# Effect on me and my business. Husband going bankrupt



## ladylu (3 Jan 2013)

Hi I got married in the last 2 years and my husband was involved in property before we met. All loans we have are in separate names. I have a paye job and a business i run as a sole trader. My business is starting to grow and will hopefully be successful enough to give me a full time employment and create another job. But this will require bank finance. 
Problem is my husband will probably need to go bankrupt more than likely in the uk. 
Will this scupper my business plans re bank finance?
If I change my business ownership to a limited company would that improve my chances of getting finance with out my husbands debts or bankruptcy?


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## Time (3 Jan 2013)

Your husbands situation has no bearing on your business unless he is somehow mixed up in the ownership. His debts have nothing to do with you. Even if he goes bankrupt it will not affect you.


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## ladylu (3 Jan 2013)

Wow that was fast. Its just any time i have talked to the my bank (different bank to husbands) they wanted joint names on accounts even though there were no borrowings looked for. So we didn't open the account. And talking to a mortgage broker he reckoned if i ever want to buy a family home it would hold me back. But it just could be his inexperience


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## Time (3 Jan 2013)

There is no legal obligation to open a joint account if married. You can continue to do so in your own name. I have opened accounts since marriage and have never been asked to open a joint account. 

It would only affect a mortgage if you applied in joint names.


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## Setanta12 (3 Jan 2013)

When applying for a mortgage, your husband's details & circumstances will be taken into account even if applying on your own behalf.

Were you single, they wouldn't.  I assume this is because marriage confers certain rights on spouses before those of mortgagors.


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## ladylu (3 Jan 2013)

Oh and i forgot to say his bank has been trying to get him to put my name on his loans in return for a deal. But the deal includes everything but a write off. which seems madness. They are talking about what we as a family can afford to pay back over 15 years which was X and that the 500k extra he owes would be put in a non repayment loan. But when asked what happens with that loan in 15 years time we don't get a straight answer. But I would reckon that they will just then start us on a new 15 year loan for the balance which will mean their is no incentive for us to work at all. 
By the way we did give them a offer of the X amount + 100k in full and final settlement which everyone at the table knew made the best business decision for the bank but it involved the word write off which apparently they don't do. 
I taught it was their job to get the irish taxpayer back as much money as practical. So the only way out is for him to go bankrupt.


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## Brendan Burgess (3 Jan 2013)

While Time is legally correct in that you have no responsibility for your husband's debts, it is likely that any lender will take them into account when deciding whether to lend to you or not. Banks don't need much reason to refuse to lend for businesses these days. 

You should not put your name on your husband's loans unless you are getting a very big write-off agreed beforehand, in writing, and approved by your solicitor.

Changing to a limited company won't make any difference. You would have to guarantee the company's lending anyway.


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## Time (3 Jan 2013)

> it is likely that any lender will take them into account when deciding whether to lend to you or not. Banks don't need much reason to refuse to lend for businesses these days.


How would they know the OP is married?


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## ladylu (3 Jan 2013)

Thanks to you all. In response to time i think the only way that the lender would know I was married is its one of their questions on loan account applications. If you lied I don't think they would know.
If I was going down that route my husband could actually say he had no loans good or bad apart from 1 tiny one that is nearly repaid from a uk-irish bank as all other loans don't show up on his ICB record (yet anyway and he is in 9 months default)
Thanks brendan I won't be signing up anything unless its a realistic amount and not just kicking it down the road. As it is we are living in rented house (which is cheap enough as rented houses go) and my husband was told by the bank to sell all of his investment properties by the bank even though the rent more than covered the interest and they were in NE. We told them they were mad but was told when borrowings came down that they would work with us. Which they did not.
 He was paying back interest and capital on 50% of his loans which were over a 12yr term and had not missed a payment and the other 50% of his borrowings he was paying on interest only but he was paying in more to slowly reduce the balance granted it was going to take 30 years but when the 12 year loan finished it would of went in to clearing the remainder faster. So all in he would of been debt free in 20 years. 
The bank kept putting more pressure on him to get his father to sign over land he was due to inherit or they would foreclose on his main business ( non building related and was doing ok ). He was willing to do what the bank wanted if they let him pay back over 20 years at a fixed margin interest rate. The bank was agreeable to the rate but insisted that it would be interest only again and reviewed every year. When asked if it was possible that at the end of the year that they could demand repayment in full which is now secured on his fathers land they said it was possible but they would work with him as they saw he had a bright future. 
My husband very nearly went for it but then found out about requesting his information from the bank through the freedom of information act. His documents were very interesting. It showed what was really going on in the background. 
No.1 His loans security was not very good 
No.2 to fix this they wanted more security which would fix the first problem No.3 senior officials were discussing him above his branch managers level saying that they should then foreclose on him once they had more security.
No.4 the bank had not got some documents signed and it worried them greatly.
In the mean time his father has passed the land onto another family member who is not in debt (very hurtful for both father and son. as he was basically disinherited) My husbands business has more or less collapsed from his stress of feeling under pressure and knowing he cant work his way out of debt. 
The bank will now be left with a small piece of unsaleable landlocked land which his brother will probably buy for peanuts from the bank. 
Only thing is we are both young and have a young family. And hopefully he can start again


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## 44brendan (3 Jan 2013)

Time said:


> How would they know the OP is married?


 
Marital status is one of the many "legal" disclosure obligations that must be made by anyone opening a Bank account in RoI.


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## Brendan Burgess (3 Jan 2013)

Hi Ladylu

Has your husband sought professional help? 

There are a few people who help negotiate a settlement with the bank. They may well hep. 

If the rent on the investment properties covers the interest, then it seems crazy to repossess. 

I would think that a Personal Insolvency Practitioner will be able to come up with a Personal Insolvency Arrangement if his total debts are less than €3m?  If they are just above €3m can he bring them down below that by selling some property? 

As a matter of interest, which bank is it? 

Brendan


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## spiker (3 Jan 2013)

Hi Ladylu,
            I was under the impression that banks were not yet subject to freedom of information act ?


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## Time (3 Jan 2013)

spiker said:


> Hi Ladylu,
> I was under the impression that banks were not yet subject to freedom of information act ?


Data protection acts 1998-2003.


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## ladylu (4 Jan 2013)

In reply to some of the questions.

Yes he has got professional help. Which took a lot of time to filter out the 'professionals' who had no clue and gave bad advice to finding solicitor who has experience of dealing with debts. I think it was from reading here and googe that he found a decent one. Plus he has got a well know and respected negotiator's working on his behalf. But all reports come back that AIB have not got to a position yet on doing deals. 
Some advice to others would be that your own solicitor or accountant are most likely not up to the task of dealing with these problems. You need specialists where the other guys are more like your local gp. And be careful of the sharks promising you the sun moon and stars.

Most of his investments properties were sold on advice of the bank so he is left with a large debt from these (less than 500k). So their will be no rental income to cover interest. He does have 1 house left that he owes 250k on that is now worth 100k but last tenant vandalised it but with some small work can get about 1000/month rent. And the bank have security of an unsaleable piece of land that is maybe worth on paper 100k but i reckon it just wont sell. All loans are cross secured. So if he spent money fixing the house up to rent it he will still lose it as he cant pay back the other loans. So it seems a chicken and egg situation. The bank reckon he can afford 200k and want to 'warehouse the rest'. Well what is the point in that some day it will come out of the warehouse and we will be back to square one. 
So going to the UK is probably the best answer.

Can someone explain what the benefit to him in waiting for the personal insolvency. As he would only do it if he got to keep the remaining assets otherwise he would be better off 1 year of hell and then rebuild his life. As at the moment he is being told he will probably need to at the very least hand back his last house so he shows he is taking some pain.


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## Jim2007 (4 Jan 2013)

ladylu said:


> So going to the UK is probably the best.



Would he even meet the criteria to go bankrupt in the UK, if he has a young family still resident in Ireland?


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## 44brendan (4 Jan 2013)

All indications currently are that both AIB & BoI are largely playing a "waiting" game in respect of bad debt settlements. Historically AIB have been reluctant to provide adequately for bad debts. Unfortunately this tends to be a strategy for some banks. They are prepared to agree to deals which effectively kick the can down the road, but appear to be extremely reluctant to bite the bullet in terms of "write offs". This can result in some logical debt solutions being rejected by the banks. However, it is only a matter of time before this strategy must be changed.
The UK bankruptcy option has been well discussed on various threads on AAM. It may well be an appropriate option for your husband, but he should obtain suitable advice from an experienced UK practitioner, prior to taking any final decision. As mentioned previously by another poster, there is no merit in agreeing to a guarantee by his father, unless a significant W/O was part of the deal. It is also unlikely that such a guarantee could be adequately put in place as independent legal advice would be a precondition of any guarantee and no solicitor is likely to advise your father in law to progress with signing a guarantee, given the risk of a call on same. 
If your husband can meet the interest on the borrowings, then it is likely that an agreement can ultimately be reached with the Bank. No Bank would agree to a wo of debt up-front, but perhaps an agreement could be reached for a write-off of a portion of the debt following a satisfactory clearance of a further portion over an agreed number of years. Any good negotiator should be in a position to buy additional time to access some improvements in performance, provided that your husband can at least meet interest payments in the interim and perhaps co-operate in the sale of some of the assets.


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## Bronte (7 Jan 2013)

ladylu said:


> He was paying back interest and capital on 50% of his loans which were over a 12yr term and had not missed a payment and the other 50% of his borrowings he was paying on interest only but he was paying in more to slowly reduce the balance granted it was going to take 30 years but when the 12 year loan finished it would of went in to clearing the remainder faster. So all in he would of been debt free in 20 years.


 
Just to be clear, your husband was paying back all loans and still the bank made him sell his investment properties leaving him with a debt of 500K and no income to pay it back?  Why would the bank do that?


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## ladylu (7 Jan 2013)

because they taught they were going to get access to more assets that would be valued more than the loan. They knew the assets were there they *taught* he was getting them. And as a carrot they said they would drop the interest rate on the interest only loan to make it more affordable. The stick was if you don't do this we may put up your interest rate as he was outside his terms and conditions and they may demand repayment in full as this part of his debt was on interest only with full repayment at the end of the 12 mts (which it had been for the previous 6 years but was always renewed yearly).
Problem was not with the proposed interest rate as it was the same interest rate he suggested and the same that others are borrowing at for similar debt. But it was the fact he had to secure the transfer to him of these assets and that he was going to be in the same position in 12 mts time as the loan was not going to be converted to a repayment term which is what he wanted. 
He did not show enough repayment capacity but was willing to, and had been, doing whatever it took to make the payments every month for the previous 5 years. And this cut in interest would of meant that for the same monthly payments he would of been paying it off in less than 20 years. 
But past performance was irrelevant all they could care about was that he was borrowed more than his assets were worth and if he got the gift of these extra assets he would have more than his borrowings. It would not of changed 1 bit his repayment capacity.
So after years of being under severe pressure and never getting any where and getting bad advice from his solicitor and accountant who both told him if he wanted to stay in business he would have to comply the business has not been getting the attention it needed as he lost hope. 
He got some proper advice who told him he was mad to have kept paying for so long and under no circumstances should he receive the gift from his father as he will lose it. A deal was put to the bank for a full settlement for more than his present assets are worth in full and final payment but they said at the time even though it was the best outcome for the bank it would not be accepted as it would require a write off from the bank and they are not in that position yet. So as I say thanks tax payer but he will pay less back now by going bankrupt and your going to pay more.


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## Bronte (7 Jan 2013)

So the bank were only concerned that his negative equity was too high. But this would be solved if he 'inherited'. 

Why did the bank think that he would receive assets from his father? Does his father bank with the same institution?

Also after receiving competent financial advice the father was advised not to transfer anything to his son as the bank would ultimately get those assets.

In addition we're learning that certain banks are 'not allowed' to do write downs (it seems).  Why so I wonder.  Even where it would be the best outcome for the bank.  Interesting.


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## ladylu (7 Jan 2013)

I didn't really want to get in to this side of things as it probably is off topic and a bit personally identifiable. But yes if you talk to any of the professional negotiators instead of the spoofers. They will tell you that very few of the banks are yet at a point where they are doing real deals where they are taking a hit. Instead they are doing everything possible in the deal to be able to say they have not given a write off. Apparently BOI and AIB are last to get their heads around it with AIB being 6mts behind BOI. 
Now the spoofers will tell you they have a hot line into head office and fancy solicitors etc etc and have done write off deals but when pressed they are talking about BOSI who are doing deals or MBNA. In fact I personally know a person who done a deal for 30% payment in full and final settlement with MBNA c.card with no effect on his ICB record. It took a lot of nasty letters from them and threats etc which he ignored  giving a minimum payment every now and then and after 2 years they were willing to deal. The debt was 20k ish.
Some banks have done deals i am told where they put the unrepayable debt into a loan with no interest and no repayment and told the borrower that they would never ask for repayment and after 6 years the statute of limitations would kick in and it would be written off. Now I would be very wary of that as nothing is in writing and i am told if the bank writes to you once a year it keeps the debt alive.
But the crux of the matter seems to be the most bailed out banks are the worst to deal with. Which seems to be the opposite of the reason for the bail out. As it keeps the productive people in society who got caught in the bubble in a position where if they do a deal with the bank their advisors are telling them not to earn much or get an inheritance for the duration of the deal or the unrepayable part of the loan will have to be repaid. Whereas if you go to the uk go bankrupt start working again you are back paying tax after 1 year with ambition again.


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## Dr.Debt (7 Jan 2013)

This last post made me smile because it is exactly what is going on in the banks at the moment.

The banks in that particular "story" agreed to the write off verbally. They won't confirm it in writing and their solution is to leave the "outstanding balance" sitting in an account for the next six years with a promise that they will never call it in.

The banks are playing for time, kicking the can down the road six years, hoping that when they have to eventually realise the bad debt in their books, that times will be better and they will have more capacity to be able to deal with it better at that stage.

The facts remain. There are lots of rotten loans in the banks, that are being hidden from the regulators, from the government and from the public.Its a survival game and it will continue if we let it.

Is anybody really convinced that the banks have properly provided for impaired loans in their books. There's not a chance in hell that they have. Very very worrying. The sooner that the whole sorry mess is flushed out and the banks are properly recapitalized, the better it will be for all of us.


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