Case study Ex husband abandoning house in negative equity

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Malenka

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[FONT=&quot]Personal and income details
[/FONT][FONT=&quot]Income self: Full time employed[/FONT]
[FONT=&quot]Income history: 9 years employed with same company
Income partner/spouse: Full time employed
Income history: 9 years employed with same company
number of children 0
Amount of Mortgage Interest Supplement received 0[/FONT]
[FONT=&quot]
Home loan
Lender: PTSB
Amount outstanding: [/FONT]273,000[FONT=&quot]
Value of home: 140,000
Interest rate: 4.34% [/FONT]LTV[FONT=&quot]
Monthly repayment [/FONT]1,007.92[FONT=&quot]
Amount in arrears 0


Other savings and investments
Nothing

How important is retaining the family home to you?
I don't care about keeping the family home.

What is your preferred realistic outcome?
I will never be in a position to repay the home loan. So I want to sell the house and deal with the shortfall[/FONT]


[FONT=&quot]Any other relevant information[/FONT]


[FONT=&quot]As requested, using the template [/FONT][FONT=&quot]for some humble request for help and advise. Thanks a lot in advance.[/FONT][FONT=&quot] :)[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]My ex-husband has left the country about 3 years ago to take up employment on the subsidiary of the Company we both work for in Brazil. Since then, he has been sending money towards the mortgage to his personal account to which a Direct Debt is set up. I send also half of the mortgage repayment each month and I do live in the property.[/FONT]

[FONT=&quot]Recently he has informed that he will no longer be sending any payments over as he has high living expenses and found a partner and had a kid. I cannot pay the full amount of the mortgage repayment as it is, and to make matters worse, TRS is about to end. He said he will be making the last payment in December and after that, I’m on my own. [/FONT]

[FONT=&quot]We currently have no separation agreement in place, since he just left the country and I haven’t seen him since. [/FONT]

[FONT=&quot]I am not sure if it improves my position to stay in the family home, and agree with the bank to pay Interest Only (as I don’t see what could be done after the IO period passes) or if I should just pack and go somewhere else and try to rent out and cover the rest of the mortgage. The first option would give me room to breathe but long term I don’t see any decent outcome. The second would leave me seriously broke but would mean I could meet the repayments. [/FONT]

[FONT=&quot]My preferred option would be to sell the house and repay the bank in a reasonable matter. I’m sure my ex would agree to the sale but there’s no way he will pay them back, so they would still chase me. [/FONT]

[FONT=&quot]Bear in mind that if the mortgage goes in arrears the bank would have reason to chase him, but he is on the other side of the world, and apart from giving him the details of our company subsidiary I’d have not much else to give them. [/FONT]

[FONT=&quot]I know this has been much discussed and I read a lot about it here, but if you have anything to add to my specific case and how can I plan my next steps it would be greatly appreciated.[/FONT]
 
I know this may be OT, but have you divorced? You say he has a wife and child, are they from before you married him? Is he planning on staying in Brazil? You list a partner/spouse, is this your ex-husband or a new partner?

He may want nothing more to do with the house, but if his name is on the deeds then he can't walk away. If he is planning on staying in Brazil this may not affect him though.
 
Hi all, thank you for your replies.

The partner/spouse listed is my ex-husband who I have the mortgage with.
We do not have children. My income is 35k.

He has a new partner, and a child with this person. We are not divorced, and don't have a separation agreement. We are still married legally. He has no plans to move back here.

I understand he cannot walk away in theory, but in practice he has done just that. He is very aware that the bank is unlikely to chase him.

To rent a room where I live would be the easiest thing to do at the moment but I don't want to put up with this for the next 29 years so he has his share in the end. I don't mind to go to a more painful solution but I would like to see a future away from this.
 
273,000 @ 4.3% = €12,000 a year.

Rent received from tenant €6,000

Net cost of your house €6,000 a year.

Salary : €35,000

There is no easy solution. I don't even think you can take short term pain, with a view to a long term solution. You bought a house with someone who is abandoning his liabilities. You bought a house which has fallen hugely in value.

Don't worry about the next 29 years.
Worry about now.
You can afford to pay the interest on this mortgage and get the benefit of the house.
It's your lifestyle choice whether you want to subsidise the €12,000 cost with the rent from a tenant.

I don't want to put up with this for the next 29 years so he has his share in the end
Click to expand...

It's very important that you do not pay any capital off the mortgage, because as you say, he will benefit from this.

Ptsb won't like this, but you can tell them that this is all you can afford. If they wish to repossess the house, you will voluntary surrender it. Unfortunately you will probably have the €133,000 shortfall hanging over you for the next 29 years in that event.

Other options

You might consider putting a proposal to them under the new insolvency legislation. That you will sell the house and pay as much as you can off the shortfall over the next 5 years. I doubt if they will go for that, but I just don't know.

Would you consider moving to the UK for bankruptcy? If you do so, you could be back home for Xmas 2013 free of your mortgage. Your husband would now be liable for the mortgage in full, and it would be his headache and ptsb's.

Brendan
 
Hi Brendan,

If it is important that I don't pay capital off the mortgage, the only option really would be to go to interest only. Is that correct?

To[FONT=&quot] sell the house and pay as much as I can off the shortfall over the next 5 years would be the ideal solution to me. I just don't know how to convince the bank of that. [/FONT]

I am not sure if this information changes anything, but both me and my ex are Brazilian. So the option to run away from the mortgage is also available to me. I don't want to threaten anyone, but does that affect my bargaining powers in any way?

(Because of the above, UK bankruptcy is out of the question)
 
Malenka said:
Hi Brendan,

If it is important that I don't pay capital off the mortgage, the only option really would be to go to interest only. Is that correct?
Click to expand...

That is correct. Each monthly repayment has a capital and interest element. If you just pay the interest, you are repaying no capital, and the interest remains the same.

To[FONT="] sell the house and pay as much as I can off the shortfall over the next 5 years would be the ideal solution to me. I just don't know how to convince the bank of that. [/FONT]
Click to expand...

If that is the ideal solution, then put that proposal to ptsb now. They will probably reject it. But I just don't know.

If they reject it, you have no choice but to go interest only.

By June 2013 , we should have the Personal Insolvency Bill in effect, and they might be more flexible then.


I am not sure if this information changes anything, but both me and my ex are Brazilian. So the option to run away from the mortgage is also available to me.
Click to expand...

That would be a solution ok. But it's better to tie up the loose ends and to do things with their agreement. Only impose a solution on ptsb if you can't reach an agreement.
 
Hi Malenka

I have proposed before and will do again. The best situation for you here is to either go interest only and use the place to live in (12k p.a. seems a reasoanable rent) OR to stop altogether and offer a voluntary surrender. Unfortunately the bank will not do anything as long as there is someone paying. If you are happy to stay then just write a letter and tell them you are changing to interest only. If anyone calls up threateneing any form of action, tell them you will stop payments altogether and default straight away. DONT put this in wriiting. Then you need to make a call, either keep paying the interest only as long as they have accpeted this OR stop paying, and wait for the court case. Keep all correspondance so you can show you werer trying in the court and offer the surrender as a solution if nad when that time comes. There will be no problems or come backs from the court system for anyone who tried to sort things out.
 
Malenka

1 ) Elcato is absolutely right. Interest only is the best path for now.
NO bank will not take your house if you pay interest only - at least , not for many many years. Banks do not want to take houses and if someone is paying the interest then this is much better than thousands of others who are paying nothing at all.

I believe - and someone else can correct me - that no house has yet been repossessed when it is the persons only home and that person has been paying the interest on the loan.

Do not be bullied by bank staff. Read the many posts on AAM about banks should not bully you, should not make nasty phone calls etc. YOU are the one in charge.


2) You state that you work for the same company as your husband who has deserted you and is not paying his legal obligations. I don't suppose you want the company to get involved but it does seem odd that one employee can so adversely (and possibly illegally) affect another employee without intervention from the company.

3) Lawyers? Divorce settlement ? Actually this should be the first priority. he has left you in a nasty position and it must be legally settled. Things need to go to court asap -which will involve his participation -refusal of which should surely be another black mark FOR HIMwithin the company.
 
Hi guys,

Thank you very much for your answers.

I can see that the best option would be as proposed by Elcato. This is likely to be the road I'll take. I really want to get things sorted here. Abandoning the country would be very heartbreaking, but at same time there is no hope I'll be able to ever pay this back, as my income is unlikely to get higher and I want to move on with my life and possibly have children in the near future. Plus I'm not getting any younger.

In regards to oldnick's comments, I don't know if the company can do much here, but I know his reputation is important to him. I will certainly inform the bank of his whereabouts and also ask them to contact the Irish branch of the company (since they might have them as his employer on record anyway). Other than that I am not sure, but I will check it out.

Divorce proceedings can only start after 4 years in Ireland. Solicitors I asked have told me that a separation agreement is unlikely to improve anything, as he won't come over to agree or sign. I'm better off getting the divorce as soon as the required time passes.

Thanks again :)
 
Update

Just thought I'd give an update here.

I have been to PTSB on a first meeting about this issue after my december repayment fell in arrears.

Basically these were the suggestions they gave me:

-Rent out the apartment and move somewhere else (bearing in mind that the rent would not cover the mortgage repayments - so they suggest I deal with the shortfall while paying for somewhere else to live).

-Pay the full amount of the mortgage in order to "prove" that I am able to. I could then apply to get my ex of the mortgage. The fact that this means about 50% (more when TRS is gone in a few months) of my salary didn't seem to be important.

-Stop paying my credit card and cut out my expenses further and pay the full mortgage instead.

I filled out the SFS stating quite clearly that I cannot pay the full amount of the mortgage, so I found that all of the above are just to put pressure on me to extract everything they can.

Then I was told that I would be put on 6 months Interest only in order to give me time to decide how to deal with the situation, but that I would be expect to pay the full amount after that. The full amount after TRS is finished will total about 1500 euros, while I'm taking home 2200 euros. Then I was told that if I surrender the apartment, I would have to pay the shortfall on my current interest rate over the rest of the term, which they calculated at 800 euros pm for 29 years. To finish off they mentioned prosecution, just in case I was not terrified enough.

I found this went a lot worse than expected. I will go on Interest only now at 630 euros for 6 months, but I feel like I have to take a stand here sooner rather than later. Any suggestion on what to plan next would be greatly appreciated. I don't care about keeping the apartment or not. I just cannot afford this by myself. Thanks for all your help in advance.
 
Malenka said:
To finish off they mentioned prosecution.
Click to expand...

Prosecution for what ? Do they think its crime not to be able to pay your mortgage?
What about it being made a crime to lend recklessly to people?
How can anyone be supposed to do a deal with people so unaware of the role they have played in the customers considerable problem?
 
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Well you were very brave to go and see them. Were you on your own and how many bankers were there?

In relation to prosecution, don't worry about that, what they probably mean is that if you don't pay back the full mortgage they will take you to court to try and get a court order, but they know full well that even if they were to do this, if your income can not sustain a full mortgage no court will order it. Courts will take into consideration your living costs etc before ordering you to make any payments.

Can your ex not divorce you in Brazil faster than you can divorce him in Ireland?

Interesting that they told you to default on your credit card. I've heard of this before, including them telling a relation of mine to default on a subprime mortgage. But they won't put that in writing. If you do default on the credit card you risk then credit card company taking you to court for an instalment order. Occasionally credit card companies do write off the entire debt depending on the financial circumstances of the defaulter.
 
Hi Melenka

Well done. You have stood up to them. As I stated before they will threaten all sorts but can really do nothing. From here on in you need to just deal with them in writing only. Put your proposal for interest only to them in writing. If they ring up and say that this isn't good enough tell them you will default (don't put that in writing). If they persist then stop paying. As you say, you don't care about losing the apartment so they have a choice of eviction which will take 12 months minimum or accept interest only to have something coming in. At that point you could try for keeping the apartment but put everything in writing and insist they do as well. Be careful, before you sign anything, make sure to read all of it.
Good luck
 
Hi guys,

Thank you for your reply. I am not too worried about the legal side of things as I'm well aware they can't take what I don't have. This meeting has played out in my head a couple of times since then, and it seems to have been designed to make me feel hopeless. It was only one person and myself and this is how it went:

- First all suggestions presented are related to pay the mortgage in full.
- Then surrending the property was the next suggestion and legal proceedings were mentioned for the first time. Quick calculation on the computer from the banker and mentioning that this would mean paying about 800pm for 30 years after property is sold.
- Then they offer a moratorium but said I can only take 3 of those during the term of the mortgage.
- Then SFS was looked at and banker said I actually can afford the payments if I stopped paying my credit card. The SFS shows a surplus that does not pay for a meal for 2.
- Then interest only is mentioned, and quick calculation on the banker shows that this means 900 euros pm. I am quite distressed at this point as it looks like I won't be able to afford it.
- Then the person corrects this by realizing I am entitled to TRS and adjusts the amount. I can't say that I got much out of it after this point. I am in tears and the person mentions that this is what I have signed. The last thing was that my ex will have to sign the papers even for interest only and this pretty much means that I could have gone through this for nothing.

I'll be avoiding these meetings in the future and have everything done in writting instead.
 
Bronte said:
Can your ex not divorce you in Brazil faster than you can divorce him in Ireland?
Click to expand...

Yes he can. I am hoping he doesn't because a court there would not look at the apartment situation. It's only a year to go so hopefully I can work on improving things here first.
 
Bronte said:
Interesting that they told you to default on your credit card.
Click to expand...

They actually didn't (my credit card is with them). The person suggested a moratorium in order to pay off my credit card and then go back to full payments on my mortgage as I have "affordabiilty". I refused it on the basis that the when TRS is over I might have to take a few of these mortgage breaks.
 
-Pay the full amount of the mortgage in order to "prove" that I am able to. I could then apply to get my ex of the mortgage.
Click to expand...
Why do you want to get your ex off the mortgage? He is as legally liable for this as you are. This makes no sense to me at all.

I think that my original post stands. Write to ptsb and set out what you propose to do.

Dear ptsb

Following our discussion, I want to set out what I will be doing.

As you know my ex who is jointly and severally liable has stopped contributing to the mortgage. This makes the mortgage now unsustainable.

From now on, I will be paying the interest only on this mortgage. If this is not acceptable to you, let me know and I will drop by with the keys. I have made every effort to pay this mortgage and to deal with you in a responsible manner. If you are not prepared to respect that, I will apply for a Debt Settlement Arrangement under the new Personal Insolvency Act. I would prefer to maximise the payments to you , but if you wish to repossess the house and pay high fees to a Personal Insolvency Practitioner, so be it.

Alternatively, if you wish for me to sell the property in an orderly manner, I am prepared to do so. This will maximise the proceeds of sale. In return, I want your written agreement in advance that you will not pursue the shortfall.

Yours sincerely

Then, if they call you again, just read out the letter to them.

If they hassle you, just hand back the keys.
 
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