no further interest in you.
Your PIP can apply for a very short term DSA and it will go through by default because BoS won't veto it.