High personal debts
- Thread starter jonnykkk
- Start date
Brendan Burgess
Founder
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- 52,116
I think you have to take things one step at a time.
You have taken the first step in that you have faced up to the gambling problem.
The good news is that you are still solvent, if I understand your figures correctly.
House value: €500
Mortgage: €280k
Loans: €195k - Loans 170; tax:5; wholesalers: 20k
Net assets: €50k
Your next priority is to stay in business and rebuild it so that you have an income.
1) Do you have an income from your business at the moment? Why are things going to suddenly get going in March 2008?
2) Your business suppliers are the absolute priority. If they stop supplying, you won't be able to earn any more money to pay off the other loans.
3) Are the loans connected to your business? If you don't keep them up to date, will your business be affected? With the help of MABS, you might be able to get reduced payments. I imagine that the advice of MABS will be to pay some small amount to each lender, to show them that you are not running away from your loans.
4) You have to consider the possibility that you may not be able to afford to keep your home. That is not as bad as it seems at first. If you sell your home for €500k and pay off your debts, you will save about €23k a year in interest payments ( 280k@5% + 170@10%). You can probably rent a similar house for around €12k a year.
It's not ideal, but no one knows what is happening to house prices. If they fall further from their present level, you might be able to buy back a similar home for less money. However, it will probably take you about 5 years to build back your credit record.
5) You should not rely on the slowness of the court system to delay the inevitable. You will get caught with legal costs and judgements against you which will make it very difficult for you to ever get credit again.
Brendan
You have taken the first step in that you have faced up to the gambling problem.
The good news is that you are still solvent, if I understand your figures correctly.
House value: €500
Mortgage: €280k
Loans: €195k - Loans 170; tax:5; wholesalers: 20k
Net assets: €50k
Your next priority is to stay in business and rebuild it so that you have an income.
1) Do you have an income from your business at the moment? Why are things going to suddenly get going in March 2008?
2) Your business suppliers are the absolute priority. If they stop supplying, you won't be able to earn any more money to pay off the other loans.
3) Are the loans connected to your business? If you don't keep them up to date, will your business be affected? With the help of MABS, you might be able to get reduced payments. I imagine that the advice of MABS will be to pay some small amount to each lender, to show them that you are not running away from your loans.
4) You have to consider the possibility that you may not be able to afford to keep your home. That is not as bad as it seems at first. If you sell your home for €500k and pay off your debts, you will save about €23k a year in interest payments ( 280k@5% + 170@10%). You can probably rent a similar house for around €12k a year.
It's not ideal, but no one knows what is happening to house prices. If they fall further from their present level, you might be able to buy back a similar home for less money. However, it will probably take you about 5 years to build back your credit record.
5) You should not rely on the slowness of the court system to delay the inevitable. You will get caught with legal costs and judgements against you which will make it very difficult for you to ever get credit again.
Brendan
R
rmelly
Guest
25k surely? Also how accurate is the 500k valuation given current market conditions?
The interest figures are a bit ropey - he's currently interest only on his mortgage, so surely not 5% (figure quoted is 1100pm), and based on the figures, he is currently spending 42k servicing the 170k debt (3500 pm).
As such selling the house may be more attractive than Brendans figures suggest.
If you do so, you can then focus on rebuilding the business and in a few years you'll be back where you started.
Assuming all goes well, how much income will the business provide you with every month? You must be banking on it being very successful to cover all those debts. Now, just say something happens between now and March and you don't get the contracts you are banking on? You are taking a huge gamble of another sort with all of this working out.
I know this isn't what you want to hear right now, but how about selling your house and clearing all the debts. You could rent a really decent house for between 1K to 1.5K per month depending on what part of the country you are in. And then if business goes as well as you expect for the next 3 years you could have saved a substantial payment for a new house.
In my own recent experience I have found that life does not always go according to plan, you are banking on everything going your way for the next 3+ years, but honestly who knows. It doesn't matter how good your business is, there are always factors outside your control. Why would it be so bad to sell up and rent right now?
I know this isn't what you want to hear right now, but how about selling your house and clearing all the debts. You could rent a really decent house for between 1K to 1.5K per month depending on what part of the country you are in. And then if business goes as well as you expect for the next 3 years you could have saved a substantial payment for a new house.
In my own recent experience I have found that life does not always go according to plan, you are banking on everything going your way for the next 3+ years, but honestly who knows. It doesn't matter how good your business is, there are always factors outside your control. Why would it be so bad to sell up and rent right now?
But how long can yu keep up the payments if you suppliers cut you off?
Also, as far as I know, if a director has being unethical (maybe not the correct word) in the running of their company, then their private assets are not necessarily safe. but someone with more knowledge might correct me on this.
Reading your post, my gut instinct is that you should sell your house. Then you can start with a clean slate. If, as you say, then business will be on the up and up in 2008, then it won't be long before you can get back on the ladder again.
C
Carey
Guest
The problem will be trying to get them to accept small payments. Most of the banks use heavy hitters of solicitors firms to collect debts. I have found in the past that will not accept small amounts and they want to rush to judgment. The thing is once the solicitors have the file the ICB report is damaged. I have found that the courts are more understanding of cases where a small amount can be paid.
They could have you in court in under a month if they wanted to and have judgement. After that they would move for an installment order within 3 months of judgement.
They could have you in court in under a month if they wanted to and have judgement. After that they would move for an installment order within 3 months of judgement.
Brendan Burgess
Founder
- Messages
- 52,116
I just don't agree with a strategy which is based on ducking and diving through the courts system. You will be under enormous pressure and it's not the way to run a business.
It would be ok to operate like this if you knew that it would all be sorted out in three months or maybe in 6 months. But that is not the position as far as I can see. Even with this big contract, you will still have excessive debts. So you will be having legal hassles for the next few years.
It seems to me that you have some time to play with at the moment. So sell your house while you don't have a gun to your head. If you leave it until March, you may be forced to sell to the first offer.
Brendan
It would be ok to operate like this if you knew that it would all be sorted out in three months or maybe in 6 months. But that is not the position as far as I can see. Even with this big contract, you will still have excessive debts. So you will be having legal hassles for the next few years.
It seems to me that you have some time to play with at the moment. So sell your house while you don't have a gun to your head. If you leave it until March, you may be forced to sell to the first offer.
Brendan
C
Carey
Guest
I don't see the problem with people seeking protection from the courts from creditors hounding people for money. Banks often make very unreasonable demands on debtors which would not be tolerated by the courts. I don't see any problem with a person allowing the courts to make a fair order as to what should be paid.
if your mortgage repayments are interest only, then you may as well rent. You aren't knocking anything off the capital, and if house prices continue to drop, the equity in your house will become less.
Also, the relief of being debt free will go along way to helping you clear your mind about what you do want in the future - you're under massive emotional strain....
Why not rent somewhere less expensive - kids tend to become more expensive as they get older, so you may break even!
Good that company is limited, so you not liable - you could always declare bankruptcy and begin new company and take on the contract beginning in March 2008 with the new company....
very sorry to hear about this - but sometimes the longest way round is the shortest way home!
Also, the relief of being debt free will go along way to helping you clear your mind about what you do want in the future - you're under massive emotional strain....
Why not rent somewhere less expensive - kids tend to become more expensive as they get older, so you may break even!
Good that company is limited, so you not liable - you could always declare bankruptcy and begin new company and take on the contract beginning in March 2008 with the new company....
very sorry to hear about this - but sometimes the longest way round is the shortest way home!
Do you reckon Revenue and suppliers will be happy to allow the OP to run up a fresh set of debts after he shafts them first time round?
While I understand the financial logic here, I'm not so sure that this is a great idea. Buying and selling property has lots of associated costs, such as stamp duty, legal fees, estate agent fees. If you were to sell the house and buy again say 2-3 years later, this could cost you say €50k in real costs.
There is also the huge disruption and emotional pressures that will be caused by moving home, particularly on the children. I guess you would need your wife to agree to any sale.
I would be very reluctant to sell the family home unless this was the absolute last resort.
R
rmelly
Guest
I take the comment to have meant 'once bitten twice shy'... the suppliers are unlikely to want to deal with this person again. Equally how eager will the third party he has the contract with for March be to proceed? I would assume that any contract would be null and void if they so choose and wouldn't be directly transferable to the new company without their agreement?
Try to stay positive - the power of positive thinking is amazing. Well done on getting this far alot of people would have given up on everything - including their marriage. You deserve to get out of this mess without it totally messing up your entire life. All you can do is your best.