NonResdident with 2 rental properties in NEq, strategic default & return the keys?

[Negatequity]

My predicament:

Loan: - ECB Tracker home loan with a foreign owned bank (ie NIB, KBC, Rabo etc but not Ulster, HBOS) for ca 650k. Originally structured as interest only but will switch to principal repayment in the next 6 months.

Secured on: - two Dublin properties currently rented.

Current value: who knows but lets say €450k so ca €200k negative equity.

Borrower: - Not been resident in Ireland for several years. Curently employed in EU continental Europe & no ambition to return to Ireland other than for holiday. No other assets in Ireland.

Problem: - Rental receipts will not cover the loan repayments once the home switches to principal repayment. The properties would need to rise 50% in value in order to wipe out negative equity.

Question: If I consider strategic default & return the keys to the lender, what action would they take? Chase me through continental European courts, sell the claim to a debt collection agency or simply write off the debt?

 

[JoeB]

chase you through the european courts, hopefully.

If they do otherwise then the irish taxpayer will end up paying, and he can't afford it.


I suppose I should add... do you intend to pay, and cannot?, or could you pay but you'd rather not? The answer to that is very important.

 

[Howitzer]

If they do otherwise then the irish taxpayer will end up paying, and he can't afford it.

Just to be a pedantic Pat, this isn't correct. The OP has already stated that the bank to which he has the mortgage is foreign owned.

 

[Brendan Burgess]

If the rental income covers the interest payments, then I don't think that you should do anything drastic.

Check out this post which covers the issues: Key Post Should I rent out (let) my home in negative equity, or just sell it at a loss?

You borrowed money to invest in properties. It hasn't worked out. You have a job in Europe. You should pay off your loan.

The best thing to do is to talk to the lenders. If you have a cheap tracker, they may do a deal with you on accepting the proceeds in full and final settlement of the loan. Or they may give you a discount.

Overall, you should try to repay your loans or settle them by agreement.

 

[Negatequity]

Thank you.
For time being i should be able to service the loan but strategic default is morally bad (before i get abuse postings it is foerign bank shareholders who would suffer not irish taxpayers) but it may make cold financial sense depending upon how the bank would react.
What chance irish house prices rise 50% in any reasonable time horizon.....

Does anyone know what are banks doing with other non-resident defaulters? I ve seen posts re the UK but tracking defaulters in continental europe is a little more messy for the banks I guess. Chasing them to ends of earth or just writing it off?

I ve thought of the idea of trying to negotiate a partial debt forgiveness but my negotiating power depends a little on how they view non-residents. Just like any other borrower or way too much hassle to chase so perhaps they are more open to negotiate?

 

[JoeB]

Well, there is a halfway point between chasing to the ends of the earth, and writing off.

I'd imagine they'd be prepared to spend at least 5% of the outstanding amount on tracking down defaulters. 30,000 would seem to cover quite a few private detectives. Unless you're actively hiding I think they could find you.

I see both sides of this. If you cannot pay, and don't want mountains of debt hanging around forever then yes, you can change your name, attempt to get documentation etc in the new name, and off you go..

You may have to do without a passport or a bank account but if you are prepared to have no tries with family, and live in a cave, paying cash for products then yes, I think you could hide out. Otherwise I feel that the legal system in the new country will force you to acknowledge the debts.


Perhaps bankruptcy in the UK is the way to go. But you have to un-secure your loan first, as apparently only unsecured loans get wiped when bankrupting yourself. All banks would be wise not to release security under any conditions.


I don't know really, but more and more people are going to be trying to walk away. The problem is that eventually they may get caught out, and then there'd be extra expense.

 

[Brendan Burgess]

If you cannot pay, and don't want mountains of debt hanging around forever then yes, you can change your name, attempt to get documentation etc in the new name, and off you go..

If you can't pay, which does not seem to be the case, then bankruptcy is the solution.

The "problem" you have is that you can't afford or don't want to pay all the capital repayments. You can pay the interest, so you should do so.

 

[oldnick]

OP is not seeking advice as to how to handle the debt.

OP is asking readers of this site,most struggling to pay loans and many in negative equity, how to not do what they are doing- and how to get clean away with it.

 

[Brendan Burgess]

OP is not seeking advice as to how to handle the debt.

OP is asking readers of this site,most struggling to pay loans and many in negative equity, how to not do what they are doing- and how to get clean away with it.

Hi nick

We delete posts on askaboutmoney which ask for advice on how to do illegal things e.g pirate software or music.

The OP has asked for advice on how to evade his debts. It is better to give him advice on how to deal with them than to simply delete the post.

Brendan

 

[Bronte]

Does anyone know what are banks doing with other non-resident defaulters? I ve seen posts re the UK but tracking defaulters in continental europe is a little more messy for the banks I guess. Chasing them to ends of earth or just writing it off?

But Europe isn't the ends of the earth so you're on a risky strategy. Presumably they know where you live and also that you've say an asset there, such as your home and also maybe they know where you work. From their point of view you'd be well worth chasing.