Short settlement of unsecured debt to BOI?

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Uptoeyeballs

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I am new to the forum and was wondering if anyone could offer me some advice... To cut a long story short, I owe approx. 70k in unsecured personal debt - all except the credit union have been restructured for the last two years. I am currently earning just under 60k pa but my husband is now unemployed (previously self employed). I have been on interest only on my mortgage for the last two years in order to try and pay off some of my unsecured creditors - however, my lender has recently said I should prioritise my mortgage and just pay what I can to other lenders, to which I have to agree. I currently owe about 340k and my house is worth roughly 250k and am 6 years into a 35 year term.

One of my biggest creditors who I owe almost half my debt to has agreed to further reduce my payments for a period of six months, however, one of my credit card lenders has flat out refused - saying they made a five year agreement with me two years ago and that's it or else they'll pass it for legal collection. They've said this will mean they will go for a charge against my home...

My question is - what happens if I just cannot commit to the amount they want me to pay? When I agreed to it my husband was bringing some money in - but now its just non - existent. My parents have offered me 10k to clear my biggest creditor who I owe 29k to but they are saying that 85% would be the minimum settlement - so that's out of the question. Has anyone else managed to settle with BOI and if so, for how much? I have no problem paying for the next ten years although I fear that I will be pushed down the debt arrangement route if my credit card lender won't negotiate with me any further - I am scared to death especially listening to all the headlines which talk about taking your health insurance, engagement rings etc etc.

I am well aware of the stupidity of all the borrowing that I did when we had two good salaries coming in, especially trying to borrow my way out of it in the early days instead of admitting I was in over my head.. I've been to MABS and they can't add anything further to what I have done myself - any positive advice would be appreciated, and apologies for the essay!
 
Without figures of your earning and repayment details it is difficult to say, amounts, terms, was the 5 year credit card settlement with frozen interest etc. but you sound like you could be a good case for the new Insolvency legislation most certainly with 70k of unsecured debt. An insolvency practitioner might advise of the particular road you need to take.
 
Was the MABS adviser not able to tell you the possible consequences of not being able to pay the unsecured creditors? Did they talk about the Personal Insolvency Act?

Yes the bank can get a judgement and secure it against your home if you can't pay them but the mortgage provider already has security against your home so they get priority.

Your home is in negative equity and the mortgage provider has first call so effectively a judgement secured against your home is worthless at the moment.
 
Uptoeyeballs said:
however, one of my credit card lenders has flat out refused - saying they made a five year agreement with me two years ago and that's it or else they'll pass it for legal collection. They've said this will mean they will go for a charge against my home...

My question is - what happens if I just cannot commit to the amount they want me to pay?
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Ultimately, given your negative equity and if you've no other assets, all they can do is get a judgement against you and then get an instalment order against you, all of which is unlikely imo if you are making an effort to pay. You can't pay what you don't have and no judge can change that. Write to them advising of your changed circumstances and what you are prepared to pay and see what they say.
I know you said you are prepared to pay for ten years but if I were you I'd be giving consideration to the new insolvency laws when they are introduced, which could see you out of your unsecured debt more quickly.
 
What can happen if you dont pay the unsecured creditor. They can go to court and a judge will order you to pay x amount a week. The judge will look at your income and expenses when deciding what that amount should be. Judges are generally sympathetic to borrowers. The important thing is to turn up in court and explain yourself to the judge. Judges do not like to be ignored.

They could also get a judgement mortgage against your home. This is not worth a lot where the home is in negative equity as explained above. As far as I know it also expires after 12 years. There is a very good thread explaining court procedure for debt cases on AAM.

The court process should not be too frightening for you. At the end of the day it is no big deal. Pay the instalment order as issued by the court and the lenders can do no more.

Regarding your home. It is not clear if you could make the payments on this if you were not paying the unsecured creditors.

My strong advice is NOT to take money from your parents to pay your creditors. If your parents are willing to cover some of your expenses, health ins, holidays, even grocery bills, thats great. That is between you and your parents. DO NOT tell any financial institution that money may be available from your parents.

If you can pay your mortgage capital and interest, and even €100 a month toward your unsecured creditors. I do not believe that they will take you to court, because they might get less in an instalment order.

If you post more info about your expenses and mortgage you might get more detailed advice on a payment plan. There is a questionnaire on the site.
 
Hi eyeballs your note has moved me to comment
there are a couple of comments here having read your thread and the following reply comments with some good advice given. Firstly the unsecured creditors will have to fork out approx 3,500 to register the judgement and with very little hope of getting their money it may prove futile so they may well be slow in doing it but they will threaten you with it. You need to take a look down some roads that you dont know in order to take some of the mystery and fear out of your situation. It is difficult to be specific here but some of your fears may not be too bad once you have it happen to you. I strongly agree re the comment about your parents gift to help do not take it as like all hungry sharks feed them and they remain hungry and will want more the next time. This will be your last resort. Is the short term debt and the mortgage with the same lender and if so get them to address the issue and maybe for example roll it all to the mortgage term. There will be an improvement over time no matter what your current circumstances are beginning from today you just need each of your lenders to allow you this time. God knows if our government can do it you sgould be able to, that is extend the repayment schedule to suit your current circumstances. I hope this helps but please do not let it get in on you. Ask yourself the following, what is the worst thing that can happen to the debt situation NOW ASK OF YOURSELF WHAT IS THE WORST THING THAT CAN HAPPEN TO YOU, because these are 2 seperate questions and there is only one answer that matters so protect yourself and your family first and if you have yourself in a good place you can deal with whatever comes at you from your lenders (I know this will not be easy but begin to bullet proof yourself) and also there are enough good people out there to help also. Final comment The level of borrowings were not stupid it is simply that there was a change in circumstances that brought affordability to the front of your issues. Do not listen to all the commentary regarding stupid debt or silly purchases when the very banks that are now trying to squeeze you are the ones that freely gave it to you in the first place. I know this will bring on all the "I told you so people" and how they made no mistakes but that type of comment does not help you so dont listen to it because it is only worthless gossip to you in your circumstances we are where we are and lets deal with it. Good luck Padraic
 
I tend to agree with the majority of the above commentary. Don't get overstressed about this issue. Threats made are empty given your poor financial situation. Do not borrow from family to pay unsecured creditors. Personal insolvency legislation will cover this. Ultimately these debts will likely be w/o.
prioritise the mortgage payments, but pay only what you can afford. Also think about a long term strategy. Would you be better off ultimately surrendering this property to the Bank and re-starting from a rented property. You will need to get an acceptable deal from the bank in return for selling the property. Hopefully the new insolvency legislation should work in your favour.
 
Thanks guys for all your words of encouragement - I've filled in the template as suggested, let me know what you think...

Personal and income details
Income self: Private Sector 62k pa
Income partner/spouse: Self employed - made a loss in 2012
Income History - Previously self employed circa 50k pa, income has been decreasing over the last no of years so we made the decision to give up full time and assume stay at home daddy
number of children 1
Amount of Mortgage Interest Supplement received None
Home loan
Lender: KBC
Amount outstanding: 345k
Value of home: 250k
Interest rate: specify whether tracker +1%
Monthly repayment 545 interest only - have been on for one full year (full payment 1300)
Amount in arrears - no arrears

Have been on frozen interest and monthly payments with my creditors as below

BOI (Personal loan + overdraft) 29k - paying 290 per month
BOI Credit Card - Balance O/S 12k 120 per month
MBNA Credit Card 12k 280 per month
Halifax Credit Card 3500 55e per month
Credit Union 13k 360 per month (shares 2,800)

Family - loan which my mother took towards our deposit - 380 per month, 14k balance

Other savings and investments - None


How important is retaining the family home to you?
I really want to keep the family home even if it means having a large mortgage and negative equity for years to come.


Any other relevant information
I haven't disclosed my mothers loan as I am afraid that I will be forced to shortpay this and I can't affect her mortgage when she is so close to retirement. The personal loan and one of the credit cards are actually my spouses which we foolishly took in my name as it was too hard for him to obtain when self employed. I approached BOI 4 years ago and informed them I could no longer afford the €1100 per month repayment on the personal loan and asked could I roll it up with the credit card and overdraft over 7 years in a new loan and they refused. In hindsight it was then that I should have stopped paying the loans but I continued on paying and ran up another credit card with groceries, paying bills etc - I thought if I could weather the storm until the personal loan was finished, then I could concentrate on the getting the cards down. It never works out like that....

What is your preferred realistic outcome?
I wanted to offer 10k to BOI to pay off the 29k in personal debt. If MBNA would agree to reduce my monthly payments by half, I wanted to save enough in a year with my saving on the BOI monthly payment, the reduced MBNA payment and the saving on my mortgage to maybe pay off my mothers loan. Whatever about my credit rating, I would feel just awful if they wouldn't allow me fully pay the monthly cost of her loan - she is a separated and on a clerical officers salary which doesn't stretch far and she's only a few years away from retirement. Its a lot of ifs and buts - cant really blame BOI for not accepting 10k against that value loan....

Does anyone know if I went in front of a judge would they expect my mothers loan to take the same sort of hit as mine? Her house is just about paid off so a judgement against her mortgage would be as bad as it could get.... If I don't mention it, it will look as if I have more disposable income and I will be stretched further than I can afford........
 
Just to update you guys - I spoke to MBNA on Wednesday asking about reducing my €280 payment downward - I haven't actually missed the payment yet (although I did shortpay by €150 in Sept due to having to buy school uniforms and books and Dec for Xmas although have paid in full for 3 months since). I received a letter in the post this morning saying I should contact them with a view to making my arranged payment otherwise they are handing it over to their solicitor who will demand full payment. They've said "due to the urgency of the matter it may be too late to enter into written communication - if we do not hear from you it will be too late to prevent us taking this action". They've also said they are here to help and have other arrangements available - they didn't when I phoned on Wednesday except to request a short settlement of 60 - 70%..... Am going to ring them when I finish work and offer a reduced monthly payment, will update you later on what they say......
 
I think asking the unsecured credits to restructure is a good plan but you need to know what you can afford to pay them and make an offer rather than seeing what they will "let" you pay.

Do a budget based on paying the full mortgage and then split what is left over between everyone else.

If a creditor doesn't accept the offer they may take legal action but ultimately they stand in line behind your mortgage provider who takes priority.
 
Uptoeyeballs said:
Just to update you guys - I spoke to MBNA on Wednesday asking about reducing my €280 payment downward - I haven't actually missed the payment yet (although I did shortpay by €150 in Sept due to having to buy school uniforms and books and Dec for Xmas although have paid in full for 3 months since). I received a letter in the post this morning saying I should contact them with a view to making my arranged payment otherwise they are handing it over to their solicitor who will demand full payment. They've said "due to the urgency of the matter it may be too late to enter into written communication - if we do not hear from you it will be too late to prevent us taking this action". They've also said they are here to help and have other arrangements available - they didn't when I phoned on Wednesday except to request a short settlement of 60 - 70%..... Am going to ring them when I finish work and offer a reduced monthly payment, will update you later on what they say......
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Is this MBNA recoveries you are dealing with ie card cancelled, interest and charges stopped?
 
Uptoeyeballs said:
Yes, I cancelled two years ago and hv been paying 280pm which I need to reduce
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Write and tell them what you can afford to pay, as I said above. Call their bluff about them going the legal route. They will know that a judge can't make you pay what you can't afford. They're not going to get a lump sum from you anyway so it would be to the circuit court for a judgement against you and then to the district court for an instalment order, which is effectively what you are offering them anyway !.
 
ClaireM said:
I think asking the unsecured credits to restructure is a good plan but you need to know what you can afford to pay them and make an offer rather than seeing what they will "let" you pay.

Do a budget based on paying the full mortgage and then split what is left over between everyone else.

If a creditor doesn't accept the offer they may take legal action but ultimately they stand in line behind your mortgage provider who takes priority.
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Cannot AGREE more, do a realistic budget and then see where you are.Make sure you KEEP enough for reasonable living expenses and keep an eye on the new Personal Insolvency as you look to be a prime candidate for it. Suggest phone Frost Debt @ 0749364000 , if you find their advice good , use them for the Personal Insolvency stuff.
 
You have not posted your outgoings so you'll have to understand my advise is based on this.

You're very stressed and as others have pointed out you need to get beyond this. From your details it would appear you are sinking into debt and borrowing from Peter to pay Paul in a never ending cycle of going nowhere.

What to do. Write a letter to all your creditors, just the same letter to the whole lot of them and addressed to them all. Tell them you are not paying BofI nor MBNA nor Halifax (I'm not sure about the credit union as I'm very loyal to them myself) until they come to an arrangement with you. No need for you to be fighting with them all individually as that ends up with you needlessly fighting fires. And them threatening you separately. What can they do to you. Ultimately nothing. You don't have the money and you have NE. I would continue to pay the mortgage.

This course of action should force them to do something, such as a write down, a zero interest rate and a reasonable payment plan.

Whatever you do don't take your parents money. Instead this money should forthwith be directed to pay off your mothers loan, otherwise it gets her into trouble with her own mortgage and in any case it would only be eaten up in interest with the other lendor. You're very tempted to take it but don't.

If your mother does not want to pay off her loan but keep the money, then you think of that money as something she can give you later when you have a real emergency such as needing a car or an operation etc.

Ideally it should be Mabs helping you to write to your creditors, but they are very busy, and it's in your interest to sort it out for yourself. By writing the letter today you begin to take control of your own situation. It will empower you. Ignoring it weakens you.
 
As above we dont see what outgoings are, as there could be scope for cutting those back significantly.
You have borrowed a lot of money unsecured. I'd ask myself where did this money go?
Was it shopping trips to New York? was it Cars? New furniture etc? was it for day to day spending and living beyond your means?
Can any of that spending now be sold and some money recouped ? Can you work out a family budget and cut back unnecessary spending?
 
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