# High personal debts



## jonnykkk (28 Oct 2007)

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## Brendan Burgess (28 Oct 2007)

I think you have to take things one step at a time. 

You have taken the first step in that you have faced up to the gambling problem. 

The good news is that you are still solvent, if I understand your figures correctly.

House value: €500
Mortgage: €280k
Loans: €195k   - Loans 170; tax:5; wholesalers: 20k
Net assets: €50k 

Your next priority is to stay in business and rebuild it so that you have an income. 

1) Do you have an income from your business at the moment? Why are things going to suddenly get going in March 2008? 

2) Your business suppliers are the absolute priority. If they stop supplying, you won't be able to earn any more money to pay off the other loans.

3) Are the loans connected to your business? If you don't keep them up to date, will your business be affected?  With the help of MABS, you might be able to get reduced payments. I imagine that the advice of MABS will be to pay some small amount to each lender, to show them that you are not running away from your loans. 

4) You have to consider the possibility that you may not be able to afford to keep your home. That is not as bad as it seems at first.  If you sell your home for €500k and pay off your debts, you will save about €23k a year in interest payments ( 280k@5% + 170@10%). You can probably rent a similar house for around €12k a year. 

It's not ideal, but no one knows what is happening to house prices. If they fall further from their present level, you might be able to buy back a similar home for less money. However, it will probably take you about 5 years to build back your credit record. 

5) You should not rely on the slowness of the court system to delay the inevitable. You will get caught with legal costs and judgements against you which will make it very difficult for you to ever get credit again. 

Brendan


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## rmelly (28 Oct 2007)

> Net assets: €50k


 
25k surely? Also how accurate is the 500k valuation given current market conditions?



> you will save about €23k a year in interest payments


 
The interest figures are a bit ropey - he's currently interest only on his mortgage, so surely not 5% (figure quoted is 1100pm), and based on the figures, he is currently spending 42k servicing the 170k debt (3500 pm).

As such selling the house may be more attractive than Brendans figures suggest.

If you do so, you can then focus on rebuilding the business and in a few years you'll be back where you started.


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## jonnykkk (28 Oct 2007)

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## hlm (28 Oct 2007)

Assuming all goes well, how much income will the business provide you with every month? You must be banking on it being very successful to cover all those debts. Now, just say something happens between now and March and you don't get the contracts you are banking on? You are taking a huge gamble of another sort with all of this working out. 
I know this isn't what you want to hear right now, but how about selling your house and clearing all the debts. You could rent a really decent house for between 1K to 1.5K per month depending on what part of the country you are in. And then if business goes as well as you expect for the next 3 years you could have saved a substantial payment for a new house.
In my own recent experience I have found that life does not always go according to plan, you are banking on everything going your way for the next 3+ years, but honestly who knows. It doesn't matter how good your business is, there are always factors outside your control. Why would it be so bad to sell up and rent right now?


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## Blinder (28 Oct 2007)

jonnykkk said:


> Fourthly I really just want to hold on to my home and my accountant has pointed out that as long as I keep up with the payments on the Mortgage no-one can repossess.
> .



But how long can yu keep up the payments if you suppliers cut you off?
Also, as far as I know, if a director has being unethical (maybe not the correct word) in the running of their company, then their private assets are not necessarily safe. but someone with more knowledge might correct me on this.

Reading your post, my gut instinct is that you should sell your house. Then you can start with a clean slate. If, as you say, then business will be on the up and up in 2008, then it won't be long before you can get back on the ladder again.


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## jonnykkk (28 Oct 2007)

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## Carey (28 Oct 2007)

The problem will be trying to get them to accept small payments. Most of the banks use heavy hitters of solicitors firms to collect debts. I have found in the past that will not accept small amounts and they want to rush to judgment. The thing is once the solicitors have the file the ICB report is damaged. I have found that the courts are more understanding of cases where a small amount can be paid. 

They could have you in court in under a month if they wanted to and have judgement. After that they would move for an installment order within 3 months of judgement.


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## jonnykkk (29 Oct 2007)

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## Brendan Burgess (29 Oct 2007)

I just don't agree with a strategy which is based on ducking and diving through the courts system. You will be under enormous pressure and it's not the way to run a business. 

It would be ok to operate like this if you knew that it would all be sorted out in three months or maybe in 6 months. But that is not the position as far as I can see. Even with this big contract, you will still have excessive debts. So you will be having legal hassles for the next few years. 

It seems to me that you have some time to play with at the moment. So sell your house while you don't have a gun to your head. If you leave it until March, you may be forced to sell to the first offer. 

Brendan


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## triplex (30 Oct 2007)

have you told your wife?


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## jonnykkk (30 Oct 2007)

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## Carey (30 Oct 2007)

I don't see the problem with people seeking protection from the courts from creditors hounding people for money. Banks often make very unreasonable demands on debtors which would not be tolerated by the courts. I don't see any problem with a person allowing the courts to make a fair order as to what should be paid.


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## triplex (31 Oct 2007)

if your mortgage repayments are interest only, then you may as well rent. You aren't knocking anything off the capital, and if house prices continue to drop, the equity in your house will become less.  

Also, the relief of being debt free will go along way to helping you clear your mind about what you do want in the future - you're under massive emotional strain....

Why not rent somewhere less expensive - kids tend to become more expensive as they get older, so you may break even!

Good that company is limited, so you not liable - you could always declare bankruptcy and begin new company and take on the contract beginning in March 2008 with the new company....


very sorry to hear about this - but sometimes the longest way round is the shortest way home!


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## RainyDay (31 Oct 2007)

triplex said:


> Good that company is limited, so you not liable - you could always declare bankruptcy and begin new company and take on the contract beginning in March 2008 with the new company....


Do you reckon Revenue and suppliers will be happy to allow the OP to run up a fresh set of debts after he shafts them first time round?


Brendan said:


> It seems to me that you have some time to play with at the moment. So sell your house while you don't have a gun to your head. If you leave it until March, you may be forced to sell to the first offer.


While I understand the financial logic here, I'm not so sure that this is a great idea. Buying and selling property has lots of associated costs, such as stamp duty, legal fees, estate agent fees. If you were to sell the house and buy again say 2-3 years later, this could cost you say €50k in real costs. 

There is also the huge disruption and emotional pressures that will be caused by moving home, particularly on the children. I guess you would need your wife to agree to any sale.

I would be very reluctant to sell the family home unless this was the absolute last resort.


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## bond-007 (31 Oct 2007)

> Do you reckon Revenue and suppliers will be happy to allow the OP to run up a fresh set of debts after he shafts them first time round?


That is the risk you take when you deal with a limited company.


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## rmelly (31 Oct 2007)

bond-007 said:


> That is the risk you take when you deal with a limited company.


 
I take the comment to have meant 'once bitten twice shy'... the suppliers are unlikely to want to deal with this person again. Equally how eager will the third party he has the contract with for March be to proceed? I would assume that any contract would be null and void if they so choose and wouldn't be directly transferable to the new company without their agreement?


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## jonnykkk (7 Feb 2008)

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## Erasure (7 Feb 2008)

Try to stay positive - the power of positive thinking is amazing.  Well done on getting this far alot of people would have given up on everything - including their marriage.  You deserve to get out of this mess without it totally messing up your entire life. All you can do is your best.


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## rochs (7 Feb 2008)

Would it be an option to take on a partner in the Business who might invest some money.

rochs


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## so-crates (8 Feb 2008)

Congratulations Jonny on taking the bull by the horns and keep up the good work, I have been reading this thread with interest. 

Just one or two things.. 
On the upcoming change of circumstances have you considered talking to your other creditors and renegotiating repayments based on your projections? You seem to be resigned to defaulting on other debts when your interest-only period on your mortgage is up but it may be worth discussing with each creditor (including your mortgage provider) now what you can afford to pay when that time comes instead of waiting for the crunch. Otherwise you are just gambling with your future. It is better for them if you pay something than if you pay nothing and it is better for you and for them if they are kept in the loop.
Also have you discussed with your wife the impact of the upcoming change? From the sounds of it you have but just in case she is thinking that you two have managed to clear the hump I thought I would mention it.
No harm in keeping in touch with MABS either, rather than looking to them when you are in deep trouble.

Rochs, from what I understand, the basic problem isn't really the business finances it is the personal finances. However if the business is a drain on his personal finances (as in he is investing money in it) then it is certainly worth considering.


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## jprender (8 Feb 2008)

Just some ideas....

Assuming that your wife does not work at the moment as you havent mentioned it, would it be possible for her to take up employment to increase the family income ?

Try to speak to your bank about extending the interest only position.

The stress involved in dancing through courts I think will only distract you from what you should be spending your time on which is increasing your monthly income.

Can you get a top-up on your mortgage to clear the more expensive debt ?
Lower interest rate over a longer term should give you more room to breath on a monthly basis. ? 

Is your house big enough to "rent a room" ?

If your business shows good figures, could you apply for a business loan?
Perhaps to purchase a cheaper vehicle ?   Then sell the one you have personally and use the proceeds to at least pay off some of the personal car loan.   Again this might have the effect of reducing your monthly payments.

Can you do any extra work in the form of nixers ?   Obviously there is a tax implication for this type of income.

Any chance your teenage child could do any part-time work?  Would be very helpful the next time he needs new runners etc etc .

Anyways, keep strong and positive and above all remember that _every euro counts_.  Be the meanest, tightest ba$tard that you possibly can be when it comes to spending.  This will be really hard but I am afraid it is very necessary.  Young kids sometimes don't understand but they will just have to get used to it.  All luxuries out.

One thing that I find very useful when money is tight is to plan every spend as best you can and keep a track of all your daily expenditure.

Stay strong.


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## Bluebells (9 Feb 2008)

Hang in there jonny. As Winston Churchill said " When you are going through hell - keep walking "

Sorry I have nothing more concrete to add, but the efforts you are making would suggest that you are made of strong stuff.

Good Luck.


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## jonnykkk (3 May 2008)

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## liketoknow (3 May 2008)

hope things go well for you, life is for living not for loathing,  i know its easy for me to say but as long as you can keep your family together that is the main thing, family is everything. 

money isnt the be all and end all of everything, i think you would benefit from some very good one on one financial advice, did you sit down face to face with mabs??
getting rid of the van is a good thing ,my partner did the same recently, he was paying 300 a month for a 16k hiace. 
he wrote to the bank saying he could no longer afford the repayements and they took it back this week. 
we await to hear if there was a shortfall.

is there any chance of a remortgage to take and of the debts into consolidation, maybe its already been suggested sorry if it has.

but maybe if the mortgage provider saw that by getting a re mortgage it would enable you to clear the debts and pay one loan ie , mortgage, thus they wouldnt have the added  hassle of repossession ,auction etc.

sorry if i havent been any help


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## bond-007 (3 May 2008)

jonnykkk said:


> More updates,
> 
> Car sold at auction leaving me with a shortfall of 15k, no way I can pay it, Have come to agreements with some of my creditors who  are willing to accept reduced payments but have also said they will be getting judgements on our house, Am a liitle scared of the sherriff coming in at that point,but what can I do? Wife done a 2nd interview with the HSE for a job as a carer working weekends and evenings,but is now awaiting Garda clearance which can take a while. She would be good at that king of job. Am thinking of giving back my van also as it cost 440 euro pm which has 3 yrs left to run,If I do this I will pick up a reliable old hiace or such like for a couple of thousand,hopefully in this case the shortfall wont be so much as I paid a deposit on the original deal of 3k. We are tighening our belts so much we cannot breathe!! Is it true tat interest on debts grows by 8% per annm? I read this somewhere and if thats the case I feel It will be impossible to ever pay the debts back.


PM sent.


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## so-crates (3 May 2008)

Jonny, you are doing better than you are giving yourself credit for. It isn't a short road and unfortunately it won't be fixed in a year but you are doing all the right things so as Bluebell said, hang in there. Try to think in a longer term for getting out of this dip. And think of all the positive things you have done. 
You have together identified a new revenue stream which will help when your wife gets the go ahead to work and will continue to make it easier. 
You have lines of communication open with your creditors and they are willing to accept reduced payments. I am not 100% sure on the judgements but my understanding is that this is basically their safety blanket until you have paid them off. I don't think you need to worry about the sherriff turning up just yet. 
You have disposed of a depreciating asset, I know you still have a shortfall. You say there is no way you can pay it, does it need to be paid as a lump sum? 
You have curtailed your outgoings and you are working as a family together on this.

Look carefully at the cost of the van and the advantages and disadvantages of replacing it. If the money looks right I would say go for it but consider it carefully first. 

You have got in place the means of making this right, and you have the support of your family in what you are doing. For what it's worth you have certainly my best wishes in this and I'm glad you are keeping us posted.


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## jonnykkk (3 May 2008)

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## liketoknow (3 May 2008)

goodluck jonny ,thinking of you x


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## Stupid Boy (4 May 2008)

jonnykkk said:


> Thanx to all of you for the encouragement,it really helps a great deal to know people out there are willing me on! I certainly will give it my all thats for sure,will keep you all posted on my progress,and again many thanks.


 
Hi Jonnykkk... please keep up the good work, i know it may not seem like it now but you are doing everything you can... I am in a similar position (debts through gambling) but only for the support of my partner I would have spiralled out of control... 

We sat down and reviewed all our finances... I have four outstanding credit cards which has now been cut to three as I have paid a balance in full this week... that leaves me with 200 euros to keep me going for the rest of the month which is going to be difficult to do and i'm having to make big sacrifices such as not going to the cinema or buying replacement football boots as I just cant afford to do it... but i know in the bigger picture its best ...

So keep the head down and keep working at your debt and fingers crossed this time next year we'll be in a lot better position... both financially and with our loved ones!!

Wishing you all the very best!


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## sidzer (8 May 2008)

I too have had very bad experiences of gambling by a family member - I think we as a society need to tighten up on this destructive industry...

Best of luck in getting through this situation.

S


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## astraclub (15 May 2008)

chief
here is the golden advice to you:
you are still gambling your life (contract, courts..blablaba)
Advice: Stop gambling,
solution: sell your house ASAP, move in to a cheaper house (outside Dublin,CORK wherever you are), there are cheaper house available..Unites State of Navan and Repbulic of Fermoy are the few examples of this...
dont be show off and look ahead.
Pay all your loans, credit cards etc. and sky and all useless item.
just become a man and come to simple living
i dont think you should have any problem except your gambling in each and every expect of life.
good luck
now after reading so many sad stories (some are really sad and some are made sad by owners themsleves), i am started to getting worried about myself, going to sleep...
hope you get it.
time for show off, big confidence, big cars social animality is gone;;;wake up, buy tesco/pennys/dunnes cloths for few years....


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## jonnykkk (15 May 2008)

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## bond-007 (15 May 2008)

I hope you are coping ok.


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## Guest114 (15 May 2008)

jonnykkk said:


> Thanx to all of you for the encouragement,it really helps a great deal to know people out there are willing me on! I certainly will give it my all thats for sure,will keep you all posted on my progress,and again many thanks.


 
Hi Jonnykkk, I had a gambling problem last year just before I got married. I nipped it in the bud within two months thank God. I was honest with my wife to be and promised that I would stop. I haven't gambled a cent since.
I hope that things work out for you. I think that they will.


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## so-crates (15 May 2008)

jonykkk, (just from looking at AAM this morning) I think astraclub gave similar advice on a few threads in this forum last night without fully reading the history of any. Also I think they have something of a distaste for any loans at all as in another thread they referred to them as "the worst virus". I wouldn't be too upset by them. When does your wife start work? And how is the delivery work suiting you? Also did you decide whether you wanted to change the van?


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## astraclub (15 May 2008)

So-crates

Yes, i give advice becuase i was in debt too till 2003. Personal Loan and credit cards bills were the worst one. Trust me, when i had this car loan/personal loan and credit card loan, i felt so depressive even thoguh i was paying. I did not go to cinema in those 2 years, did not rent a dvd, and put my full energy and resource on paying off these. Since i have paid off personal loan and credit and took oath that i would not take it again. I am happy driving a 7 year old car just becuse i dont have loan.
JKK
Yeh i know the rating is gone but if you talk to someone from bank sector and explain..they might refer you to some rich man who may buy your house... apology but these all were suggested to me and i was ready to try anything......

I have full sympthey with you and wish i can help...
i am starting a business very soon and would need some part time head count , PM me and i will see what i can...
Hope to god that you can get out from this soon.....


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## astraclub (15 May 2008)

Just to clearify, i read all the psot and found that almost all had many personal loans and credit card balance and i realized that paying off these is as equal as the take home....
And due to the fact that i was hit hard by these two issues and i still feel scared with these two.
I dedicate my success to come out from red was killing these two issues.


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## ClubMan (15 May 2008)

Yes - but referring to loans/debt as "the worst virus" without any reference to an individual's specific circumstances is nonsensical.


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## astraclub (15 May 2008)

O understood, 
will take care in my replies. :-(


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## so-crates (15 May 2008)

astraclub said:


> Just to clearify, i read all the psot and found that almost all had many personal loans and credit card balance and i realized that paying off these is as equal as the take home....
> And due to the fact that i was hit hard by these two issues and i still feel scared with these two.
> I dedicate my success to come out from red was killing these two issues.


Apologies Astraclub for misconstruing and saying that you hadn't read the posts, it was an impression based on viewing a set of your posts which appeared to be very similar to each other in response to different problems. Congratulations on getting yourself out of debt, it is inspiring to see someone show it can be done. But I think the how is possibly the most valuable.


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## astraclub (15 May 2008)

NO bother at all,
Let's see if we can be helpful here. Everyone is trying his best to suggest based on past personal experiences.
I hope JJKK get some room and free ideas.
Lets help people in any way we can...


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