# Seeking advice on personal insovency, uk bankruptcy or hanging in there.



## Bandana (14 May 2012)

Hi, I desperately need advice. 
I own two houses (It's a long story and I made some bad decisions a few years ago (and took bad advice) - when I had a really good job and long term partner. Needless to say, now I have neither.)
I have been unemployed for over a year and can't get work in my area. I have been looking at ways to re-train and have an idea to start a business so I can come off social welfare and start making payments again. I have no income at the moment except social welfare. I have not been able to make any repayments on my 2nd house in over a year. My home - I pay interest only on.
Even though I have been communicating with both banks since the week I lost my job the second bank has continued to charge me interest and capital and I am now over 19,000 in arrears. My home is the same (over 6,500 in arrears). Basically I owe: 315k plus 19,000 in arrears and 380k plus over 6,500arrears. Current value of houses are (120k and 240k). It is probably worth saying that even before I lost my job I was starting to struggle a little with my outgoings. I had spoken to the bank months before I lost my job trying to put a plan in place incase it happened and I was basically told contact them when it does happen but now that it has happened they still wont negotiate. Neither bank is Irish owned and they say they don't do debt forgiveness or need to negotiate.
I also have credit union loans, credit card loans all maxed - a lot of this was to service my bills when I  lost my job first.
I have been advised to go bankrupt - but I really don't want to do this. I believe if I just had one mortgage albeit massive - I could work to service that but with two mortgages I don't ever see a way I can manage them. And its not just the mortgages that cost - its the 2 life insurances, house insurances, then PRTB, NPPR and property tax. Also its an old house and things keep breaking so maintenance is very costly.
I seem to have hit a crossroad where I don't know if I should start my business as a sole trader and continue talking to the banks (even though it has done no good so far) or should I just give up? I really don't know what to do. I'm not afraid of hard work and I do want to sort this out. Any help or advice would be greatly appreciated as my head is in a spin most days lately and I know if some resolution isn't forthcoming I am likely to crack.


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## Wishes (14 May 2012)

Hi Bandana,

Firstly, if I were you I would place all your unsecured debt with a debt management company. They will arrange one monthly repayment on your behalf with your creditors. This will be a payment you can afford. It will also take the pressure off you so you can focus on setting up your business. Most of these companies are now negotiating with mortgage companies on your behalf so this is an option you could also look into. 

Secondly, write by registered post to the mortgage provider of your second home and ask their permission if you can sell the property. If it sells it will probably sell at a loss but this loss will then be unsecured debt. You can then add this to the rest of your unsecured debt the DM company is handeling.

You should contact Social Welfare and ask them what your entitlements would be if you were to start up a new business. I believe there are supports there for up to one year of start up but you would need to meet with them to confirm this.

Good luck.


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## Bandana (14 May 2012)

Thank you wishes. I will look into debt management companies. Social  welfare are willing to support me by putting me on the BTWEA and the  enterprise board like the idea and are willing to support me too. I am  willing to work really hard at getting this off the ground. As I am a  sole trader I am very nervous about accepting enterprise board support  in case the banks come to claim what the enterprise board will invest in  my business. Does that make sense?


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## Wishes (14 May 2012)

My first protocol would be to contact DM company. Get the unsecured debt sorted but do your research and make sure they are a reputable company. I am dealing with a DM company myself at the moment and they are proving to be a nightmare; so most definitely do your research. There was a regular poster on here, went by the username Frost who seemed very informed, it may be worth contacting him/her.

If you have a repayment agreement in place I doubt a bank could come after your assistance from the enterprise board but do talk to either MABS or the DM company to confirm this.


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## wbbs (14 May 2012)

I would try MABS first before you go paying a debt management company.


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## Bronte (15 May 2012)

Mabs is free and impartical so that is your first port of call.  You cannot go bankrupt in Ireland.  You have to do that in the UK. 

Based on all the debts it would need to be some kind of extraordinary business to allow you to live, pay back 2 mortgages, 2 sets of arrears, pay income tax on rent, pay back credit cards etc.  

But fair play too you for trying.  If you post up the figures of what your income and outgoings are in the money makeover thread you may get better advice.  

If you do go the UK bankruptcy route you can come back in less than 2 years and start your business then.


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## PipGuru (24 May 2012)

Hi Bandana. Going bankrupt in the UK is a very real option and cleans out all your debt. As a hard worker you do not want to put all that hard work into working for the banks for the next 20 years. Do it for YOURSELF and your family. You will get no thanks from the banks just constant headaches. Clean the debts and put the hard work into rebuilding your life. There are lots of people going to the UK now so you are not alone. There is help out there to do this with you. I know there is an ad every Sunday in the business post of a company that can help. Just google and you will get options. Best of luck.


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## demoivre (25 May 2012)

Bronte said:


> Mabs is free and impartical so that is your first port of call.  You cannot go bankrupt in Ireland.



Why not ?


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## frostie (31 May 2012)

Hi Bandana,

Given the amoutn of negative equity you have I can understand why people are telling you to go bankrupt, however without all of the figures on your unsecured debt, it's unwise to give bankruptcy as the only possible solution. 

The new insolvency bill will be published at the end of June, and although it will not be enacted in legislation until possibly January, there may well be a solution for you here. You may just need to keep the wolves away from the door for now.

The fact that you also have the opportunity to start a new business is a positive. Secondly, in terms of any funding granted to you, I would not see hopw the bank can come after this from you. I would advise that you separate your bad debt banks, and open a new account with another bank with whom you have no debts. Use this ongoing, otherwise a lender with whom you owe money can literally take the lot against your existing debt, if the money is paid into this account.

The lenders you owe money to, would need a judgement to get their hands on the money from the enterprise board, although even then, I don't see how they would get their hands on it. 

If you hand the keys back on the second house and can pay the other mortgage, although it's better to get their consent to sell, the negative equity becomes unsecured debt. In terms of the new insolvency arrangement, this is why I'd ask for the other debt info, to see how much weight the negative equity would have against your other debts. Can you post the other debts here?

www.frost.ie


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## Bandana (1 Jun 2012)

Hi Frostie,

The other debt I have is credit union around 25,000. Credit card maxed at 6,000.
The second house is an old house and requires constant repairs (average 200pm), then associated with that too is the house insurance, NPPR and household charge. With rents so low, half the rent is spent on upkeep. The other half doesn't even scratch the surface of interest only. Are these the figures you are asking about?


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## frostie (1 Jun 2012)

Hi Bandana,

Couple of things to note...

If your former partner is joint on the mortgage, if you go bankrupt, there is joint and several liability which means that the bank can pursue your former partner for the balance.

If you get the other house sold, depending on how your business performs, you may be able to do a PIA, and pay over up to 6 years. This is seen to be one of the ways the banks are intending to deal with failed mortgages in future. 

You'll have additional unsecured debt of €140k. If the mortgage debts are with the one bank, this could be even better, as you would commit to servicing one mortgage in full. Also as the negative equity would be equivalent to about 80% of the debt, if the mortgage lender consents, your other creditors eg credit card and CU, could not block it, and will have to take what they get.

In the event that the PIA fails (which would basically happen anyway if your business fails and you cannot manitain your PIA payments) you would then be declared bankrupt - although this would be under the new Irish bankruptcy law of 3 years with a 5 year income payments order.

If you think you have a fighting chance with the new business, you could try for the PIA, although I agree in some respects with the people advising UK bankruptcy, as it's the quickest way to get your debts discharged. You would however be in a tougher position after bankruptcy in the UK in terms of starting your new business later, and probably would not get the funding you require, and could have difficulty trading.

There's a lot to consider, but hopefully this will give ou some food for thought.

www.frost.ie


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## Wishes (1 Jun 2012)

Hi Frostie, is it possible that a debtor could be forced into bankruptcy rather than a PIA?


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## Time (1 Jun 2012)

Irish banks won't force bankruptcy because they have to pay all the charges and 99% of the time they end up with nothing.


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## frostie (1 Jun 2012)

Wishes said:


> Hi Frostie, is it possible that a debtor could be forced into bankruptcy rather than a PIA?



Hi wishes, it is possible to be forced by a creditor, but unlikely given the costs of bankruptcy in Ireland,. Also the fact that the PIA/DSA will give the creditor some return on the debt, even if it's only 25%, it's better than nothing. 

People may feel 'forced' into bankruptcy themselves, and may opt for this on occasion, where it is quickest way out of debt, rather than hoping the PIA/DSA will pay off for them.

Bankruptcy would normally follow if a PIA/DSA fails, but for a creditor to push for it, where there were no assets to realise for example would be a waste of time and money.

The costs of putting someone into bankruptcy in the UK is very low in comparison, which is why creditors can easily threaten this as a way of forcing people to pay - creditors can push for bankruptcy for only a few thousand pounds in the UK.


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## Wishes (1 Jun 2012)

Thank you both for your replies. I am hoping to go down the PIA route but my unsecrued debt is massive, over 120k. Also my mortgage in in negative equity with arrears. 

I am paying 1/3 of my mortgage repayment monthly. I'm running a small business and two part time jobs. The business is starting to take off and whilst I'm not rolling money in at the moment, I do believe that I will be able to clear these debts off given half a chance. My guess is, I will be out of the red on the unsecured debt within five years and can then focus solely on repaying my mortgage.

I am avoiding the bankruptcy route but do feel 'forced' nto taking this step.


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## Steve Thatcher (16 Jun 2012)

PipGuru said:


> Hi Bandana. Going bankrupt in the UK is a very real option and cleans out all your debt. As a hard worker you do not want to put all that hard work into working for the banks for the next 20 years. Do it for YOURSELF and your family. You will get no thanks from the banks just constant headaches. Clean the debts and put the hard work into rebuilding your life. There are lots of people going to the UK now so you are not alone. There is help out there to do this with you. I know there is an ad every Sunday in the business post of a company that can help. Just google and you will get options. Best of luck.



Hi bandana I have posted a couple of guides on going bankrupt in the uk here. They may even be a sticky. Everything you need to understand should be on there. If not just post another question. I should be back on the site full time now


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