Large residual after sale of BTW. ..bankruptcy ?

Discussion in 'Personal Insolvency, bankruptcy, etc' started by unstacked, Dec 2, 2016.

  1. unstacked

    unstacked Frequent Poster

    BTL in my name was with KBC. Sold in March, leaving a residual of 185,000.
    Own home jointly owned in negative equity by about 200,000.and arrears of 17k
    Mortgage o/so is 400,000. Arrangemeets being made with Stepchange.. and Ulsterbank. ....hoping for some of it to be warehoused as we will never have that mortgage paid off. We have a tracker....payments are 1200pm.
    Reason for arrears....we have no savings and husband is seasonal work, so when some big expense comes along we have no way of coping with it (medical expenses or other necessary expenses). I am working ft
    KBC are not taking the sale of the BTL as full & final settlement...nor could I see them accepting anything like 10th to get closure. Do I go bankrupt and if I do, will KBC go after our home..?
  2. TLO

    TLO Frequent Poster

    Hi unstacked

    Courses of action are determined by your preferred outcome. For example, do you wish to keep the family home? If so, and if the mortgage on the family home was in arrears on 1 January 2015, then you are entitled to apply for a "no veto" Personal Insolvency Arrangement (PIA). The residual with KBC gets written down to zero, and the mortgage on the family home gets reduced to an amount that a Circuit Court Judge decides, based on a proposal submitted by your Personal Insolvency Practitioner (PIP).

    If you aren't interested in keeping the family home you could apply to the High Court for your own bankruptcy. Incredible as it may seem, you and your husband could still end up keeping the family home. The amount of negative equity attached to the family home would incline the Official Receiver towards selling your half of the beneficial interest to your husband for a "nominal" sum, usually €5k. Caveat, the mortgage company, Ulster Bank?, would expect your husband to continue making full repayments on the mortgage of the family home. Might not be the best undertaking with €200k of negative equity hanging out there.

    Another possibility is that KBC might take 10% of the residual €200k, €20k, as full and final settlement. You won't be able to negotiate this by yourself. You will need an accountant with insolvency experience, or a PIP, to get this over the line. In other words, you will need to appoint a third party to negotiate on your behalf. Again, Ulster Bank would still want payment in full over time.

    Try and avoid warehousing part of the mortgage on the family home. All it does is "kick the can down the road". Paying a mortgage in retirement? Not pleasant, and often not possible. The aim of insolvency legislation to to return "insolvents" to solvency within five years. So the recommendation of this poster would be to investigate your eligibility of a "no veto" PIA. Best place to start is with an experienced (PIP).

    Finally, to answer the question, "Will KBC go after our home?" Unlikely. And if the High Court adjudicates you bankrupt they can't touch you or your home. In theory they could get a charge over it, assuming you haven't already petitioned for your own bankruptcy, but it would be a waste of their time and their money due to the €200k of negative equity associated with the family home. Also, in theory, they could obtain a court order for payment, and then apply to a District Court for an installment order, or pass it to a City/County Sheriff for enforcement. If they were thinking of such actions you would probably have an inkling of it by now. Just be aware of the possibility but don't worry about it too much.
    unstacked likes this.
  3. Brendan Burgess

    Brendan Burgess Founder


    I think that this needs clarification. Warehousing is often the best solution. A solution which keeps you in the family home and gives you time to recover and pay your mortgage is a very valid solution and should not be dismissed with "kicking the can down the road".

    Having said that, if you and your husband can get a PIA which writes off the negative equity on your home and wipes out your KBC shortfall, that would be a much better solution than warehousing.

    My own view is that negative equity should never be written off while the borrower stays in the home. Warehousing it is a much more balanced solution. But my view doesn't count. If you can get it written off, go for it.

    unstacked likes this.
  4. unstacked

    unstacked Frequent Poster

    Thank you both very much for your replies. This has been going on for some years ( previous posts) but Im thankful the BTL is sold.
    I want to deal with KBC. I want to complete this and just concentrate on our home.
    I do have sites (not registered yet). Somewhere along the line I must have mentioned these..years ago I was emotionally attached to the house and said alot to the bank 'to try and keep it'..
    In a recent letter about the residual . ..they mentioned these sites and wanted an update...
    I think they might take these in settlement. I have no interest in moving there...the site is 1 acre in total ...not great land . ..but could work if planning was successful.
    The other thing is I may have an inheritance down the road and dont want it wiped out..because I have to pay it all to them.
    Time is of the essence here and Im worried I'll loose it all....
    20000 to kbc or site....what will satisfy them...
    With regard to the PPR...Stepchange are talking with Ubank and we should have some resolution next week thank god . ..