# Negative equity huge personal debt unable to make repayments



## outofmymind (6 Jun 2010)

Age: 27
Spouse’s/Partner's age: 35

Annual gross income from employment or profession: 18,150
Annual gross income of spouse: 0

Type of employment: e.g. Civil Servant, self-employed 

In general are you:  a
(a) spending more than you earn, or
(b) saving?

Rough estimate of value of home €140,000
Amount outstanding on your mortgage: €280,000
*What interest rate are you paying?  *5.47%

Other borrowings – car loans/personal loans etc

Credit Union: 14,000 (previously paying 600 p/m have sent letter asking to pay interest only. No response yet.
Credit card 1: 3,700 (0% interest until Jan 2011)
Credit card 2: 2,500 (husbands card with UK bank)
Credit card 3: 700 (husbands card with UK bank)
BOI business Loan: 10,000 (100 p/m. BOI agreed to freeze interest and reduce repayments)

Do you pay off your full credit card balance each month? NO
If not, what is the balance on your credit card? 

Savings and investments: 2,500 in credit union

Do you have a pension scheme? no

Do you own any investment or other property? no

Ages of children: 2 years

Life insurance: included with mortgage


*What specific question do you have or what issues are of concern to you?

I don't know where to start so I'm sorry if my post is long winded. Just want to try outline our circumstances and get any advise on what we should do.

Husband was self employed having started his own business but it wasn't working out so he was happy to get employment last Sept. Unfortunately he was let go in May as there was not enough work for him. He went to SW and was told he doesn't have enough stamps for JSB they told him they'd call to our house to look at business accounts to means test us for JSA.  That was 3 weeks ago and still no contact from them.  Meanwhile we are surviving on my salary which is 1400 net per month.  We have gone interest only on mortgage so that is now €1100 per month so not a huge decrease as we are fixed for 3 years on a high interest rate.  We live about 40 mins from Dublin and I need my car to travel to work.  Its only a banger worth about 1k..  Petrol costs are 200 per month.  We shop at Aldi and don't  have any sort of social life so there aren't many cut makes we can make.  We have borrowed from family in the past when the business wasn't doing well and still owe that money (approx 7k) thats how credit cards are so high as we used them also when we had no income from business.  We are economical with gas and electricity, have basic tv package etc. We're at our wits end and just don't know what to do.  Have called MABS but they have 10 weeks wait for an appointment but they did help over the phone.

We would love to walk away from our house as we can't see how we can ever afford it but I know this isn't an option in this country.  It was bad judgement on our part that we bought it as its not in a desirable location and is not ideal for raising a family in (we thought we were getting our foot on the ladder and had planned to move on after 2 years when we'd made our profit - how foolish were we..)

**Husband has been applying for jobs and has had interviews but was recently told he is over-qualified yet he can't get a job at the level he is at as there are no jobs to be had. So frustrating, as he really wants to work.*
*
As my husband is from UK and only living here 4 years we have considered getting jobs over there and living there in order to apply for bankruptcy.  Does anyone have any advise on this??

*


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## Marietta (6 Jun 2010)

How come your house has devalued by nearly 50% since you purchased it, the experts talk of a 25% and 30% decline but a 50% drop is shattering. 

There is an[broken link removed]here about UK bankrupty which you may find useful.


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## D8Lady (6 Jun 2010)

It looks like you qualify for Family Income Supplement, the detail of the applicaton form, phone no etc are in the link. 

I'd suggest taking 1500 of your credit union savings and pay off a chunk of the 3,700 credit card or some of the credit union loan.  
Leave the other 1000 in the CU available for emergencies - the car will  have trouble, something else will hit the fan...

Contact each of the other credit card providers and negotiate.

Have a look at the other threads on this same topic, you are not alone in this situation and there are ways of dealing with it.


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## Pat Bateman (6 Jun 2010)

D8Lady said:


> I'd suggest taking 1500 of your credit union savings and pay off a chunk of the 3,700 credit card or some of the credit union loan.
> Leave the other 1000 in the CU available for emergencies - the car will have trouble, something else will hit the fan...


 
I don't think the above is good advice. Rather than looking after the credit card companies, based on her circumstances the OP should hang onto whatever cash she has.


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## z107 (6 Jun 2010)

Your income is €18,150.
I can't see how you can service all of these loans on that income. Even if you didn't spend anything, but just used all your income to pay back the loans, would it be enough?

If it was me, I would be looking at that UK bankruptcy link that Marietta posted.


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## niceoneted (6 Jun 2010)

Yes your husband needs to get work and as you said he really wants to work but is overqualified, he should tailor his cv for the jobs he applies for, ie not show all his qualifications and dumb down his experience, not a nice thing to have to do as you should be proud of your qualifications and experience but needs must. 
Your on the right track contacting mabs. 
Is there any other way that you could take in extra money, are you working part time and perhaps could go full time, or something similar. 
I also don't understand how the house has devalued so much.


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## fizzelina (7 Jun 2010)

D8Lady said:


> It looks like you qualify for Family Income Supplement, the detail of the applicaton form, phone no etc are in the link.
> 
> I'd suggest taking 1500 of your credit union savings and pay off a chunk of the 3,700 credit card or some of the credit union loan.
> Leave the other 1000 in the CU available for emergencies - the car will have trouble, something else will hit the fan...
> ...


 
Good advice here re FIS and negotiating. However I just want to point out that when you have a credit union loan it is secured on the savings so it's not an option for the OP to take 1500 out and repay a card or be able to access 1000 for emergencies The savings balance stays in the CU untouched until such time as loan is repaid or almost repaid.
OP - this is a hard situation for you, dont beat yourself up for buying the house, just do an Income & Expenditure sheet (on MABS website) and contact the lenders saying your net income and what you can repay. MABS will help too. Please don't stress or worry, you are making efforts to repay based on your income so you're on the right track. Good luck.


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## Mpsox (7 Jun 2010)

niceoneted said:


> Yes your husband needs to get work and as you said he really wants to work but is overqualified, he should tailor his cv for the jobs he applies for, ie not show all his qualifications and dumb down his experience, not a nice thing to have to do as you should be proud of your qualifications and experience but needs must.
> Your on the right track contacting mabs.
> Is there any other way that you could take in extra money, are you working part time and perhaps could go full time, or something similar.
> I also don't understand how the house has devalued so much.


 
+1 on tailoring the CV, I get a lot in and it is obivous which ones have shown an interest in the job and who is adopting a "shotgun" approach and are just sending them out left right and centre

Also he  should check with the Social Welfare whether or not any of his UK NI payments (if he has made any) could count towards his social welfare application


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## JEON50 (7 Jun 2010)

Hi, your situation is not unusual, believe it or not, If is reasuring i have met 100's in my small village in exact same position. There is no quick fix. I strongly recommend you make a confidential meeting with MAB's. Forget about your UK Cards just for the moment. A rep from mabs will plede your case with a member of thr Irish bankers Fed and will trash out somethink. There is goverment proposals coming on negative equity, and the banks will have to take resonsibility for their actions


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## Bob_tg (7 Jun 2010)

outofmymind said:


> We are economical with gas and electricity, have basic tv package etc. We're at our wits end and just don't know what to do.  Have called MABS but they have 10 weeks wait for an appointment but they did help over the phone.
> 
> We would love to walk away from our house as we can't see how we can ever afford it but I know this isn't an option in this country.



You do need some professional/MABS advice, so good luck with the appointment.  They must be snowed under, but see if you can push them for something sooner.

Given your circumstances, you need to get rid of all unnecessary expenditure.  For example, you don't need a 'basic tv package'.  You can get most basic channels free-to-air.

Also, contact the bank and ask them for a 'mortgage holiday' for 3-6 months.  If they do give you that, then go 'interest only' after that for as long as possible.  If you are being asked to give up a tracker mortgage, seek further advice before taking that course.  It sounds like you are in the distant 'commuter belt' which would explain the house drop of 50%.

Increase your own income if possible, until your husband finds a job.  There might a few extra hours you can pick up in the evening or on a Saturday doing a nixer or some part-time work.

Can you rent out the house and rent somewhere yourselves for a bit less?  Perhaps you can move back in with parents/friends for a while?  Or get a one-bed apartment at less than the rental income you would get for your house?  Or, could you rent out a room in your own house (but it's unlikely someone would rent from a family given the availability of rental alternatives out there....but they might if the price was low).

If I think of anything else, I'll let you know.


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## outofmymind (7 Jun 2010)

Thanks so much for all the replies.  We only discovered the true value of our home the other day when I called into the see the showhouse beside us there are still 10 houses to be sold 4 of which are the same as ours and they are selling at 139k with extras like flooring throughout.  We bought in 2007 for 295k with no extras included so it really is a kick in the teeth.

Husband has lots of different cv's to suit different roles but as he was self employed for so long in a specific role its obvious he has good qualifications.  Maybe totally waffling and giving fake references might work!   

Thanks for the info on FIS will look into this.

We spoke today with two different bankruptcy solicitors in the UK and its looking like a good option for us.  It means we have to stop paying our creditors and will need to put money by for moving to UK and court fees.  Still leaves the task of husband getting job in the UK so prove our main centre of interest is over there but he has a lot of contacts and family over there so he's confident someone will employ him.

If we don't go ahead with UK bankruptcy we'll talk to MABS about helping us talk to creditors.  But we're really hoping bankruptcy works for us.  Its not going to be easy but it will be easier than life at the minute.

Thanks again everyone.


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## JEON50 (7 Jun 2010)

Ring at get past reception with MABS, if you can speak to an advisor they will see you within a week, I Know


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## doubledeb (8 Jun 2010)

Op you should qualify for FIS if you are working at least 19 hours a week or 38 in a fortnight.  Its your gross wage €349 less tax and prsi.  Based on €349 pw you should get €96 p.w from them.  There is a wait of about 10 weeks but if you qualify it will be back dated.  My advice is to keep the roof over your head, go interest only on your mortgage for a while.  You must be on a fixed rate of interest at 5.47%.  Can you transfer the UK CC's to 0% interest so at least whatever you can pay will go off the loan and not on interest?.
When is the fixed rate ending? when you go onto variable your mortgage payment should go down


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## Magpie (8 Jun 2010)

Marietta said:


> How come your house has devalued by nearly 50% since you purchased it, the experts talk of a 25% and 30% decline but a 50% drop is shattering.
> 
> There is an[broken link removed]here about UK bankrupty which you may find useful.




Its that not that unusual. Trust me I know about a 50% drop in value.


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## Romulan (8 Jun 2010)

I may be misreading the post but I fail to see how bankruptcy will help address debt issues you have within the ROI?

The bulk of your debts are located in the ROI and even if you move to the UK, the banks will work their way through the process here and you will still owe them the money you borrowed.


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## RIAD_BSC (8 Jun 2010)

Romulan said:


> I may be misreading the post but I fail to see how bankruptcy will help address debt issues you have within the ROI?
> 
> The bulk of your debts are located in the ROI and even if you move to the UK, the banks will work their way through the process here and you will still owe them the money you borrowed.


 
Under EU rules, the Irish courts would have to recognise the UK's bankruptcy decision. Your Irish debts would be all addressed under the UK scheme....


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## Marietta (8 Jun 2010)

Romulan said:


> I may be misreading the post but I fail to see how bankruptcy will help address debt issues you have within the ROI?
> 
> The bulk of your debts are located in the ROI and even if you move to the UK, the banks will work their way through the process here and you will still owe them the money you borrowed.


 
Read the article I posted above.  If the OP decides to move to the UK then he/she will not be able to return to live in Ireland for many a year because the banks here will pursue her for the amount owed.  She and her partner owe well in excess of €300,000 and her earnings of €18000 can not and will not service that sort of debt. It works out at over 15 times the OP annual salary. 

The figures just dont add up and you can't get blood from a stone.  I wish the couple well.


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## Marietta (8 Jun 2010)

Magpie said:


> Its that not that unusual. Trust me I know about a 50% drop in value.


 
I do sympathise wirth you, it must be soul destroying having to pay a high mortgage for a property that has halved in value.  Even if such a person  can comfortable pay the mortgage, one is left with that awful psychological feeling that one has lost out financially.


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## setesh (9 Jun 2010)

If I was in your situation, I would sell the house for what you can get.
Then rent a better house in Dublin near your work for around 900 per month or less.
You will still owe the remaining mortgage but at least now you could be in a better house and near your current job.
You have now slashed the mortgage repayment and eliminated car/fuel costs.
Both you and your husband will have access to more employment oppurtunities.

Conclusion, drop the debt, get into a better property and stay mobile for potential employment. 
You may end up renting for a decade but so what. Its better than potentially getting evicted.


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## Pat Bateman (9 Jun 2010)

Outofmymind, I hope you and your family are keeping well.

Given your circumstances, you should speak with MABS as soon as possible. Keep trying to make contact with them.

Some of the advice you've received within this thread is appropriate to your situation. Some is not.

I suggest you take no drastic action until you've spoken with MABS.


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## csirl (9 Jun 2010)

Marietta said:


> Read the article I posted above. If the OP decides to move to the UK then he/she will not be able to return to live in Ireland for many a year because the banks here will pursue her for the amount owed. She and her partner owe well in excess of €300,000 and her earnings of €18000 can not and will not service that sort of debt. It works out at over 15 times the OP annual salary.
> 
> The figures just dont add up and you can't get blood from a stone. I wish the couple well.


 
My understanding is that Irish law applies to the Irish debts and UK law applies to the UK debts. If the OP is not in debt in the UK, then how can they apply for bankruptcy there?


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