# Personal loan in arrears - How to negotiate with the bank?



## Stress16 (4 Jun 2014)

I have an unsecured personal loan which is in arrears and has been called in by the bank for the full amount of approx €30k. The loan was taken out in 2009. I have been unemployed for the past two years (I had made all the monthly repayments prior to that), and am not receiving any social welfare payments as my spouse's salary places us just over the threshold. The only income I have in my own name is child benefit of €130 p/m. We are renting, have no savings, and have no other assets to speak of. 

I was on JSB for a year, so for the first six months of unemployment I maintained the existing rate of repayments on the loan, following that I negotiated with the bank for a temporary reduction for six months to cover interest and a bit extra, and since my JSB finished last year I have been paying interest only. The loan was called in approx six months ago, but through a combination of burying my head in the sand and misunderstanding on my part because I was continuing to pay off the interest, I didn't realise that they were about to pursue legal action to recover it until about a month ago.

I have been in regular contact with the bank over the past month, and have also spoken a few times with MABS. I've reviewed all the information they have sent me and have advised the bank of same so I now need to submit a proposal for repayment of the loan.

The interest repayments were considerably over what we could afford, to the extent of utilities and other bills falling into arrears and needing to borrow off other family members, so the amount I can offer will be considerably lower than what I was paying up to now. 

I have been unable to establish either through the bank, MABS, or information I've been able to find online, how much scope I have to negotiate with them. E.g. Should I offer to make monthly repayments for a specific time frame in exchange for partial forgiveness of a portion of the debt, should there be no change in my circumstances during that time? Or is a short-term agreement the best I can hope for? They have refused several requests over the past few years to freeze the interest. 

Also, in completing the financial statement, as the debt is my own, I am unsure whether to include just my own details (essentially no income and no bills as my spouse has to pay for these from his salary) or whether I should base it on our total household income. MABS said I could do either so it was up to me, which didn't do much to clarify things. 

I have been incredibly stressed about this so apologies if any of the above is unclear. I would be grateful for any advice that can be offered.


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## elcato (4 Jun 2014)

You have done your best. You cannot afford it and as long as the loan is in your name then they cannot get blood out of a stone. Stop negotiating, if they call tell them you don't have anything to give. Ignore threatening letters, don't answer phone from unknown numbers. When they send you a court date then appear and tell the judge your story. He will not lock you up and will wonder at why you were even there in the first place. Don't get stressed or worried about this. They can huff and puff all they like but eventually they will get the message. Don't reveal anything of your partners income. It's none of their business. Good luck and enjoy life.
ec


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## Gerry Canning (4 Jun 2014)

Strongly with Elcato on this.

You appear very stressed by legal threat .
Do not be , think about it.
1. You owe k30 , have no assets, have no job etc , so what is the point   in Bank pursuing you.
2. By all means meet them , stress you would love to pay them but you cannot see any way to pay them.

It will blow over .
Importantly , try to repay family over time, they actually care about you.


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## Stress16 (5 Jun 2014)

Thank you both very much for taking the time to reply. I have found it very hard to approach this objectively, and nobody knows of my situation other than my spouse and the bank, so it has been very helpful to get some external feedback. 
In the past two years I have done my best to follow all of the guidelines given by the bank and MABS to the letter, and I really hoped to avoid it being taken further. I'm at a loss at this point as to what more I can do with them. I called them again yesterday morning, and wrote to them yesterday evening, with a final proposal to pay a monthly sum (not much at all but realistically the most I can afford), and if they don't accept that then I will just have to see out the rest of the process. I have nothing to lose, that's some reassurance, but I would like to have managed this with more dignity.


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## elcato (6 Jun 2014)

> I called them again yesterday morning, and wrote to them yesterday  evening, with a final proposal to pay a monthly sum (not much at all but  realistically the most I can afford), and if they don't accept that  then I will just have to see out the rest of the process.


They may accept this but will add small print. The bottom line here is that you tried. I would leave it at that now and as Gerry says, don't stress about it regardless of any threatening letters. This will blow over. Just ignore all threats. If they proceed to court see it as a bonus for you to tell the judge how they have dealt with this matter over time.


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## 44brendan (6 Jun 2014)

From a bankers perspective I agree with the responses given above. The bank is required to pursue this loan but given your financial circumstances will ultimately be forced to write it off. If you have minimal income and assets there is nothing that the Bank can do to recover this money. Your standard response to any further contact from the Bank should be that you are not in a position to make any repayments. Advise thaem that continued contact is causing you stress and that you will not be responding to any further phone calls.


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## alzer (17 Jun 2014)

*Personal Loan - Recourse or non-recourse??*

How do you know if your personal loan is recourse or non-recourse?

I took out a 100k interest-only personal loan back in 2006 to stupidly invest in the property market.
Terms of the loan were:
1. Maintain life cover for 100k (which I've done)
2. Repay the debt from the proceeds of the investment

The scheme is still alive (just!) but the returns to date have been meagre. I've been paying interest each month along with a small capital repayment element.
Any proceeds from the investment have also been paid to reduce the loan. Current balance is c70k.
The loan term has now expired and the bank is now turning up the heat a bit and are looking for household income and expenditure, asset statements etc. Also suggesting that the terms of the loan won't be extended and I'll be hit with surcharges and higher interest.
My (long-winded) question is this -can the bank pursue me beyond the security given (100k life policy) where the loan agreement states that 
'it is understood that the capital will be repaid at the end of the term from proceeds of the investment'' .
i.e. - are personal loans automatically recourse loans - even if not stated in the loan agreement?
Many thanks
 Alzer


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## Gerry Canning (17 Jun 2014)

Alzer; 

I would ordinarily be surprised if any personal loan was non-recourse.

However {2.Repay debt from proceeds} , looks to my untrained eye that maybe you have somewhat of a case on non-recourse.In that they state {repay from proceeds?}
You need to get full copies of contract you signed.
Peruse it very well and maybe you will end up with a viable argument.
Good luck.


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## alzer (17 Jun 2014)

*Personal Loan - Recourse or non-recourse??*

Many thanks Gerry, will study the loan agreement carefully!


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## 44brendan (17 Jun 2014)

Alzer if you took out this loan with an Irish bank you can be sure that you are fully liable to repay it. careful examination of the loan agreement will only confirm this. I am surprised that the Bank lent you 100K virtually unsecured. However, the loan is now due and you will need to address this with the Bank or they are likely to commence action against you for recovery. Success of this action will depend on your financial circumstances!


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## Gerry Canning (17 Jun 2014)

44brendan said:


> Alzer if you took out this loan with an Irish bank you can be sure that you are fully liable to repay it. careful examination of the loan agreement will only confirm this. I am surprised that the Bank lent you 100K virtually unsecured. However, the loan is now due and you will need to address this with the Bank or they are likely to commence action against you for recovery. Success of this action will depend on your financial circumstances!


 ..........

Have seen (albeit it was in a  commercial case) when it was judged that given the way lending was set up , the judge ruled that customer and Bank were acting as {partners} .

Agreed that if set up as a {simple} loan, chances of any non-recourse is unlikely and I do not wish to imply false hope etc, nor do I wish to have anyone avoid genuine due debts. But still no harm having a good look at documentation; at least then he will have surety over the parameters.


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