# Is it better to walk away from your house



## NL1001 (24 Sep 2008)

I was wondering if someone has an answer about why not to give the keys back. My situation is that Im from UK, but family commitments bought in commuter belt (new build, no stamp). House has since falled by about 80,000 and still are for sale (ie still dropping). The repayments are pretty crippling and I have no standard of living (3 hr commute each day). I have been offerred a good job back in UK. Due to houses location, there is little rentable value (massive over supply in area) and I have about 50,000 negative equity 

Now if I didnt repay the mortgage and walked away, in about a year Id be able to buy a house in the UK no worries with a big deposit and small mortgage. I currently pay over 2,000 a month of which 1500 is interest, so i reckon it would take approx 5 years to get back to zero equity (and that excludes inflationary factors) by which time I would have saved over 100,000 euros. Seems a no brainer in financial standpoint (i blame the bank for giving a single person a 6x multiplier)

My question is really, what are the implications of walking away if i dont intend to work in Ireland again. What if I did come back to work in ireland, would the bank come after me. I know in the UK the bank can come after you for 12 years. Is there a similar rule in ireland? 
I have tried but cant find anything about the reality or implications of reposession apart from its hard to get another mortgage.

Can anyone give advice. Should I try to keep up the repayments for years to get back to net zero on the house, or move back to England


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## room305 (24 Sep 2008)

*Re: Is it better to walk away form your house*

Well, assuming the bank salesman didn't actually force you to sign at gunpoint (in which case the contract is null and void anyway), you have to accept responsibility for your debt.

That aside, I see no reason why should condemn yourself to a three hour commute indefinitely when you can move back to the UK and enjoy a much better quality of life.

Here's what I'd do if I were in your position. I'd arrange a meeting with the bank manager and tell them I was consider reneging on my mortgage agreement. Sending them a quick jingle mail and flitting to another country (under no circumstances disclose what country).

Ask them if they'd consider agreeing to a "short sale". In a short sale you sell the house at whatever price the market will bear and they take the hit on the difference between that and the outstanding balance on your mortgage.

If they are smart they will realise this is a better deal than having you do a runner and having to begin legal proceedings against you in order to repossess the house. During which time house prices will continue to fall and the house will lie vacant.

If negotiations are not going well you could perhaps sweeten the deal by agreeing to pay a portion of the outstanding balance on your mortgage after the sale from savings.

This is only my personal opinion and I have no idea if there are further legal issues that I am unaware that would make this a bad idea.


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## camlin90 (24 Sep 2008)

In Ireland the bank is legally entitled to pursue you for the negative equity if you hand back your keys. This should be quite easy for the bank to pursue anywhere in the EEA.

And rightly so IMO. 
If you were forced into this transaction against your will, were of unsound mind, etc, you have plenty of comeback under contract law. Otherwise we make our decisions and stand up to their consequences like the big boys and girls we are.


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## room305 (24 Sep 2008)

John J said:


> In Ireland the bank is legally entitled to pursue you for the negative equity if you hand back your keys. This should be quite easy for the bank to pursue anywhere in the EEA.



But he is surely entitled to negotiate with the bank an agreement to have them waive the negative equity from the sale?

The alternative for the bank is lengthy and costly legal fees to repossess the asset. At which point it will have depreciated considerably from its present value (as the market continues to fall and the house is vacant). Once sold the bank faces the costs and difficulty of locating the OP and then launching a legal battle for recovery of monies owed.

I don't know about you, but if I was the bank manager I'd consider taking the fifty grand hit on the chin.


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## cjh (24 Sep 2008)

NL1001 said:


> (i blame the bank for giving a single person a 6x multiplier)



Do you blame yourself at all? Do you have any personal responsibility in this?


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## Deb___ (24 Sep 2008)

NL1001 said:


> in about a year Id be able to buy a house in the UK *no worries* with a big deposit and small mortgage.





NL1001 said:


> i reckon it would take approx 5 years to get back to zero equity (and that excludes inflationary factors) *by which time I would have saved over 100,000 euros.*



If you can save 100k in 5 years (or 80k if you added interest on already) and if paying a big deposit in a year is no problem to you then how come you can't afford the mortgage? At least I'm sure the bank will see it that way. 

Can you live the rest of your life with this hanging over you? You're fortunate to have a good job offer, you're not broke thankfully. Do all you can to get out of this legally and ethically now I'd say, don't let it drag on for years and wear you down. Perhaps ask if you can pay interest only for a year while you're trying to sell it. Even though there's a glut of rentals available, you could still let it out for 20%, 30% or even 40% below the cheapest rental in your area. Some money coming in from rent is better than none.


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## roro123 (24 Sep 2008)

Thats a hefty mortgage. If you bought a house and pay that much and still live 3hrs commute then you must have bought a monster gaf in the sticks.
What county is the house in? Maybe your term is too short- Did you get one of those sub-prime type specialist mortgages? Best thing to do is to contact the Bank and explain the circumstances. Keep in contact with them, maybe they could agreed to stretch your term out a few years and bring your repayments down in the medium term, that way they can carry the "loss" without having to write it off now- you know there will be an upswing at some point. Every month going by  is another month of potential buyers building up who still want to own there own house and sooner or later the demand will match supply. Alternatively you could sell privately for a serious knockdown and reduce the debt you owe and the interest payments that you would have to service on the larger capital sum. Seek advice from MABS.
Otherwise you're just being lazy handing back the keys-damaging your credit rating i the process. UK housing market is in no great shapes either.


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## NL1001 (25 Sep 2008)

to answer a few responses

1. Of course I feel partly to blame. I have never been in debt in my life. I am currently putting every penny in to try to reducey negative equity. But to play devils advocate - I am not an organistaion that deals with loans debts and risks. The bank just wanted my money. With extornate stamp duty you were forced to buy in the commuter belt. The government just milked it while they could. All this mess was pretty avoidable. - (end devils advocate)
But because its not in my nature to do the jingle mail, that why I have asked. 

2. Deb.If i didnt pay 2,000 *12 months * 5 years= 120,000 , well inxs of 100,000. This is how I could save this money. I have a family home in the UK I could live in rent free. But in the same time I would have reduced my mortgage by only 30,000 (still 20K neg equity). Do you think house prices will be 10% up on what they are today in 5 years. Its anyones guess. But it means I pay 120,000 euros to end up net zero. (actually still in debt when inflation is included). You are right about the big deposit. after a year i reckon i could save approx 35K without paying a mortgage or rent and a better job. moving into an nice apartment in UK of 200K leaves only 1000/month mortgage - currently i pay 2.5K/ month which is every penny i have spare. 

3. Roro - No the duplex was 390 out near Naas. Means 30 year mortgage of 355 now over 2K per month + mgt fees. Managed to nail the curve right at the tip. basically 1.5 hours each way from door to work. Has got a bit better with red cow, but still not pleasent. But cant extend as im 35 and 30 years is longest mortgage I can get. And an extra 5 years deosnt reduce payments by much. But in about 1 year will be a good time to buy in UK. 30% lower than 18 months ago. 

4. The rentral market is real bad out there, last year 2 places in the surrounding, now 13 as all the investors look to get some money back. Realistically I could get 600 net per month (taking fees out) undecutting the market by 20%. Actally that reduces to 400 when you then take off the govt subsidy as I wont live there so dont get the rebate. So I'll still be paying 1600 and now I dont live in the house. Which honestly doesnt really make that much financial sense.

5. JohnJ - again playing devils advocate. I made a decision, but so did they. They gave a securitised loan, basically trying to make as much money as possible. They had no problems taking my money gambling on the fact i could repay a 6x multiplier they were only too happy to give. If they lose then they have to live with their decisions and stand up to their consequences like the big boys and girls they are. 
Contracts are 2 ways. They lend me money saying if i cant repay they take the house based on their informed valuation. (this appiles if there is positive or negative equity on the house). A few months ago they upped my mortgage repayments because of the credit crunch. So without an increase in base rate they take more of my money because they want more money. Very simple. Someone makes a bad deal in US, I pay 30 quid extra a month. When do they live with their consequences. Never it seems. We do. (Apologies for the mini rant)

I appreciate that I have a good job, but my quality of life is pretty non existent (working 7-7 every day.) and I am lucky in that respect. But it does feel like a noose. I cant get work away or  abroad and further my career as I cant afford to pay for the house here (see earlier point re renting). I appreciate I made a mistake buying a house, but then the advice of the bank was very much pesuading me to buy saying if i didnt buy now I wouldnt be able to afford it in future. It seems kinda rich considering my pension fund has dropped and I dont expect them to stump up  the loss. They sold me the mortgage based on an asset they valued (and charged me for the privilege) as a security and yet Im meant to pay the difference. 

I think the next step is to see the bank manager like room305 suggests
But it seems that the main issue is the bank trying to chase me for the money and credit rating. But reading between lines, lots of foreigners moving home, 1 in 8 homes in dublin unoccupied, rents reducing, houses not being completed as developers just abondain builds, think its a while away before the supply/demand curve moves and prices go up. stamp duty still makes it impossible for others to upgrade. at what point do you cut your losses

Any other advice real appreciated. i still dont know the exact legal position i would be in if i 'jingle mail'. what powers do they have. how hard is it to reclaim the money. how long does it last? What about jurisdiction. does anyone have experience?


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## ClubMan (25 Sep 2008)

NL1001 said:


> My question is really, what are the implications of walking away if i dont intend to work in Ireland again. What if I did come back to work in ireland, would the bank come after me.


If you are seriously considering this course of action then you might want to talk to a solicitor first.


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## nolaig90 (25 Sep 2008)

Why not give back the keys, i have a friend in a similar situation the bank gave him a loan for a house that was 93miles from work, daily commute was a bummer doing 12hr shifts in Dublin. One morning driving home he fell a sleep at the wheel of the car which the same bank owned by terms of a loan. car was a write-off €20k down the drain and the insurance wouldn't pay out due to a tyre-thread being below legal limit.
lucky to be alive several weeks out of work behind on his payments no money for another car and forced to rent near his place of work he has defaulted on both loans and the banks are after him. he tried to get the bank to take the house back they wouldn't except a short sale, and any moneys owing on the car loan he could keep repayments going as his circumstances had changed.
now he has just left his job a few weeks ago and moved to england. and far as he is concerned this mess is left here and it has nothing to do with him any more. As far as i know from what he said to me that they cant do anything to him in the UK. if the chase hi in the UK he will declare himself bankrupt.
UK have bankruptcy laws there and for £300 pounds he can declare himself bankrupt which he can't do here.


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## stephen1381 (25 Sep 2008)

Surely it can't be that easy to just walk away from a mortgage with no consequences, I'd imagine it would affect your credit rating in the UK.


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## mainasia (25 Sep 2008)

Who cares about credit rating when somebody owes that much!


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## Mo Sizlak (25 Sep 2008)

_i have a friend in a similar situation the bank gave him a loan for a house that was 93miles from work, daily commute was a bummer doing 12hr shifts in Dublin. One morning driving home he fell a sleep at the wheel of the car which the same bank owned by terms of a loan. car was a write-off €20k down the drain and the insurance wouldn't pay out due to a tyre-thread being below legal limit.

_So the evil bank sold him a house 93 miles from work? My goodness! That must have been a shock for him when he moved in. And the bank made him fall asleep at the wheel? Unbelievable. The bank should have had someone in the car to make sure he was driving irresponsibly like that. He could have killed a child or something, and it would be the BANK'S fault. And then they gave him a car with low tire tread depth? Shocking - I mean, it's not like you are responsible for maintaining your own car - the bank should send someone around every week to check it out for you...

Serioulsy, people like your friend are the same as the sub-prime clowns who have caused the credit crunch in the US. People like that and possibly the OP should NEVER be allowed to borrow ever again, they clearly are not capable of dealing with credit and try to deny responsibility for their own choices.


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## Bronte (25 Sep 2008)

I don't agree with the sentiments expressed that people do not have personal responsibility for their actions.  No one forced anyone to take large mortgages on a house miles from work. Having said that I agree that banks were reckless in their lending.  If what Nollaig 90 says is true and that by returning to the UK you will not be chased by the Irish bank, and it will only affect your Irish credit rating than I'd say you've nothing to lose except that a person who does this once will be the type to always blame someone else.  But then again we all make mistakes from which we need to move on and I know Irish people who posted the keys to their bank and left England after the last crash and moved to Ireland to rebuild their lives.


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## BoscoTalking (25 Sep 2008)

I am curious here. what if NE had not arrived here - op would be paying the now crippling mortgage and be commuting to his job?

You were not forced to be a homeowner. It was just easy for you.


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## dodo (25 Sep 2008)

At the end of the day if you feel you just can't keep up with the repayments and you give the keys back to the bank.If you have no money what are they coming after you for ?.If you have no money then what can they really do to you.Of course in the future if you where to have assets then they could come after you for those,So if you have nothing then what can you give them.
I also know that if one had a home mortgage and also a investment house that if you defaulted on the investment house the bank cannot go after your family home.This is my case if things ever got that bad.This is something that our solicitor explained to me at the time.


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## Kemo_Sabe (25 Sep 2008)

dodo said:


> I also know that if one had a home mortgage and also a investment house that if you defaulted on the investment house the bank cannot go after your family home.This is my case if things ever got that bad.This is something that our solicitor explained to me at the time.


 
only if you have a non-recourse mortgage on the investment property

otherwise they can take everything you've got


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## LDFerguson (25 Sep 2008)

Rather than handing back the keys, why don't you rent it for less than the market rate in the area?  Then move back to England and supplement the mortgage until you get out of negative equity.


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## Bronte (25 Sep 2008)

What is a non recourse mortgage and why on earth would a bank allow such a thing?


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## Kemo_Sabe (25 Sep 2008)

here you go

I doubt there's any here, they are very common in America, especially California

I also doubt that dodo has one on his investment property and that his solicitor is, well, *wrong*. If you default on one mortgage, the bank would be well within its rights to go after your other assets (PPR, pension fund, savings, investments, future earnings etc) in order to recover your debt.

This fantasy security blanket that some people have (like OP) of ' shure, if the worst comes to the worst, I'll just give the keys back to the bank and they can't touch me' is not correct. Sorry to be the bearer of bad news.


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## Bronte (25 Sep 2008)

Kemo_Sabe said:


> This fantasy security blanket that some people have (like OP) of ' shure, if the worst comes to the worst, I'll just give the keys back to the bank and they can't touch me' is not correct. Sorry to be the bearer of bad news.


 
Well people in the 80's were able to do just that in the UK.  A bank is not going to chase someone who has left the jurisdiction, has no assets and no job.  Yes it will affect the credit rating but as I understand it even that has a time limit.  
Dodo can you clarify why you think your investment property is not linked to your family home in a default situation - other than my solicitor told me so.


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## ClubMan (25 Sep 2008)

Bronte said:


> Well people in the 80's were able to do just that in the UK.


What happened in the _UK _in the past may be irrelevant to what the options are here and now in _Ireland_.


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## groom (25 Sep 2008)

Bronte said:


> Well people in the 80's were able to do just that in the UK.  A bank is not going to chase someone who has left the jurisdiction, has no assets and no job.  Yes it will affect the credit rating but as I understand it even that has a time limit.
> Dodo can you clarify why you think your investment property is not linked to your family home in a default situation - other than my solicitor told me so.



Not sure about that. Have heard plenty of posts where people are talking about UK banks coming after them/their friends here a decade later for the principal and the interest from the meantime. 

I know my neighbour was chased through the Irish courts by a UK bank for a debt from years earlier. He similarly tried to deny responsibility and painted a rant on his gable end about the 'Jewish conspiracy' hounding his family. But they got him in the end and they'll get the OP as well if he tries it.


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## nolaig90 (25 Sep 2008)

nolaig90 said:


> Why not give back the keys, i have a friend in a similar situation the bank gave him a loan for a house that was 93miles from work, daily commute was a bummer doing 12hr shifts in Dublin. One morning driving home he fell a sleep at the wheel of the car which the same bank owned by terms of a loan. car was a write-off €20k down the drain and the insurance wouldn't pay out due to a tyre-thread being below legal limit.
> lucky to be alive several weeks out of work behind on his payments no money for another car and forced to rent near his place of work he has defaulted on both loans and the banks are after him. he tried to get the bank to take the house back they wouldn't except a short sale, and any moneys owing on the car loan he could keep repayments going as his circumstances had changed.
> now he has just left his job a few weeks ago and moved to england. and far as he is concerned this mess is left here and it has nothing to do with him any more. As far as i know from what he said to me that they cant do anything to him in the UK. if the chase hi in the UK he will declare himself bankrupt.
> UK have bankruptcy laws there and for £300 pounds he can declare himself bankrupt which he can't do here.


follow on:
now i'm not trying to make anyone feel sorry for him. but i feel there are a lot of people in similar situations. 
this colleague from work worried himself sick about the situation he was in. he went out to find help with mabs, citizen advice they couldn't help his debt was to high. because mortgage rates went up from a base 2per cent to 4per cent and the cost of fuel went up this took all his disposable income away from him. i remember this person used to sleep in the car out in the car park some days because he wouldn't have the money for fuel to drive home.
this person is very nice person, very easily taken advantage off, has tendency to be to trusting and believing in what people used to say to him, estate agents and mortgage brokers sold him a package that wasn't suitable for him. and when interest rates went up the stress limits rose on his finance.


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## room305 (25 Sep 2008)

LDFerguson said:


> Rather than handing back the keys, why don't you rent it for less than the market rate in the area?  Then move back to England and supplement the mortgage until you get out of negative equity.



Surely it makes more sense to sell now at a loss and to continue to repay the balance outstanding on the mortgage when he returns to the UK. At least this way there is a cap on the amount he has to repay and he doesn't have to try and manage a rental property while living in another jurisdiction?


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## Tank (25 Sep 2008)

NL, Unfortunatly the banks have given away too much money in the past ten years, as is quiet evident.   That said, everybody is responsible for their own decisions and blaming the banks wont get you anywhere.   Although I think that the banks deserve you walking away and throwing the keys back at them, I couldnt condone that type of action and I think that the solution may not be so painful as you think.

You may be surprised at what the banks will accept if they know that there is a high risk of you either walking away, or disappearing.   Some money is better than none to them.   I would organise with them to sell the house, tell them that you are leaving, and negotiate a deal on the remainder of the bad debt, aiming to halve the bad debt payment.   Stretch this payment over a manageable time that you can pay without affecting you too much.  Everybody gains more than the alternative.   Push this hard with them, as they are more likely to say no at the beginning, but if they understand that there are no a lot of alternatives, you may get something out of it.

My information above is based on a recent situation where I saw a large loan in the process of being disolved from 4 Million to 3 Million by one of the lending instituations.   Not a done deal yet, but what happens to high risk cases.

All the best though.


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## roro123 (25 Sep 2008)

Well , you seem to have done a lot of thinking on this and ultimately if you feel your options are better in the UK then moving there seems preferable to struggling with your finances here. Ideally I'm sure you would prefer to meet your obligations to the best extent possible and would give you a clear conscience as you move on in life. 
Like it has been said above, Solicitor, MABS and Bank is the best way to try and draw a line under it. The Bank would probably be more flexible if you approach them before you default rather than after. Make sure you put everything in writing and keep copies. 
 The limits on the mortgage term applies really only to new applicants or much older clients, but coz you are already in the game the bank could stretch this, or at least on the neg equity remaining. The one size fits all mortgage arrangement needs to be rethought in the current climate. Your  "new loan agreement" could have a term of 40 years but stipulation of the agreement could be that its reviewable on a yearly basis and renegotiated (hopefully in the banks favour) to suit your station at that stage. 
Longer term years reduces the repayments in the medium term - once you get on your feet in the UK you can start to overpay and reduce the debt quicker. Give them a plan because the banks sure as hell don't have one.

Your approach should be one of trying to sort this out but demanding that they deal with this as a priority. Make a complaint to the banks complaints dept if you feel they are not giving you the service you expect and leaving you in limbo. Follow up the complaint with the regulator/ombudsman, put in a call to Joe Duffy, keep the hassle and pressure on and maybe they will consider your proposals and agree to come to some arrangement. 

If they won't let you stretch the term, tell them you want one of those "roll up the interest mortgages" that they give to those developer friends of theirs ,just until the recession is over and prices start recovering. (only kidding on this one)

If they don't want to know and don't want to assist you then head off to the UK and and start over. You wont have been the first person in the world that has been in this position.
Good luck and let us know if your bank does assist you in this.


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## VOR (26 Sep 2008)

The bank will find the O.P. in the U.K. If he as much as registers to vote, he will be found. Does any one genuinely think that the bank will not go looking for over €300,000? 
There's a good chance they have his parents address already from his mortgage application. He might have given it as a previous address.
Running away is not the option. Talking to the bank is the correct thing to do.


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## Tank (26 Sep 2008)

I agree with VOR.   Walking away is not the way.   You wont even be able to buy a sofa on credit if you do that.   Broker a deal with them, as they wont want the hassle of re-posessing, forclosure or to costs of sorting this out...   If they know that you are willing, but stuck, they will realise that their own options are restricted.


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## Mopsy (26 Sep 2008)

IMO , you have defininte a lot on your plate at the minute and the long commute is more time for thinking every day. But you need another slant on this situation.

Take it step by step. 

This is only an opinon, but because of your situation,  you should perhaps talk to MABS first and ge the low down from them. It might seem that MABS are for people who have small debts, but I am sure they have trained advisors who will go through the situation with you and help you see a way out. You need another thinking on this before you make any rash decisions which may have long term implications way into the future. You say now that you might never come back to this country, but who knows? nothing is certain.

Definitely, following outside advice be it legal or above, you should talk to your Bank. Keeping them in the loop might seem the worse thing at the moment, but I am sure there are others in similar situations and they would be no strangers to this plight at the minute. Ignoring any debt, does not make it go away..............


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## Tank (26 Sep 2008)

I agree with Mopsy.   Maybe some of our comments are adding to what is on your plate.   Good solid advise from the right people will help you through here, and a step by step approach is important.   There are many people in this situation at the moment and good advise should be readily available from teh bank.


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## skatter (31 Jan 2009)

WoW! This is so familiar. My brother in Canada went through University and came out the other side overeducated and jobless (this was 15 years ago). Three months after graduating the student loan was called in. He hadn't a job, was looking and living with my Mum (not on welfare). He was harassed and agonised over the situation and came to the decision to declare himself bankrupt. Thousands of others did the same as jobs were scarce at that time...they didnt care because they were mostly on welfare and couldnt get credit anyway. The banks realised what was happening and it is now illegal to declare bankruptcy (in Canada) on a student loan. He never had any regrets and after 10 years his (bankruptcy) record was clean and he was doing very well. 

I am not suggesting that you should do what you are thinking on....but I would say that I doubt that it will be an option for long: this is a global situation and these issues are no doubt being looked at.

If you walk from your job here your mortgage interest protection will be void. I suggest you talk to your bank. 

You should also think about the fact that the Euro and Stirling are very close now and the UK minimum wage is much lower then ours. If you go to the UK and dont succeed in getting a good job then you might well be in a situation that is much uglier then this.


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## Soarer (31 Jan 2009)

@ NL1001 :  Why don't you go back to your bank manager/mortgage broker and negotiate a few things?
Firstly, €1500 per month interest on a €355k mortgage equates to 5% interest. There's no way you should have to pay that much interest in your position. The average variable rate at the minute is 3.5%. Even AIB have a 2 year fixed rate of 3%. By switching to a variable, you'd save yourself the guts of €500 per month on interest. That's not to mention the your TRS rate.
Secondly, you can get a 10 year Interest Only mortgage on investment properties. Switch to this, and you'll be saving the €500 per month on your capital payment every month (no point in paying off the capital when the value's falling!).

By doing these two things, you'd be saving €1000 per month on the €2000 per month you're currently paying.

Then, if you take in €600 per month in rent after management fees, all of a sudden the house is standing you €400 per month, again exluding whatever TRS you're entitled to.

So surely you'd be able to move back to the UK, live rent free, pay the €400 per month to keep your Irish house ticking over, and save for your deposit over there?

You're in a great position to bargain with the bank. They don't want to take your house, as they don't want the hassle of trying to sell it and chasing you for the difference.
This way, they still make their interest, you keep the house, you move to the UK for a better standard of living, and you can save for a place of your own.

Everyone's a winner!


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## rk80 (11 Feb 2009)

Can you declare bankrupcy here and it not affect your uk credit rating?


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## bond-007 (11 Feb 2009)

You can easily declare bankruptcy here if you have 2K in cash or assets lying around. The banks don't like it as they can't use the usual methods of harassment to get money out of the stone er debtor.


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