Case study Two houses, big debt, unemployed
- Thread starter coleman
- Start date
Age: 37
Spouse’s age: 39
Annual gross income from employment or profession: 0
Annual gross income of spouse: 0
Type of employment:
In general we are: Absolutely driven demented with this, struggling just to get through on SW.
Rough estimate of value of home: 100k
Amount outstanding on your mortgage: 161k (including top up of 30k, however there are arrears - at this stage, I really don't know how much as I have given up looking at the letters. Suffice to say I would be certain that there is an arrears figure of possibly 12-15k.
What interest rate are you paying : Tracker with BOI - 30k top up is at 3.5
Other borrowings:
9k overdraft on husbands personal current account
20k loan
8,500 credit card
2,500 credit card
14k tax bill
30k top up
Do you pay off your full credit card balance each month: No - 100e is paid every month on the 2,500 card. I initally was able to reduce this down, but has since gone back up again.
If not, what is the balance on your credit card: 8,500 plus 2,500 - 8,500 cc was my husbands with MBNA. He is now on the ICB and they have stopped making contact - last we heard from them was approx 8 months ago - bear in mind, that this started over 2 years ago.
Savings : so little pointless even completing this question
Do you have a pension scheme: I have. My employment ensured that there was one in place for me, for when the time comes. I do not pay extra into it. I used to, but I have given up doing that a long time ago. My husband has no pension scheme.
Do you own any investment or other property:
1 2-bed apt
Apt - The exact same apt is for sale currently on Daft for 135k. A similar property not far, but in a much better location recently went for 105k.
House - We are living in my husbands house. We initally were renting but decided to try to cut costs and initally again, this was fine. I paid the mortgage for a good while (this happened long after my original post above). We thought it made sense. So we moved in, I paid the mortgage, but roll on approx 7/8 months we found we were struggling again. I can't actually remember what happened, actually, I do, my daughter needed to be seen by a specialised eye doctor (she has a bad curl in one of her eyes and is severely long sighted) but I remember in April of 2011 I contacted my lenders on the apartment and asked them if I could have a 'break' for that particular months repayment and they kindly agreed. This was the first time in my life I had ever, ever missed any repayment on anything. From then, my arrears seems to just catapult to just unbelievable heights. I believe 'compound interest' was added. Then the tenants in the property left. So I needed to get new tenants, sort the apt out, give the deposit back to the old tenants. At this time, I rang my lenders again for a 'break' and again they agreed, but they then advised me, in a very nice way, that my name would be put on the ICB as I'd missed 2 repayments. I remember getting a little frustrated on the phone with them, asking them, if they were going to now put me on the list what was the point in my making the repayments? There was no answer. So on and off I have been struggling with this mortgage. This sounds bad, and I know it does, but because we have been finding it all so hard financially I have had to dip into the rental income to ensure that we are all ok. I'm sorry to have to admit to that, but it's the truth. My lender wanted me to sign a new agreement with them agreeing to repay a new mortgage amount (this amount on their letter of offer was above the original mortgage amount in the first place and over a longer period, so I advised them I could not do this.
Ages of children: 3 todders - twins, nearly 4 and a 2.5 year old.
Life insurance: We have both cancelled our life insurances and house covers quite a while ago as we cannot service them. Also I no longer pay the maintenance fee on the apartment as again I cannot afford it.
What specific question do you have or what issues are of concern to you?
What does this new insolvency bill do for us? Anything??
Comments:
I'd like to add, that my husband's property is his solely. Currently you could say that I am a tenant, as are our kids. I had paid for a time his mortgage, but now cannot pay that as have been made redundant. He has advised BOI that he is selling it. They have agreed and house has been up for sale but zero takers. What hasn't been agreed is that it is in full and final settlement. Haven't had the strength to fight that particular fight yet.
The apartment is solely my problem. It is now rented out again for 750.00 p/m, but as I said previous,I've been dipping into this, which I know is wrong, but I don't feel I have any other choice. I think if there is nothing in the bill for us,that I have no option left but to either try to sell it and/or hand it back. But if I'm allowed to sell, the shortfall is horrendous, so how could I even hope to pay that back??
Two years ago, I wanted us to go the UK route. My husband was against it - he still is, but I'm not adverse to going across the border and getting myself sorted out as I'm not liable for his side of the debts. Things are very, very hard. I feel very nervous typing all this as I didn't really want the whole sorry truth out there. I'm ashamed, embarrassed and very low about it all. It really is like having this enormous weight on you and no matter what, being unable to shake it off or free yourself of it, so that you feel you can breath properly for a while. I was on anti-depressants for 4 months as I was finding it hard to even want to get up out of bed. I didn't even want to spend time with the kids. The effect of this has taught me MASSIVE lessons. I will never be in this position again, so I'm grateful for that, however the toll that it has caused, emotionally, physically and mentally....that toll has been a hell of a burden.
I'd like to know can the insolvency bill help us in any way? And if not, do you believe that this bill that our government has given the people who need help - is this it?
Thank you for your time,
Coleman
Spouse’s age: 39
Annual gross income from employment or profession: 0
Annual gross income of spouse: 0
Type of employment:
In general we are: Absolutely driven demented with this, struggling just to get through on SW.
Rough estimate of value of home: 100k
Amount outstanding on your mortgage: 161k (including top up of 30k, however there are arrears - at this stage, I really don't know how much as I have given up looking at the letters. Suffice to say I would be certain that there is an arrears figure of possibly 12-15k.
What interest rate are you paying : Tracker with BOI - 30k top up is at 3.5
Other borrowings:
9k overdraft on husbands personal current account
20k loan
8,500 credit card
2,500 credit card
14k tax bill
30k top up
Do you pay off your full credit card balance each month: No - 100e is paid every month on the 2,500 card. I initally was able to reduce this down, but has since gone back up again.
If not, what is the balance on your credit card: 8,500 plus 2,500 - 8,500 cc was my husbands with MBNA. He is now on the ICB and they have stopped making contact - last we heard from them was approx 8 months ago - bear in mind, that this started over 2 years ago.
Savings : so little pointless even completing this question
Do you have a pension scheme: I have. My employment ensured that there was one in place for me, for when the time comes. I do not pay extra into it. I used to, but I have given up doing that a long time ago. My husband has no pension scheme.
Do you own any investment or other property:
1 2-bed apt
Apt - The exact same apt is for sale currently on Daft for 135k. A similar property not far, but in a much better location recently went for 105k.
House - We are living in my husbands house. We initally were renting but decided to try to cut costs and initally again, this was fine. I paid the mortgage for a good while (this happened long after my original post above). We thought it made sense. So we moved in, I paid the mortgage, but roll on approx 7/8 months we found we were struggling again. I can't actually remember what happened, actually, I do, my daughter needed to be seen by a specialised eye doctor (she has a bad curl in one of her eyes and is severely long sighted) but I remember in April of 2011 I contacted my lenders on the apartment and asked them if I could have a 'break' for that particular months repayment and they kindly agreed. This was the first time in my life I had ever, ever missed any repayment on anything. From then, my arrears seems to just catapult to just unbelievable heights. I believe 'compound interest' was added. Then the tenants in the property left. So I needed to get new tenants, sort the apt out, give the deposit back to the old tenants. At this time, I rang my lenders again for a 'break' and again they agreed, but they then advised me, in a very nice way, that my name would be put on the ICB as I'd missed 2 repayments. I remember getting a little frustrated on the phone with them, asking them, if they were going to now put me on the list what was the point in my making the repayments? There was no answer. So on and off I have been struggling with this mortgage. This sounds bad, and I know it does, but because we have been finding it all so hard financially I have had to dip into the rental income to ensure that we are all ok. I'm sorry to have to admit to that, but it's the truth. My lender wanted me to sign a new agreement with them agreeing to repay a new mortgage amount (this amount on their letter of offer was above the original mortgage amount in the first place and over a longer period, so I advised them I could not do this.
Ages of children: 3 todders - twins, nearly 4 and a 2.5 year old.
Life insurance: We have both cancelled our life insurances and house covers quite a while ago as we cannot service them. Also I no longer pay the maintenance fee on the apartment as again I cannot afford it.
What specific question do you have or what issues are of concern to you?
What does this new insolvency bill do for us? Anything??
Comments:
I'd like to add, that my husband's property is his solely. Currently you could say that I am a tenant, as are our kids. I had paid for a time his mortgage, but now cannot pay that as have been made redundant. He has advised BOI that he is selling it. They have agreed and house has been up for sale but zero takers. What hasn't been agreed is that it is in full and final settlement. Haven't had the strength to fight that particular fight yet.
The apartment is solely my problem. It is now rented out again for 750.00 p/m, but as I said previous,I've been dipping into this, which I know is wrong, but I don't feel I have any other choice. I think if there is nothing in the bill for us,that I have no option left but to either try to sell it and/or hand it back. But if I'm allowed to sell, the shortfall is horrendous, so how could I even hope to pay that back??
Two years ago, I wanted us to go the UK route. My husband was against it - he still is, but I'm not adverse to going across the border and getting myself sorted out as I'm not liable for his side of the debts. Things are very, very hard. I feel very nervous typing all this as I didn't really want the whole sorry truth out there. I'm ashamed, embarrassed and very low about it all. It really is like having this enormous weight on you and no matter what, being unable to shake it off or free yourself of it, so that you feel you can breath properly for a while. I was on anti-depressants for 4 months as I was finding it hard to even want to get up out of bed. I didn't even want to spend time with the kids. The effect of this has taught me MASSIVE lessons. I will never be in this position again, so I'm grateful for that, however the toll that it has caused, emotionally, physically and mentally....that toll has been a hell of a burden.
I'd like to know can the insolvency bill help us in any way? And if not, do you believe that this bill that our government has given the people who need help - is this it?
Thank you for your time,
Coleman
Brendan Burgess
Founder
- Messages
- 52,175
The really key question here is whether you want to retain the family home or not.
I see that you have it up for sale. Is that because it's not suitable for your needs or because it is in the wrong location?
I have assumed that you are happy to be rid of it.
Where will you live after you sell your home?
If you want to keep it, then the answer would be different.
I see that you have it up for sale. Is that because it's not suitable for your needs or because it is in the wrong location?
I have assumed that you are happy to be rid of it.
Where will you live after you sell your home?
If you want to keep it, then the answer would be different.
Brendan Burgess
Founder
- Messages
- 52,175
A few initial comments and questions
I have summarised the numbers in the first post. Is the summary roughly correct?
Are you getting Mortgage Interest Supplement to pay the interest on your home mortgage?
You mention your ICB record. This is really irrelevant. You are not going to be in a position to borrow again for some time.
What are your employment prospects? In your earlier threads on askaboutmoney, you were earning €40k? You are now unemployed.
I have summarised the numbers in the first post. Is the summary roughly correct?
Are you getting Mortgage Interest Supplement to pay the interest on your home mortgage?
You mention your ICB record. This is really irrelevant. You are not going to be in a position to borrow again for some time.
You seem to feel ashamed of this? Given your level of borrowing and the size of your mortgage, missing payments is inevitable. The only shame should be if you choose not to make payments. You are not making an active choice. It's forced upon you.
I don't fully understand this. I presume that the amount is the amount now outstanding. This would be higher than the original amount if the interest charged exceeded the repayments made. I think that if you sign this letter, your repayments will reduce.
What are your employment prospects? In your earlier threads on askaboutmoney, you were earning €40k? You are now unemployed.
Brendan Burgess
Founder
- Messages
- 52,175
It is clear from the numbers involved that there is no prospect of you repaying these loans. Either your creditors have to agree to write down these loans or else you have to go bankrupt.
Let's look at what the Insolvency Bill might do for you...
You could try for a Debt Settlement Arrangement
Sell both your properties which converts the shortfall into unsecured debt.
A Debt Settlement Arrangement is for unsecured debts. 65% of your creditors would have to agree to this Arrangement. If 65% of them agree, then it is binding on the rest.
It looks as if Start or Bank of Ireland could veto any such arrangement. If they both agree, then it will be binding on the rest.
I would propose something along the following lines. "Look we are totally insolvent and can pay nothing. We will pay what we can for the next year and then please write off any remaining debt". They might or might not agree.
Under the proposed legislation, the maximum period for a Debt Settlement Arrangement is 5 years. But that does not stop you proposing one for one year. I can't see why anyone would propose a 5 year period.
If they don't agree, go to the UK or Northern Ireland and go bankrupt
Your children are young. The UK would be an adventure for them. You will probably find it easier to get work. After around 18 months, you can come back. You will have no assets, but you will have no liabilities either.
Advantages of UK bankruptcy
It's much more certain. We have no idea what Bank of Ireland or Start would agree to.
It's much quicker.
The law is in place - you could be over and back before the proposed Irish legislation is in place.
I think that the Irish tax debts would disappear.
Your pension fund would not be affected by UK bankruptcy - it might be available to creditors under Irish bankruptcy - you need to check this.
Let's look at what the Insolvency Bill might do for you...
You could try for a Debt Settlement Arrangement
Sell both your properties which converts the shortfall into unsecured debt.
A Debt Settlement Arrangement is for unsecured debts. 65% of your creditors would have to agree to this Arrangement. If 65% of them agree, then it is binding on the rest.
It looks as if Start or Bank of Ireland could veto any such arrangement. If they both agree, then it will be binding on the rest.
I would propose something along the following lines. "Look we are totally insolvent and can pay nothing. We will pay what we can for the next year and then please write off any remaining debt". They might or might not agree.
Under the proposed legislation, the maximum period for a Debt Settlement Arrangement is 5 years. But that does not stop you proposing one for one year. I can't see why anyone would propose a 5 year period.
If they don't agree, go to the UK or Northern Ireland and go bankrupt
Your children are young. The UK would be an adventure for them. You will probably find it easier to get work. After around 18 months, you can come back. You will have no assets, but you will have no liabilities either.
Advantages of UK bankruptcy
It's much more certain. We have no idea what Bank of Ireland or Start would agree to.
It's much quicker.
The law is in place - you could be over and back before the proposed Irish legislation is in place.
I think that the Irish tax debts would disappear.
Your pension fund would not be affected by UK bankruptcy - it might be available to creditors under Irish bankruptcy - you need to check this.
Brendan Burgess
Founder
- Messages
- 52,175
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.
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.
Brendan Burgess
Founder
- Messages
- 52,175
So what should you do now?
When the legislation comes into effect, you want to have converted both your secured loans into unsecured loans. I expect that the lenders will be far more flexible on unsecured debt than on secured debt.
Assuming you don't want to retain the family home, then do your best to sell it. As you will be writing off the shortfall one way or another, it doesn't really matter to you if the price agreed is low. However, if it's too low, Bank of Ireland might not approve of the sale.
Tell Start that you can no longer afford to keep up the repayments. Offer them an orderly sale of the property. Offer the following agreement.
Alternatively, we are happy to return the keys to you now and agree to a voluntary repossession.
You should end up then with €210k of unsecured debt.
At that stage, you can apply for a Debt Settlement Arrangement.
If they don't agree, you can go to the UK and bankruptcy will be a lot simpler as you have no secured loans.
When the legislation comes into effect, you want to have converted both your secured loans into unsecured loans. I expect that the lenders will be far more flexible on unsecured debt than on secured debt.
Assuming you don't want to retain the family home, then do your best to sell it. As you will be writing off the shortfall one way or another, it doesn't really matter to you if the price agreed is low. However, if it's too low, Bank of Ireland might not approve of the sale.
Tell Start that you can no longer afford to keep up the repayments. Offer them an orderly sale of the property. Offer the following agreement.
- We will put the property on the market through an agency nominated by you and accept your decision on the sale price
- We will do everything to maximise the selling price
- We will pay over the rent to you in the meantime
Alternatively, we are happy to return the keys to you now and agree to a voluntary repossession.
You should end up then with €210k of unsecured debt.
At that stage, you can apply for a Debt Settlement Arrangement.
If they don't agree, you can go to the UK and bankruptcy will be a lot simpler as you have no secured loans.