# Running out of options .....



## Superb (11 Mar 2011)

I have a sibling who is really running out of options and needs help .. unfortunatly as a family we don't have the spare cash to help out directly. 

His position is quite simple and complicated at the same time. 

He is single, employed on circa €35k a year .. commission and bonus structured so not regular but generally in the region of €35k. 

He has an apartment which he is ower occupied, in massive negative equity (bought for €250k .. now worth realisticly €90k) .. mortgage is in the region of €900 per month. 

This is only the tip of the iceberg. He has two personal loans (AIB and GE Money) plus two credit cards (MBNA & AIB) with total debts of €17k. 

He is just about servicing these debts to the tune of €1200 per month on top of the mortgage. 

The Credit card debt isn't diminishing .. it is just paying interest. 

He applied to the Credit Union for a consolidation loan .. but was refused. MABS are not really interested in him .. and now he has no idea where to turn now. 

I am considering taking out a loan for him, but I don't think I am in a position to do this as I have a current car loan with 2 years left. Plus my wife and I have our house on the market (in Neg Equity - but savings will clear that) in order to move out of suburbia and to the country. 

If I take a loan out, it will affect my ability to get a mortgage on a new property in the next couple of years.

I am sort of banging my head on a brick wall thinking of his options .. in reality he can easily afford to pay all this debt off if he could consolidate. 

He is calling some debt managment agencies today (I just don't trust these people) and I am afraid he will end up falling in to the trap where by he makes the situation even worse !


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## truthseeker (11 Mar 2011)

Superb - it would be useful if you could detail your siblings income and expenditure more clearly - his monthly take home pay, what does he owe on each loan, the interest rate on each and how much he pays to each one every month, plus what his other outgoings are like bills, insurance, food, etc....

On the face of it it doesnt sound too bad, he has a roof over his head for 900 a month, and his total debt outside of that is *only* 17k (I say only because its only half his salary - he doesnt owe multiples of his salary).

If you could post some more detail it might be obvious where to make cuts, which debt to address first and how best to pay it off over a period of time.


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## niceoneted (11 Mar 2011)

Has he engaged with the credit card companies in relation to his balances?
Is he still using the credit cards? If so he needs to stop now. cut them up write to the institutions that he holds them with and explain that they are cut up, ask them to freeze the balance and commit to making a specific payment each month. 
Alternatively he may be able to apply for a new CC where he can transfer the balance to 0% for 6/8/12 months. He needs to shop around for this. 
He could use the snowball effect in clearing the debts either. 
He needs to cut back in every aspect of his life to get these cleared. 
Can he rent a room out in the apt to obtain extra cash or take on part time work.


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## Superb (11 Mar 2011)

I will be sitting down with him later on tonight to go in to more detail. 

I know that both AIB and MBNA have refused to faciliate any sort of help to date. 

He has actually cut back on everything with regards to expenditure, he has a 10 year old car with a broken turbo for the last 12 months as he won't put money in to it. 

A second job is out of the question as he tends to be out of the country for at least a week or two a month with his job (sales role european wide). 

I know that his job is going well and the potential of an exceptional bonus isn't off the cards and that would really go a long way to clearing off one of the debts. 

With regards to the apartment, renting a room is probably an option, but it is in a place where there is probably Zero demand for rental (typical of the boom time building) and the apartment needs a good bit of work to get it in to condition. Even getting €200 a month for a room would go a long way. 

Other CC companies don't want to know him ... he isn't spending on the cards as their isn't any credit on them left to spend !!


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## Phoenix2011 (11 Mar 2011)

Perhaps he could approach his mortgage provider to ask for an interest only period. He really needs to batten down the hatches and live very frugally. He may be entitled to a medical card/GP only card.


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## truthseeker (11 Mar 2011)

If he is currently servicing the debt to the tune of 1200 a month that would suggest that he spends 14400 a year servicing debt - but if his total debt is only 17000 then surely he doesnt need to be servicing them at that level? Can he spread one of them out over a longer term?

It would be most useful to know the amount he owes to each debt and what the payment schedule is like.

He could have higher debt than he is claiming.


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## Phoenix2011 (11 Mar 2011)

By the way, how did he get into so much unsecured debt on his salary?


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## michaelm (11 Mar 2011)

Superb said:


> The Credit card debt isn't diminishing .. it is just paying interest.





truthseeker said:


> If he is currently servicing the debt to the tune of 1200 a month that would suggest that he spends 14400 a year servicing debt


He's probably paying a whack of the 1200 off the credit cards and then spending back up to the limit.


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## Superb (11 Mar 2011)

Phoenix2011 said:


> By the way, how did he get into so much unsecured debt on his salary?


 
that is what has this country in the hole it's in !!  Credit offered didn't reflect realistic ability to repay. 

If the MBNA debt is anything to go by I can give first hand experience. Back in 2003 - 2006 I was flying to the UK every week with Ryanair, signed up to the Ryanair MBNA Credit Card (every 10th flight free etc) .... I literally signed a form in the arrivals hall giving my details and within a week I got a Gold Card with a 5k limit. By the end of 2005 the limit on this card was €15k and there was also a Cheque book to go with it. 

Fortuantly I didn't fall in to the trap of actually using it much and as soon as I stopped making as many flights. 

My brother fell in to the trap of 'needing' a property and having a mortgage broker who was able to make a colourful application on his behalf to secure a loan in the region of 7 times is current salary .. while he had other debts under his belt. 

While this is all his own fault he is determined to pay it off


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## Superb (11 Mar 2011)

michaelm said:


> He's probably paying a whack of the 1200 off the credit cards and then spending back up to the limit.


 
that could be a fair assesment ... I have told him if he wants my help he has to be honest with me.


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## Bronte (11 Mar 2011)

Superb, do not do not do not take out a loan for him.  You will not help him this way and will only get yourself in trouble.  

Can you do the money makover thread for him.  We need details like his take home pay etc.

What do you mean Mabs cannot help him, did he tell you this, did you go to Mabs with him?


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## DrMoriarty (11 Mar 2011)

+1

Better still, get him to register on AAM and post his own money makover thread.


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## Mommah (11 Mar 2011)

He definitely needs to sort this himself.
Do not borrow for him.

You can support him and advise him but it's his bag.

BTDT with family


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## Greta (11 Mar 2011)

Do not let down your own family by borrowing for him. He got himself into it, you say, he is determined to pay it off, so let him do it!


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## Panacea (15 Mar 2011)

If he is working abroad for 2 weeks each month he should investigate whether he qualifies for foreign earnings deductions in calculting his annual tax bill. This could generate a substantial tax refund if applicable.


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