# Failed to strike deal with bank - what happens next?



## Adecco (20 Jul 2015)

I was trying to negotiate a deal with my bank in residual debt after selling properties.

We had some over and back haggling and it seems we failed to reach an agreement. The  deal we were trying to strike was based on potential future earnings.(I felt i would be unable to repay what they were asking)

They told me they are now passing it over to the litigation management team for collection.

What does this mean in practice? I don't have any assets or cash - its basically just a lump of debt.(I am single and live in rented accommodation)

I don't have any cash other than potential non-guaranteed future earnings. (I am self-employed IT contractor so cannot guarantee earnings as i can easily have long void periods of work)

So what is the likely outcome of this? In practice does it just mean that the debt is always there? Any other practical implication?


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## Jim Stafford (20 Jul 2015)

Each bank will have different procedures.

Generally speaking, "branch" levels of the banks have no authority to do debt forgiveness.  Branch level can re-structure i.e. change the payment terms.

The recovery units generally do have authority to do debt forgiveness.  If you can't reach a deal with the recovery units, it then goes to the litigation units. 

Litigation units have more scope on debt forgiveness, as they are the "_last line of defence."_ When it goes to the litigation unit you might have 3 cracks of the whip.  The first crack is to submit a settlement proposal to the solicitors upon receipt of the "7 day letter"  before they issue the actual proceedings.  The solicitors might advise the bank to settle (and generally speaking banks follow their legal advice.) The second crack is to defend the proceedings and issue a settlement proposal at the same time.  The last crack is to submit a settlement proposal once they have obtained judgment.

In conclusion, you should keep offering a reasonable settlement proposal.


Jim Stafford


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## Adecco (20 Jul 2015)

Jim Stafford said:


> Each bank will have different procedures.
> 
> Generally speaking, "branch" levels of the banks have no authority to do debt forgiveness.  Branch level can re-structure i.e. change the payment terms.
> 
> ...



Thanks Jim.

Just to clarify - i am currently at the last stage (i.e. dealing with debt forgiveness)
We have gone over and back over the last many months basically haggling.

The bank are still looking for an amount I believe i am unable to repay.

There are a number of risk factors such as I am  self employed where earnings are far  from guaranteed, I live abroad where exchange rate is particularly good for me now but will most likely change for the worse over the 7 year repayment plan, as well as interest rates being at historic lows - -meaning massive risk.

They told me their last proposal was their absolute final offer. I rejected it - came up with a counter proposal...which they rejected.

So the haggling is all over. Its a stand-off. Its done and dusted.

Their final line to me was as i stated above that they are passing over to litigation management team for collection.
Jim- is this the litigation team you refer to? (i.e.e where there is 3 cracks of the whip).Meaning i have been dealing with the recovery team up until now? (I had to sumbit SFS forms and prro of finances etc to them)

So in practice what does that mean  for me? I don't have any real funds to pay them.
As i said - I'm a single guy with no assets or real cash living in rented accommodation overseas.

My preferred solution is coming up witrh an informal resolution rather than bankruptcy - but obviously that preference has a tipping point.


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## Gerry Canning (20 Jul 2015)

Adecco,

From experience , the more you communicate ,perversely the less you can get from a Bank!
In practise you are not in Ireland, so pursuit (unless they can see substantial funds) is generally not followed.

Their (systems) seem to move into this (litigation) mode. Generally the debt is passed to a collection Comp to manage . That collection comp try to squeeze what they can from you..
The problem can then arise that you may pay off something without having a conclusion date.

You can only make your proposal on a realistic appraisal of what you can afford.

If the Bank won,t accept that ,then let them (threaten) etc.
But ensure you keep notes/copies of your efforts.


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## Adecco (20 Jul 2015)

Gerry Canning said:


> Adecco,
> 
> From experience , the more you communicate ,perversely the less you can get from a Bank!
> In practise you are not in Ireland, so pursuit (unless they can see substantial funds) is generally not followed.
> ...



Thanks Gerry

SO you are saying that this is an external 3rd party which the bank use? Or an  internal division of the bank? (Or does it even make a difference to me which one)

So what kind of approach does the new litigation company use? Surely they have no additional weapons in the armoury than  what the previous team I was dealing with?
What is this new teams function that the other team were unable to achieve? 

Ideally i would like some informal resolution - but the terms they proposed were way too risky given that all written off debt is brought back into play should i fail to make repayments anytime over the first 5 years. There is no point in me entering into something i am doomed to fail with.

I'm beginning to think from now on i should simply ignore them unless they agree with my repayment proposal (which was generous). or alternatively volunteer myself into bankruptcy here in UK.

Thanks


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## elcato (20 Jul 2015)

Adecco said:


> I'm beginning to think from now on i should simply ignore them unless they agree with my repayment proposal (which was generous). or alternatively volunteer myself into bankruptcy here in UK.


You are abroad. Why not just stay there and ignore them altogether. You have no assets to take so they will just tire of chasing you and eventually just give up. If it was me that is what I would do given they have had a chance to get something up to now. Don't bother with bankruptcy, they will eventually go away and write you off. Ignore any correspondance and don't take any of their 'threats' seriously.


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## Gerry Canning (20 Jul 2015)

Adecco.
I understand there are umpteen good insolvency/bankruptcy people in Uk.
If the residue is large ,bankruptcy would give closure, so suggest find a uk insolvency person, check their fees and take there advice.
......................
1. Given Bank know you have no assets , little funds etc they will probably use a separate 3rd party. From your view it does not matter. Just ensure everything is copied and only in writing ie NO phoning.
2.The new boys just pester to see can they get a few bob , eg letters threatening court etc.
3. No point going for 5 years unless you have a genuine clause for hardship eg if no work.
4. Never good to ignore,

Have a word with Uk insolvency person.
I can get you name if you send me private message.


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## Adecco (20 Jul 2015)

Gerry Canning said:


> Adecco.
> I understand there are umpteen good insolvency/bankruptcy people in Uk.
> If the residue is large ,bankruptcy would give closure, so suggest find a uk insolvency person, check their fees and take there advice.
> ......................
> ...



Thanks Gerry.

The residual debt is significant. I had a number of properties which i was forced to sell.

Although i'm unsure why you say it is never good to ignore?

In this scenario given me and the  bank have opposing views as to what is affordable, is there anything that further communication can achieve at this point? To me it seems that communication has broken down.
What is the downside to not communicating from here on in?

I've had 2 years of over and back with them to no avail.


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## Jim2007 (20 Jul 2015)

Adecco said:


> I'm beginning to think from now on i should simply ignore them unless they agree with my repayment proposal (which was generous). or alternatively volunteer myself into bankruptcy here in UK.



Well so long as you are sure none of your IT contracting will be with a financial institution that requires a clean financial record, it is a strategy I suppose.


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## Jim Stafford (21 Jul 2015)

Given that you are in the UK you currently have better insolvency options than living in Ireland.  Having said, given that you only have just one creditor, it should be possible to negotiate an informal deal.

I suspect that one issue that you might have is that the Irish bank is basing its payment plan on the Irish Insolvency Service's Reasonable Living Expenses, whereas your UK living expenses might be considerably higher.  If this is the case you need to explain the differences. Also allow for Exchange Rate differences.

Given that you are in the UK it will make it more expensive for the bank to issue proceedings against you.  For example, if they issue High Court proceedings against you, they will have to locate a UK summons server to serve you personally.  (We have had clients in the UK who managed to evade personal service, thereby forcing creditors to apply to the High Court with costly Substituted Service Applications.)It will also be much more expensive for the bank to actually enforce judgment against you in the UK.

Any experienced litigation solicitor acting on behalf of an Irish bank will be very alive to the costs of obtaining judgment against someone living in the UK. If you make a reasonable settlement proposal to the solicitors upon receipt of the 7 day warning letter there is a possibility the solicitor will advise the bank to accept it (particularly if you say that you will go bankrupt if your proposal is not accepted.)

Any settlement offers should be made on a "Without Prejudice" basis so that the bank cannot exhibit them as evidence that you 100% accept that the debt is owing.  (You can make a "Without Prejudice" offer by typing the words "Without Prejudice" at the top of your email or letter.)

Jim Stafford


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## Adecco (21 Jul 2015)

Thanks Jim

2 additional queries please.

What is this 7 day warning letter you refer to?
And what is the significance of this "Without Prejudice" thing you mention?


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## Asphyxia (22 Jul 2015)

Adecco,

the seven day warning letter is the final legal demand for payment of the monies owed ,usually issued by the financial institution's solicitor. If you do not pay within this time frame, then they are legally entitled to start legal proceedings against you.


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## 44brendan (22 Jul 2015)

"without prejudice" written on correspondence means that any offer made does not in itself accept a liability for the debt. I.e. It does not prejudice any subsequent defence in a Court Case.


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## Bronte (23 Jul 2015)

Adecco said:


> The residual debt is significant.


 
Well seeing as you have no assets and uncertain income despite you saying the debt is significant why would a bank go after you, it's just pointless.  How much roughly is 'significant'  are we talking half a million.  It cannot be that amount if they are trying to get you to agree a repayment plan on an IT salary over 5 years.


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