# Bankruptcy or settlement agreement?



## magnum (16 Jan 2014)

Hi,
I spoke yesterday with an insolvency practitioner.
After reviewing my situation he advised that I should go bankrupt or attempt first, (I think he called it) something like an 'insolvency agreement'?

He said that he thinks they might accept an 'offer' if I was able to get some money from somewhere!
He told me that if they know that I am going to go Bankrupt anyway, if I was able to get say €20K from a relative for example, he could offer this to them.
He said that he thinks they would go for it as better than nothing.

What do you think?

My debt (if I handed back my house) first would total about €300K
(€200K of that for Mortgage)

Is there a remote chance they would agree to this??
Also, I asked him 'but would it be as secure as going Bankrupt?'
ie; They (as in ALL Creditors) could never come after me after if they agreed.

Is this true??


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## Gerry Canning (16 Jan 2014)

Magnum, take the insolvency practitioners advice.
Bankruptcy is a costly hassle for any lender.

If lender agrees to accept k20 in full settlement , then it ends there.
You might then keep the house.


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## magnum (16 Jan 2014)

Hi Gerry, thanks for comment,

Yes of course I will listen to all advice given, I just want to be clear of what I am being told first and sure it is correct.

The house would be included in the debt and is the majority share (I hear you need 60% to say yes for it to be accepted)

My question is, will all my debt be 100% gone, exactly like in Bankruptcy? 
No chance later of someone coming after me?


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## Brendan Burgess (16 Jan 2014)

> (I think he called it) something like an 'insolvency agreement'?



Hi Magnum

This is a very important decision for you and so you should make sure you understand it fully. Ask the practitioner to set out the options for you in writing. This may cost you money if the first consultation was free.

It sounds as if he could be proposing an informal arrangement, whereby they would write off their debts in exchange for some cash now.  All creditors would have to agree to this.

Or he could be proposing Personal Insolvency Arrangement whereby the deal would be binding if 66% of the creditors agreed. 

Brendan


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## magnum (16 Jan 2014)

Hi Brendan,
Yes I am confused between the two. What is the difference?
Also, yes I am getting the feeling this could be costly all right. 
He mentioned casually some figure of 5K for costs for Bankruptcy either here or Uk,
so mmmmm


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## magnum (16 Jan 2014)

Also I have read that Revenue debt is not written off in some agreements.
Whats the different agreements one can have?


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## Dr.Debt (16 Jan 2014)

One of the main points for the OP is that you cannot go bankrupt in the 1st place without first making an effort to solve your situation through an insolvency arrangement. This is a requirement of the new bankruptcy legislation.

Most likely the PIP is talking about applying for a short term DSA or PIA (once the house has been sold) by trying to get the creditors to agree to a cash sweetner. There is no evidence so far that the banks are willing participators in this type of scenario

If you want to go bankrupt this step must be taken and its worth a shot for that reason alone.

Until the banks get their houses in order and start to engage with the problem and the various processes, i'm afraid bankruptcy is the only show in town.


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## magnum (16 Jan 2014)

Okay, thank you Dr.Debt,
So... if they agreed to a DSA or PIA would that mean that after no one including Revenue could come after me and all debt gone?


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## Dr.Debt (16 Jan 2014)

No its not as simple as that and this is where you need the guidance of a PIP.

Some debts are "excluded" some are "excludable" and some debts are "preferential" Certain tax debts will be classified as "excludable" which may give the tax man an option to remain outside the arrangement.It would be impossible to cover all the angels of this here.


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## Bronte (17 Jan 2014)

As I'm a very cynical person I'd be worried that this 20K is to try and pay the professional fees of the PIP.  

Magnum is is also abundantly clear that you don't know what is being proposed.  I'd be very worried that you might end up having dealt with the bank but liable to other creditors including revenue.  

I find it hard to believe a bank would settle for 20K, if you go in with an offer like that, and they smell money, they'll not settle, and will demand more.  And you'll then owe family money.  It's a very very rare situation, and risks family relationships, where it is advisable to borrow from family in these circumstances.  

Do you want to list all your creditors and income, you should think about doign the money makeover thread.


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## Brendan Burgess (17 Jan 2014)

Bronte said:


> As I'm a very cynical person I'd be worried that this 20K is to try and pay the professional fees of the PIP.
> 
> .



I think that the PIP's approach here seems right.  Try to resolve the issues without a PIA, DSA or bankruptcy by bringing in external cash. 

Part of the engagement letter should specify the fee and if the PIP charged €5k for clearing the OP's debts while keeping the OP out of an insolvency arrangement, they would deserve their money.


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## Bronte (17 Jan 2014)

Brendan Burgess said:


> I think that the PIP's approach here seems right. Try to resolve the issues without a PIA, DSA or bankruptcy by bringing in external cash.
> 
> Part of the engagement letter should specify the fee and if the PIP charged €5k for clearing the OP's debts while keeping the OP out of an insolvency arrangement, they would deserve their money.


 
Totally agree, but it's not clear this is what is happening.


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## Gerry Canning (17 Jan 2014)

I hear good advice on previous.
In short ,get your projected costs/agreement in writing.

I think in trying to sort Debt issues the biggest problems are

1. We don,t trust Banks.
2. We don,t trust their motives.
3. We don,t tust their agents.
4. We don,t trust Pip,s.
We are insecure
1. On their rights.
2. On our rights.
We are stressed out. 
1. We perceive they are all out to get us.
2. They perceive we are out to get them.
..............................................

Suggest . 
We have to trust someone .Keeping 2nd guessing any  advice we get and querying motives stalls resolutions.
 Surely a PIP can be trusted to give good advice and is properly Regulated ? 
At least PIP is a 3rd party.


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## Bronte (17 Jan 2014)

Gerry Canning said:


> I
> 1. We don,t trust Banks.
> 2. We don,t trust their motives.
> 3. We don,t tust their agents.
> ...


 
I like this Gerry, but one shouldn't trust banks, their motives or their agents, one has to be detached and focus on a solution that will work for one, and that which the bank will agree to. On 4 I'm not sure yet, and for sure, people don't know their rights, as all of this is new and so far we have seen little or no actual solutions, and a perception that the new insolvency paneaca is not fit for purpose. While we watch on disgusted, particularly today, at the pigs in the trough aka Animal Farm


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## magnum (28 Jan 2014)

Hi all, thanks for the replies, have not been on in a while!
I am meeting the PIP tomorrow. Still feeling a bit confused though. 
My mortgage is with Bank of Scotland and seen as they have left the country, he seems to think they might settle for anything rather than me going bankrupt and getting nothing.
They also hold the majority share of the debt so he says if they agree so do the others.
I am very skeptic about this, as he is suggesting offering them a figure of 20K or so and seeing what they say. May I add here that I do not have 20k!....BUT if there is a chance of coming out of this without Bankruptcy and ALL debts included then possibly my mother my lend me the money. Obviously I do not want to do this if I cannot be sure it will be as certain as Bankruptcy. 
Can anyone explain the legalities of a Debt settlement arrangement? Is all debt included?
Thanks again


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## Stu24 (1 Feb 2014)

Is it possible to petition for your bankruptcy before a property is repossessed/surrendered with negative equity of €100k or does the debt need to be crystallised?


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## Matthew Moore (3 Feb 2014)

Stu24 said:


> Is it possible to petition for your bankruptcy before a property is repossessed/surrendered with negative equity of €100k or does the debt need to be crystallised?



Yes you can apply to be adjudicated bankrupt before a property is repossessed. Once adjudicated bankrupt the Official Assignee will deal with your property.


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## 44brendan (3 Feb 2014)

Not necessarily or usually! As property is in negative equity the Mortgagee is likely to remain outside of the bankruptcy and rely on their security. Bankruptcy is not an option to avoid repossession!!


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## Matthew Moore (3 Feb 2014)

44brendan said:


> Not necessarily or usually! As property is in negative equity the Mortgagee is likely to remain outside of the bankruptcy and rely on their security. Bankruptcy is not an option to avoid repossession!!



I'm assuming he meant would he have to wait for it to be repossesed before the debt was included or could he go ahead with the bankruptcy before.


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## Stu24 (3 Feb 2014)

Thanks Pat, yes I was unsure if you could you say your liabilities exceed your assets by €20 k until after the property is sold. A friend of mine is considering surrendering her property and was unsure if she had to wait until after the bank sold it before going for bankruptcy as she has no other debts


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## Matthew Moore (3 Feb 2014)

Stu24 said:


> Thanks Pat, yes I was unsure if you could you say your liabilities exceed your assets by €20 k until after the property is sold. A friend of mine is considering surrendering her property and was unsure if she had to wait until after the bank sold it before going for bankruptcy as she has no other debts



Your friend should be aware that she must investigate a DSA/PIA to see if that is more appropriate to her situation.


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