# What choices do I have regarding my home and bankruptcy?



## magnum (4 Jan 2014)

I am considering Bankruptcy as I have debts due to a previous business as well as a mortgage of 300k on a property now worth 120K
What is the likelihood of the bank reducing the mortgage down to the current market value?
If the Bank does not reduce the mortgage can the assignee insist that I stay in my home or do I have a choice of handing over?
How much can be certain before the bankruptcy application process?
Thank you


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## Matthew Moore (5 Jan 2014)

magnum said:


> I am considering Bankruptcy as I have debts due to a previous business as well as a mortgage of 300k on a property now worth 120K
> What is the likelihood of the bank reducing the mortgage down to the current market value?
> If the Bank does not reduce the mortgage can the assignee insist that I stay in my home or do I have a choice of handing over?
> How much can be certain before the bankruptcy application process?
> Thank you



Based on my dealings with my mortgage lender I'd say it's very unlikely that they will write it down to the current value. I think your best hope would be that if the other debts were dealt with in bankruptcy you may have enough to meet your mortgage repayment if the mortgage lender opt to stay out of the process. I don't think the OA has a say whether you stay in the house if the bank want access to their security.
As far as certainty goes, nothing is certain at these early stages. If keeping the house is very important and speeding up the process isn't then you may be better to try and wait a year or so and see how other cases are dealt with. It's new to everybody, creditors, debtors, courts service etc


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## Jim2007 (5 Jan 2014)

magnum said:


> I am considering Bankruptcy as I have debts due to a previous business as well as a mortgage of 300k on a property now worth 120K
> What is the likelihood of the bank reducing the mortgage down to the current market value?
> If the Bank does not reduce the mortgage can the assignee insist that I stay in my home or do I have a choice of handing over?
> How much can be certain before the bankruptcy application process?
> Thank you



When you are declared bankrupt, creditors who have a charge over your assets will seek to enforce it and if there is a shortfall that will remain as a debt in your bankruptcy.

The bank's best strategy is to take position of property, dispose of it and seek to recover any outstanding amount from the bankruptcy, should there be any funds available.  The bank would be at a very big disadvantage as against the other creditors if they were to reduce the debt - the bigger the debt the bigger the share of the funds they are entitled to!


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## magnum (5 Jan 2014)

Thank you both pat2 and Jim2007.
But if I do not have the full repayment amount available for the mortgage, lets say I can only afford half that amount per month, then what?
if the Bank does not want to reduce the mortgage amount and I cannot pay anymore then half, will they sell my house (which is in negative equity) or make me live there and simply pay the half amount?
Whats more likely?


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## Matthew Moore (6 Jan 2014)

magnum said:


> Thank you both pat2 and Jim2007.
> But if I do not have the full repayment amount available for the mortgage, lets say I can only afford half that amount per month, then what?
> if the Bank does not want to reduce the mortgage amount and I cannot pay anymore then half, will they sell my house (which is in negative equity) or make me live there and simply pay the half amount?
> Whats more likely?



If you can only afford half your mortgage and can't supply the bank with a good explanation of how you will meet the full repayments very soon, either during or post bankruptcy, I see no reason why they would allow you to stay in your house. 
They will as Jim has said dispose of your property and hope to recoup the shortfall during bankruptcy. If you can only pay half they will want to cut their losses and move on, there's no advantage for the bank to continuing the relationship with you.


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## magnum (7 Jan 2014)

Thanks Pat2,
if the Bank does not do a write down and decides I can afford to pay them up to €250 per week which is the approximate home allowance for a single person when bankrupt,
do I still have a choice whether I accept that or hand back the keys and choose to rent somewhere else?


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## Bronte (7 Jan 2014)

magnum said:


> or make me live there and simply pay the half amount?


 
A bank is unlikely to let reduce your mortgage to a level that you can afford.  They don't seem to be doing such deals.  So they will insist the house be sold. 

Don't understand your question about being made to live there.  Nobody can force you to live anywhere.  If you don't want to live there, move somewhere else.


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## Matthew Moore (7 Jan 2014)

magnum said:


> Thanks Pat2,
> if the Bank does not do a write down and decides I can afford to pay them up to €250 per week which is the approximate home allowance for a single person when bankrupt,
> do I still have a choice whether I accept that or hand back the keys and choose to rent somewhere else?




I'm not really sure of the advice you're after. 
Are you worried that you could go through the bankruptcy process, bank could opt out and you get discharged still owing the full mortgage on a negative equity property?

I'd reccommend filling in the case study, people would be able to give you better advice. When you're on the page filling in the details there's a little box beside where you enter the title which says "Prefix", click this and select "case study".
Click on this link and follow instructions:

http://www.askaboutmoney.com/showthread.php?t=170704


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## Dr.Debt (7 Jan 2014)

I think this thread has become very confused. At least I am very confused.

If you are the sole owner of the house and you are declared bankrupt, then the legal ownership of the house becomes vested in the Official Assignee.You are no longer the owner of the house. In this scenario,the bank is likely to apply to the court for an order to have the house sold.

If you are joint owner of the house with your spouse and you are declared bankrupt then your 50% ownership of the house becomes vested in the OA. At this stage your spouse and the OA are joint owners. In this scenario the OA may attempt to sell his 50% to your spouse for a nominal amount (especially if the property is in negative equity) If this happens your spouse will then be 100% owner of the house and will enter negotiations with the bank as to whether he she can afford to repay the mortgage on it.

I think the main point that you seem to be missing is that once you are declared bankrupt your ownership of the property ceases and the bank will not be negotiating with you about anything.


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## magnum (8 Jan 2014)

So what I am hearing is... the moment I declare myself bankrupt the Home is no longer mine, so there is no chance of renegotiation or the Bank choosing to let me keep it at that stage?
yes, I am worried bank could choose to let me live there if I can pay the €250 rent allowance per week (its basically the same as my mortgage repayments, so why would the Bank not want that?)
I will also fill out the case study, thank you.


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## Dr.Debt (8 Jan 2014)

Yes, once you declare bankruptcy, the house is no longer yours.

I very much doubt that the bank will be interested in renting the house back to you at any price. Only time will tell how the banks will conduct themselves
within the new bankruptcy framework


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## Matthew Moore (8 Jan 2014)

Dr.Debt said:


> Yes, once you declare bankruptcy, the house is no longer yours.
> 
> I very much doubt that the bank will be interested in renting the house back to you at any price. Only time will tell how the banks will conduct themselves
> within the new bankruptcy framework



It is not necessarily true that he would lose the home if he can afford full repayments and have enough left for reasonable living expenses.

Taken from the ISI website on this page, [broken link removed]

_"A family home is the property in which a married couple or civil  partners ordinarily reside.  The bankrupt person's interest or share in  the family home transfers to the Official Assignee as with all other  property. 
You may not necessarily lose your family home in bankruptcy. You may be  able to agree a schedule of mortgage payments with your bank and the  Official Assignee, where such payments are within the Reasonable Living  Expenses approved by him._"

I have also seen scenarios published by the ISI where the bank opt to remain out of the bankruptcy. I would imagine that if they are opting out then it is only after consent from the debtor and OA.

Magnum, you should have a good look at your circumstances and make sure a PIA/DSA would not be a better option, especially if you have enough as stated to meet your mortgage repayments and reasonable living expenses. When you come before a judge in the bankruptcy he will have the power to adjourn the proceedings if he thinks a PIA/DSA is more suitable.


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## Dr.Debt (8 Jan 2014)

1. Its very unlikely that a bank will allow a 100% owner of a home to remain in the property after bankruptcy.
2. If no.1 was a possibility then there is no way that it will be allowed to happen without the debtor remaining on the hook for the full amount of the mortgage debt.

If the debtor remains attached to the debt, then what is the point in going bankrupt in the 1st place.

I think the ISI should come out and explain that sentance. As far as Im concerned, its pie in the sky and as no bearing with the reality of what is actually happening.

Yes I can understand certain scenarios where the bankrupt is only 50% owner of the house or scenarios where the bankrupt remains in the house as a tennant. I have never heard of a case where a bankrupt is allowed to remain in the house making mortgage repayments !!!


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## Matthew Moore (8 Jan 2014)

Dr.Debt said:


> 1. Its very unlikely that a bank will allow a 100% owner of a home to remain in the property after bankruptcy.
> 2. If no.1 was a possibility then there is no way that it will be allowed to happen without the debtor remaining on the hook for the full amount of the mortgage debt.
> 
> If the debtor remains attached to the debt, then what is the point in going bankrupt in the 1st place.
> ...



I suppose the provision is there for families who have other debt which they can't service while still meeting their full mortgage repayments. It enables them to deal with the other debt in the bankruptcy and be solvent on discharge while still able to pay the full mortgage repayment. 
I agree that a there will probably be no writedown if availing of this option. 
On the ISI website it states a family home is "_A family home is the property in which a married couple or civil partners ordinarily reside." _I'm sure they don't mean to exclude single parent families from this but I reckon a single person with no kids would be excluded.


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## Dr.Debt (8 Jan 2014)

Yes but we must first establish if we are discussing a family home or not. A family home with joint ownership between two spouses is a completely different situation to a single person owning a property on his / her own.

In Magnum's case I'm not sure which of these applies.


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