# Unable to repay buy to let loan



## Princeofdebt (5 Sep 2011)

The good news: I own a small block of apartments on longterm lets that pay the interest only tracker mortgage, and my home is mortgage free. The bad news: I am self-employed with no income and am living off dwindling savings, and with the repayment mortgage kicking in early 2012, I have no hope of making monthly repayments for the 15 year term left! The apartments are in negative equity and have no prospect of being sold in the next couple of years at least.
If I approach bank, they will seek judgement on my home. If I sell the home and leave Ireland with my family for good with the proceeds, what  can the bank take to seek repayment of the shortfall if I have no assets left in Ireland? Would the come to France or country outside EU to seek a charge on any property or bank accounts I may have there? I know, as a buy to let borrower, I am not in the same precarious position as many whose home is at risk, but


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## 44brendan (5 Sep 2011)

From the perspective of the Bank the position and options would be as follows:
They are tied into the interest only agreement until 2012 so until then they can do nothing provided you maintain interest payments.
After expiry of agreement they will look for full P&I repayments. Term of loan is not a major concern. The minimum expectation from the Bank is that you continue to meet interest payments. If the rental income is above the amount required to cover interest they are likely to demand an increase up to or close to the rent amount. If you refuse this they can appoint a fixed asset receiver to clooect the rents directly. However they are unlikely to do that if you offer them a reasonable monthly payment. They may also look for you to place some of the apartments on the market. Again they are well aware that sale will take time and do not expect miracles. 
Generally speaking provided you co-operate they are unlikely to take any legal action against you. While theoretically they can progress legally to obtain a judgement and put this against your house this is a last ditch scenario and provided you co-operate with them is unlikely. From your own perspective the worst case option in the short/medium term is that you will lose out on the surplus rental income that you currently have.


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## Irishbuk (5 Sep 2011)

May I suggest that if you have no problem moving abroad I would sell your house and keep the proceeds. Spend 4 to 5 months in the Uk as a first step to moving abroad. At the end of this period you can declare bankruptcy in the UK and this will completely wipe all your Irish debts. You will be discharged in 12 months and can then get on with your life and not have the debt hanging over you forever. Just google for bankruptcy and read related articles


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## Luternau (5 Sep 2011)

Irishbuk said:


> May I suggest that if you have no problem moving abroad I would sell your house and keep the proceeds. Spend 4 to 5 months in the Uk as a first step to moving abroad. At the end of this period you can declare bankruptcy in the UK and this will completely wipe all your Irish debts. You will be discharged in 12 months and can then get on with your life and not have the debt hanging over you forever. Just google for bankruptcy and read related articles



This suggestion makes no sense. If the op declares bankruptcy, they must file a statement of assets and liabilities. The proceeds of any sale  would vest the court appointed official and would most likely be disbursed to the creditors as part as the bankruptcy. After 12mths the op, has no debt (good), very little if any assets (bad), possibly no income (v bad) and a damaged credit rating.

The op is far from having to declare bankruptcy, and should discuss the matter with the banks as soon as the notice of switch to p&i arrives.


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## Bronte (6 Sep 2011)

44brendan said:


> While theoretically they can progress legally to obtain a judgement and put this against your house this is a last ditch scenario and provided you co-operate with them is unlikely.


 
Not so sure about this. He does not have the protection of the code of conduct on mortgage arrears for buy to lets.  Also what if he owes 1 million with sale of say 500K and the home is worth 500K. The bank would be negligent to not go after him in those circumstances. 

OP has given no figures so it's very difficult to give concrete advice. As in how much he is repaying now and how much the amount will increase by in 2012. He could sell the home, live in one of his apartments, reduce the mortgages on the rentals and see if the figures work that way.


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## Irishbuk (6 Sep 2011)

With regard to Luternaus reply to my bankruptcy suggestion I suggest his comments "make no sense at all".
POD says that when P&I kick in the bank will come after and take his home and he will be left with nothing - but he will have a damaged credit rating. Is it not better to have money in the bank, no overhanging large debt and an equally damaged credit rating. I know which I would prefer.
If he starts a new debt free life he has a far better chance of  approaching a bank for credit when he has no borrowings whatsoever. He will never get a loan with all the existing debt in place.
I say, get rid of the debt now and start a new life. Nearly 3000 people per week file for bankruptcy in the UK and they then start a new life. Its about time Ireland caught up with the rest of the World


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## TRipley (7 Sep 2011)

I thought you could only declare yourself bankrupt on unsecured debt?


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## Steve Thatcher (7 Sep 2011)

TRipley said:


> I thought you could only declare yourself bankrupt on unsecured debt?


 
Hello I have posted many times that you can declare bankruptcy and if you have secured debt on a property that you solely own, it can be writen off as the Official receiver takes control of that property andif there is no equity he asks the morgtgagee to sell it and realise the loss which he then includes in the bankruptcy.

Steve Thatcher


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## Steve Thatcher (7 Sep 2011)

Irishbuk said:


> With regard to Luternaus reply to my bankruptcy suggestion I suggest his comments "make no sense at all".
> POD says that when P&I kick in the bank will come after and take his home and he will be left with nothing - but he will have a damaged credit rating. Is it not better to have money in the bank, no overhanging large debt and an equally damaged credit rating. I know which I would prefer.
> If he starts a new debt free life he has a far better chance of approaching a bank for credit when he has no borrowings whatsoever. He will never get a loan with all the existing debt in place.
> I say, get rid of the debt now and start a new life. Nearly 3000 people per week file for bankruptcy in the UK and they then start a new life. Its about time Ireland caught up with the rest of the World


 
Hi you are right to an extent. So is the other poster. When you declare bankruptcy here in the UK you fill in the statement of affairs in which you have to state if you have disposed of any property in the last five years and where the proceeds have gone. In this instance the OR will be very interested in knowing where the sale proceeds from an unemcombered house are.
The problem still exists as to what to do with a blaock of flats which are in neg equity and may never come back, with rents which will not meet the mortgage repayment figures and no income. That to is a circle which will not square. Something has to give.


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## 44brendan (7 Sep 2011)

UK bankruptcy would not be a preferred option in this scenario. See my earlier post. provided you engage with the bank and co-operate in agrreing to pay over the rental income & if required putting the apartment block on the market they are unlikely to progress further if you have no significant income or assets other than your PDH. Selling your house and emigrating is not realistic as any sale would take time to achieve in the current climate and you run the risk of the Bank finding this out and initiating legal proceedings.


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## Bronte (8 Sep 2011)

Steve Thatcher said:


> When you declare bankruptcy here in the UK you fill in the statement of affairs in which you have to state if you have disposed of any property in the last five years and where the proceeds have gone.


 
Presumably he can just spend the money?  On whatever he wants?

What would happen if he didn't declare the disposal to the UK receiver?  Which I presume some people are doing.  Would it make the bankrupty invalid.  Would that be a criminal offense I wonder.


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## Princeofdebt (11 Sep 2011)

Many thanks to members for suggestions. To clarify my position, the following points are relevant:

1. If I sell my debt-free home in Ireland and send proceeds to France or outside EU, I cannot declare bankruptcy in UK unless I omit to declare these funds under statutory oath. 
2. I am not woried about my credit rating as I will not be borrowing from the banks again given my age close to retirement.

My question still stands...  If I sell any assets I have in Ireland and emigrate to a foreign country taking the proceeds with me to live out my retirement, what steps can the mortgagor take against me living abroad to enforce a judgement they are likely to get from the courts in Ireland if I have no assets here other than the apartments on which the mortgage is held? Surely they will have to sell the apartments to get as much as they can, and then write off the balance?


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## Bronte (12 Sep 2011)

They are probably unlikely to follow you abroad. They'd first have to find out where you are and the costs of taking you to court in a foreign jurisdiction would have to make sense to the bank. So far we have not seen any evidence of the banks chasing all the bad debt emigrants. And there are plenty of them.  No doubt you'll meet them wherever you end up.


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## Luternau (12 Sep 2011)

This post should not have appeared here. Can you delete this entry?
L


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## Steve Thatcher (14 Sep 2011)

Bronte said:


> Presumably he can just spend the money? On whatever he wants?
> 
> What would happen if he didn't declare the disposal to the UK receiver? Which I presume some people are doing. Would it make the bankrupty invalid. Would that be a criminal offense I wonder.


 
If no disposal is admitted on the form, this is a bankruptcy offence. The Or can ask for a suspension of the discharge for up to 15 years. Also, it may be hard to disquise as there is other information that is asked for on the forms such as bank statements, which could show the flow of money. If these are left out, this would be very grave.


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## Bronte (19 Sep 2011)

Steve Thatcher said:


> If no disposal is admitted on the form, this is a bankruptcy offence. The Or can ask for a suspension of the discharge for up to 15 years. Also, it may be hard to disquise as there is other information that is asked for on the forms such as bank statements, which could show the flow of money. If these are left out, this would be very grave.


 

Well I'm sure some people will hide the money if they can.  How grave an offence is it?


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