Secured or Unsecured Debt?

B

Bbd123

Registered User
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Thank you in advance for reading my post.

I have spent last two years negotiating interest only payments and full payment moratoriums with KBC on a RIP I have mortgaged with them.
They requested, as a condition of this current moratorium that I put the RIP on the market and it be sold as we both agree the mortgage is unsustainable. It went sale agreed for €175K leaving negative equity of approx €105K which I have discussed with them that I am not in any position to make repayment on.

My question is am I better off having €277K as a secured debt on the property or having €105K unsecured debt? I face the property being repossessed if I don’t sell it so need to make a decision on this. House is currently vacant as it was on the market but when being rented, rental income was €800 per month which went to the bank, the mortgage is approx €1889 per month and I cannot contribute anything towards this.

I would appreciate any advice or input.
 
Hi B

Do you have a family home as well?

If you don't have any other secured loans, i.e. mortgages, then I think that you are better off with unsecured debt. When the new Personal Insolvency Act comes into force, you will be able to apply for a Debt Settlement Arrangement.

I think that KBC will be less interested in objecting to a DSA. They might object to a Personal Insolvency Arrangement if you have a home loan.

It's best to provide all the information as requested in the first post on this forum, so you can get comprehensive opinions.
 
As you cannot afford it and the bank is in agreement it is best if you sell. This immediatly reduces your debt and takes pressure off. The bank is happy to be talking to you and they are in agreement that you cannot pay off the NE. What have they said is to happen to this?
 
Can the entirety of a mortgage be seen as secured debt when there is negative equity?

Something I hadn't considered before but if your property is worth €100k less than what is owed on it and you hold no other assets, surely the whole loan cannot be deemed to be secured.

Not sure what the consequences for the individual are. Would it cost the bank more to keep these loans on their balance sheet as unsecured?
 
Thank you for all your replies so far.

Yes I have my home mortgaged with BOS, loan amount €248K, house worth approx €190-€200K. Currently paying interest only on this mortgage, it's a tracker mortgage.
 
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