Do BOI currently accept PIA writedowns?

[Redzer]

My buddy has been struggling with mortgage debt for several years as he was self employed with 2 BOI mortgages (1 PPR and 1 BTL) but couldn't keep up his repayments due to the recession. He tried to keep everything going as long as he could and to continuously make partial repayments on both properties but to little avail despite horrendous stress and even Depression. Eventually the BTL was sold by the bank with a €100k shortfall which he's not paying towards and he may now be coming to the point of insolvency and losing his PPR.
However he has recently got a decent permanent job (€32k p.a.) and has been making the full repayments on the PPR but still wouldn't be able to repay the €100K. I'm going with him to meet a PIP this week but he thinks its to discuss Bankruptcy. He's divorced and lives alone so the PPR doesn't count as a Family Home so he could lose it?

If he's made Bankrupt the sale of the PPR will only cover its mortgage and fees and there'll be no 'sale' surplus for the BTL €100k or other unsecured debt (Credit Union €10k, Family €25k). He would then have an 'income' surplus of €400 p.m. approx. (lower room renting cost v current PPR mortgage repayments) available to repay debts but wouldn't that be shared between all the unsecured Debtors or does the BTL €100k get preference? If he was bankrupt I presume he'd have to still repay that surplus income over his Reasonable Living Expenses for 3 years. If so the BTL €100k might only get €10k but my buddy would've lost his home.

Is there any chance BOI would write down the €100k and take €10k upfront but leave him with his home via a PIA or alternatively does a 'no-veto' PIA apply if its a PPR but not a Family Home?

 

[Brendan Burgess]

He's divorced and lives alone so the PPR doesn't count as a Family Home so he could lose it?

If he lives in the home , it's his family home.

He could lose it, but it's very unlikely if he is making the full repayments.

It sounds like a perfect candidate for a PIA. If he can pay the mortgage on his family home, the PIA will do a settlement on the rest of the debt. The good news here is that whatever BoI decides will take effect. They can approve a PIA even if the CU objects.

I don't see the need to go bankrupt here.

I don't know enough about BoI's practices, but if it's reasonable they will probably go for it. If they don't, the court will probably impose it.

Brendan

 

[TLO]

A couple of comments.

1) The PPR counts as a Family Home. In your friend's case, "a family of one".

2) There may not be a need for a PIA. First thing to try would be for your friend's PIP to ask BOI if they would accept €10k in "Full and Final Settlement" of the €100k shortfall. BOI's public statements indicate that they won't, but in practice, behind the scenes, they might. This would be known as an "informal arrangement" in that it doesn't make use of a legal process.

3) A "no-veto" PIA would work but your friend must have been in arrears on his PPR on 1 January 2015. Failing that, a DSA might be a runner as all debts appear to be unsecured.

4) Plus one to Brendan's view that bankruptcy is not needed here. It's important that your friend does not go bankrupt as the sole owner of a PPR has a higher risk of losing their home in a bankruptcy situation than a couple who jointly own a property and one goes bankrupt.

5) Putting forward a PIA/DSA is a valuable exercise. Even if it doesn't get approved the fact that it was proposed can be used to successfully defend subsequent bankruptcy proceedings brought by a creditor. This is because creditors will usually receive more under a PIA/DSA than they would if a bankruptcy order is made.

6) Keep encouraging your friend to keep the chin up. It's all there to play for. If he wants to keep his house he will.