# Will bank agree to deal to accept half of joint residual debt?



## gearoidc (12 Oct 2015)

In a situation where after a forced sale there is a shortfall and two parties jointly/severally owe €300k.
One party can get lump sum from family and suggests an arrangement to bank whereby she agrees to pay back "her share" - €150k plus interest - over next 10 years.
As part of the arrangement, the bank will not pursue her for any more of the debt.
If bank insists on continuing to hold her liable for full amount, she has no choice but to go bankrupt. (This is turn will force other party into bankruptcy as they cannot afford full amount either)

Can a bank legally entertain such an arrangement?
Are they likely to?
Can the other party veto it?


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## TigerDebt (13 Oct 2015)

Hi,

I attempted to secure a similar deal with a bank but they refused to split the shortfall. Both parties are jointly/severally liable for the debt.

If one of the debtors files for bankruptcy, the other is then fully liable for the entire outstanding debt.


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## Jim Stafford (15 Oct 2015)

gearoidc said:


> Can a bank legally entertain such an arrangement?


 Yes



gearoidc said:


> Are they likely to?


 Banks do not like making decisions in an information vacuum, and are unlikely to make a decision until they obtain full financial details of both parties.  If their investigations show that the other party has no money, then it is possible that the bank would accept the offer made.



gearoidc said:


> Can the other party veto it?


 No.  However, if the other party pays more then 50% of the debt, then they may sue the first party for the amount in excess of 50%.

Jim Stafford


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## Bronte (15 Oct 2015)

gearoidc said:


> If bank insists on continuing to hold her liable for full amount, she has no choice but to go bankrupt. (This is turn will force other party into bankruptcy as they cannot afford full amount either)



Would it not just be better for both too go bankrupt.  And then start again ?

Is it wise to take money from family.  This is a negotiation game.  One could also go with say, 50K offer in full and final (for total debt) and work ones way up to maybe 100K.  Banks will settle, and how much they are prepared for will depend on the bank and depend on what the banks think they can get from borrowers.  Hopeless cases can be settled for a good percentage off.


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## gearoidc (15 Oct 2015)

Thanks for replies.
Given that the bank would be pushing both borrowers into bankruptcy resulting in hundreds of thousands more being written off, it seems like a no brainer to me. No?
By accepting offer, bank  recovers half the outstanding debt and is still at liberty to pursue the other borrower (public servant in good job) for the rest.


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## Brendan Burgess (15 Oct 2015)

I don't see why she would even pay her share of €150k? 

She should simply go bankrupt.  

But before doing so, she and he should approach the bank and try to do a deal together. 
1) She will pay €50k now in full and final settlement. 
2) He will agree to pay €50k over 5 years and if he does so, the balance is written off at that stage. 

If they refuse, then she should go bankrupt. 

Brendan


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## Bronte (16 Oct 2015)

gearoidc said:


> Given that the bank would be pushing both borrowers into bankruptcy resulting in hundreds of thousands more being written off, it seems like a no brainer to me. No?
> By accepting offer, bank  recovers half the outstanding debt and is still at liberty to pursue the other borrower (public servant in good job) for the rest.



You're going with logic and trying to outhink a bank.  Also not even considering the possibility of settling the whole debt for both borrowers.  Even if they are not speaking or hate each other it should be a negotiation on the total debt to end the matter once and for all. 

The banks logic is probably that she is wealthy, money in the family and the public servant is a good bet to get lots of money and interest from over time.  And then this will go on and on and probably ruin his life too.


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## gearoidc (16 Oct 2015)

Brendan Burgess said:


> I don't see why she would even pay her share of €150k?
> 
> She should simply go bankrupt.
> 
> Brendan


Brendan
She currently has about 80,000 in assets. All of which she would lose in a bankruptcy.
Add to that the loss of earnings in the first year and possibly in subsequent years - not to mention the stress involved in moving abroad and the stigma of bankruptcy itself - and you can probably understand why she would prefer to hammer out a deal.

The other party refuses to engage with either her or the bank.
She just wants to get her life back. This is not possible as long as a debt of 300k hangs over her.


Bronte said:


> You're going with logic and trying to outhink a bank.
> *The banks logic is probably that she is wealthy, money in the family and the public servant is a good bet to get lots of money and interest from over time.*  And then this will go on and on and probably ruin his life too.


Bronte
No significant wealth.
No family money.(unless it forms part of a deal)
Nobody trying to "out-think" the bank here. Simply trying to get a handle on how they arrive at decisions. Is it cold, hard, mathematical logic that drives their decision-making or do emotions and other extraneous factors also come into play?

What for instance might the logic be in refusing an offer such as the one above if to do so would almost certainly cost the bank over €250k?


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## Rebuttal (19 Oct 2015)

Recently, banks have been found not to be as astute in making financial decisions as some people believed ( hence their bailout by the Irish taxpayer ). Some may argue that it is non sensical for a bank to pursue a debtor through our courts system for a judgment that the debtor cannot possible repay ( unless they win the lotto ). However, one should consider the said action from the bank's viewpoint.

Mortgage debt in Ireland was sold on by the banks, in some instances, as soon as the ink was dry. The large hedge funds etc., that bought these derivatives ( mortgage debt ) became the true owners of your mortgage. The banks that you lodged your monthly mortgage payment into, merely became loan administrators for these funds. The said bank would get a small percentage for managing the mortgage for these funds.

However some astute banks, had a back up plan in case the said mortgage loans turned bad ( defaulted ). They took out mortgage default insurance. So if the borrower defaulted they would get paid. Some banks got involved in betting against bonds backed by mortgage loans ( credit default swaps ) and did very well out of same. However due to the high overall % of default by both commercial and residential mortgage loans, even these shrewd moves by the banks could not save their balance sheets, the Government stepped in and guaranteed the bank's debts ( The bailout ).

So, what happened next. The bank's got bailed out by taxpayers. ( your USC weekly payment is paying down Government guaranteed bank debt ). However something else happened. The large hedge funds that had originally bought the mortgages from the banks, were notified by the respective bank each time a borrower defaulted on his mortgage. The large hedge fund, who did not wish to waste any time chasing these small individual debts then sold the mortgages back to the originator bank, usually at a substantial discount. So, now the bank has got the mortgage back. What now. Well to cash in on the original mortgage default insurance policy, the bank have to show the insurance company that they have pursued you, the borrower, through the courts and have obtained judgment against you. This is why banks pursue debtor, hopelessly indebted, through our courts system. To get paid trice. Once by the taxpayer in general, then again by purchasing the original mortgage loan off the hedge fund at a substantial discount and then finally by the mortgage insurance company.

So, next time your down the Masters High Court, head in hands, after having been served with summary proceedings seeking judgment against you, spare a tear for the old bank. They are just doing what they are meant to do, make money. It's nothing personal !


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## Rebuttal (19 Oct 2015)

Oh, I forgot to add that maybe they will get you to pay them a % as well. Heads they win, tails you lose, welcome to the casino.


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## Rebuttal (22 Oct 2015)

Where the house always wins !


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