Is there any way of keeping the family home?
You could apply for the
mortgage-to-rent scheme. A housing body would buy your home from you and then rent it back to you. You would still owe the shortfall to the Bank of Ireland. Having achieved this, you could then apply for a Debt Settlement Arrangement.
If this is not available, you could apply for a Personal Insolvency Arrangement.
You would put a proposal to your creditors along the following lines -
The mortgage of €161 k would be put on interest only for, say 5 years. At 2% interest rate (ECB + 1%) on 131k and
[email protected]%, the total interest would be about €4k a year. You should be able to pay this out of your Mortgage Interest Supplement or your salary when you return to work.
You would not be able to get accommodation like it for €4,000 anywhere else, so it makes sense to try to keep the home.
The investment property would be sold and the Start would become an unsecured creditor for €90k.
You would offer to pay whatever net income you have in excess of a "reasonable standard of living" for a period of 3 years to your unsecured creditors.
At the end of three years, any remaining debts would be written off.
I think that the tax debt of €14k would remain outstanding - need to check what the Bill proposes in this case.
So, after three years, you would be living in your home worth €100k with a €161k interest only mortgage. You would have no further debts.
What are the downsides of this?
You might not be able to get the following to agree to it:
50% of your unsecured creditors
50% of your secured creditors
65% of your overall creditors
If Bank of Ireland and Start agree to it, then it doesn't really matter what the rest think. The proposed bill is a bit vague. As I read it, Start would be regarded as a secured creditor for €135k and as an unsecured creditor for €90k i.e. the negative equity. So BoI and Start would be able to "impose" their solution on the others.
You will still have negative equity of €61k and you may have a tax bill of €14k. If you have a reasonable income after 3 years, then this is tolerable.