# Emigrating to Oz.  Prepared to honour our debts. Will banks respond?



## freddie99 (9 May 2013)

Hi my wife and i bought a 1 bed apt for 240k in 2008 - we lived in it until the arrival of our first child in 2010-it has been rented since then and we have been renting a two bed house for ourselves
we have managed to pay all our bills up to now but have used up all our savings + have used a family gift to help with the creche fees for 2 children -after a lot of thought and discussions we have decided to up sticks and move to melbourne in october
current rent is 700 - mortgage 1350 - property is worth 80k + owe the bank 200k at this stage
i am trying to work out how i should discuss this with the bank
i am aware that this is our debt + our responsibility
interest only is probably the best solution for now -this will still leave us with a shortfall of 300 monthly that is before any mgt fees  or tax on rental income is paid - we should be able to manage this
however long term i cannot see us been able to send at least 700 eur to ireland monthly - the bank i reckon at best give us 6 months interest only -then the trouble will start
i would appreciate peoples opinions on what our best options are
thanks


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## Brendan Burgess (9 May 2013)

What interest rate are you paying? I presume it's the Standard Variable Rate? 

Check out the insolvency story in Australia.  If your debts exceed your liabilities, there may be some way of using the Australian system. 



> have used a family gift to help with the creche fees for 2 children


Money is money. You could just as easily argue that you have used a family gift to make capital repayments on your mortgage and that you paid the creche fees yourself.



> i am aware that this is our debt + our responsibility


Fair play to you. 

I would approach the bank and seek a deal.  Selling the property will leave you with €120k of a shortfall.  You agree with them that after paying off €60k of this , they will write off the other half.  If they don't agree, put the house on the market and sell it anyway. 

Stop off in the UK for a year on your way to Australia and go bankrupt. After one year, you will have a fresh start, debt-free.

I agree with your decision to be responsible. But you should strike a balance. You have been responsible since 2010; You are starting a new life in Australia and you need to see light at the end of the tunnel. Committing yourself to remotely managing an apartment in Ireland and discharging the full shortfall seems "too responsible" to me.

*Tactics
*It's difficult to get the bank to agree to anything and to act responsibly. 
You should contact the bank and give them the following options. 

"We are moving to the UK. What would you like to do with the apartment? 


We can leave the tenant there and get them to pay you directly. Here are the keys.
We can sell the apartment on your behalf. "
As you have been borrowing from family members to pay capital off the mortgage, you should use the rent in the meantime to repay those loans to family members.  If the account goes into arrears, you are more likely to get a response from the bank. 



When you get the bank's response, you can then decide how responsible you want to be.  Presumably they will go for the sale of the apartment. But you should get an agreement from them up-front on the shortfall. If they don't give you this, then you have to decide if you want to sell it or just hand it back.  Or just collect the rent until you have paid off your family loans. 



Brendan


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## freddie99 (9 May 2013)

Hi Brendan – thank you for your response and advice – much appreciated
Yes the rate is buy to let svr
I didn’t think it was possible to sell a property without the banks consent! Do they not hold the deeds?
Do you think it is not worth considering the interest only option as it is only pushing the problem down the road and not solving anything?
I don’t have any confidence in them providing a workable solution. If they offer us six months interest only – do you think I should reject this and follow the tactics you advised earlier 
If they refuse to engage fairly and we either hand back the keys or sell the property what is our legal position then
It’s a massive decision for us either way and I would like to get something sorted before we leave as communication will be difficult from Australia


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## Brendan Burgess (9 May 2013)

freddie99 said:


> Yes the rate is buy to let svr



OK, so they have been charging you a higher rate for a higher rate of expected default anyway. 



> I didn’t think it was possible to sell a property without the banks consent! Do they not hold the deeds?


They do, but they should allow the sale go through, especially if the alternative is that it will be handed back to them. In the past, they refused to allow such sales, but they are much more flexible now.



> Do you think it is not worth considering the interest only option as it is only pushing the problem down the road and not solving anything?



"interest only ... will still  leave us with a shortfall of 300 monthly that is before any mgt fees  or  tax on rental income is paid - we should be able to manage this"  

I don't think that it is easy to manage a letting from abroad.  Combine this with the negative equity of €120k and really there is no light at the end of the tunnel for you.  Giving a commitment to pay half the shortfall in exchange for getting €60k written off seems to me to be a fair and balanced solution to the problem.  

I don't think it's right that you should be stuck with €120k of a shortfall and a mortgage at the investment SVR for a property you bought as your home. You have borrowed to stay up to date on your mortgage repayments.  Taking everything into consideration, you have acted responsibly and now you should prioritise your family.



> I don’t have any confidence in them providing a workable solution.



Agreed. So impose it on them by giving them a choice. 



> If they offer us six months interest only – do you think I should reject this and follow the tactics you advised earlier


Absolutely. 6 months is nothing. You will have the exact same problem in 6 months but you will be off to Oz and will have enough to worry about.



> If they refuse to engage fairly and we either hand back the keys or sell the property what is our legal position then


They can pursue you in Australia for the debt. But they are very unlikely to do so. However, it is just so much cleaner to stop in the UK on your way to Oz. Then you will go debt-free to Oz and you will be debt-free if you choose to return to Ireland.



> It’s a massive decision for us either way and I would like to get something sorted before we leave as communication will be difficult from Australia



Stress that to the lender as well. 
You could probably appoint a power of attorney here in Ireland to reach an agreement on your behalf.


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## ClaireM (9 May 2013)

Will bankruptcy in the UK impact your ability to get a working visa for Australia?


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## Negotiator (9 May 2013)

Hi Freddie99,

I'm sorry but I completely disagree with Brendan's suggestion to pay half of the shortfall. You've already taken a massive hit on your investment, ploughed lots of money into it over the years and most importantly you are having to leave the country.

You have done all you can and now it's time to start thinking about yourself and your family. If you're absolutely committed to Australia in October then I would stop all payments immediately and hand the keys back to the bank. Keep all the money you can to make a fresh start and if you start making a very large sum of money then there is nothing to stop you from offering them money at that stage.

From what I gather from a recent post here on AAM, your debt will simply fall away after 6 years if you don't contact them or make any payments. That's assuming that you notify them that you no longer live in Ireland and they don't get a judgement against you before this.

Good luck with your new life.....don't look back!


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## freddie99 (9 May 2013)

*Quote*
*Will bankruptcy in the UK impact your ability to get a working visa for Australia? *
I am going to Australia as a permanent resident (wife is Australian) – however I need to activate my visa by year end otherwise it expires and a I have to begin the whole process again – as a result of this the UK is not an option for us

When should I start communicating with the bank considering we will be gone in 5 months.  My wife has received advise that we should not talk to them until we are in Australia then advise them of the situation – voluntary surrender the apartment and look for a deal re the shortfall – would this work or would it be in our interest to start communicating with them before the move?
It sounds like they will not take action until the mortgage goes into arrears – if this happens before we go is their anything they can do to stop us from leaving the country.

If the worst case scenario arises and we don’t reach a deal and they manage to issue a judgement against us – what does this actually mean? – we would have to start paying as much as we can which is the case anyway! – would a judgement affect our ability to return to Ireland for a funeral etc etc?

If we use Brendans tactics and they refuse then we try sell and they block that then we return the keys and they get a judgement against up before we travel – I also want to avoid this.

Thanks


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## Time (9 May 2013)

> would a judgement affect our ability to return to Ireland for a funeral etc etc?



Absolutely not. Your ability to enter/leave ireland will remain unaffected by a judgement.


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## Negotiator (9 May 2013)

Don't worry, they are VERY unlikely to get a judgement against you before October even if you stopped paying everything right now.

Once you've left maybe the best thing to do is call them up and explain you're now at the other side of the world and that you're offering €10k to settle the shortfall. tell them you'll phone them back in 3 weeks from that date looking for an answer otherwise they'll never hear from you again! That'll learn them!


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## Brendan Burgess (9 May 2013)

Hi freddie

It's a pity you can't use the UK bankruptcy option. 

I still think that acting responsibly is the right, and probably the best thing to do. 

I think you should contact them now and try to have it all clear before you go. Property sold etc. 

You have a responsible outlook, as most people have. As such, I think you would probably worry yourself for years to come if you had "unfinished business". If you make a good effort to arrive at a fair solution, and the bank doesn't respond, then you would be much more comfortable. 

Put the house on the market asap. 
Start talking the lender asap. 
Use the rent to repay the personal loans.  Tell the lender that this is what you are doing. 
You might find yourself going to Oz with a clear conscience and a deal. 

Brendan


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## freddie99 (9 May 2013)

Hi Brendan
I am going to arrange a meeting with the bank asap. From their point of view up to now they wlll have seen no issues as all repayments have been met. Should i still tell them that we are going to the UK even though this is not the case or just advise we are going overseas. These are my main agenda items
1. Our current situation financially and that how its not sustainable long term
2. We are going overseas in October
3. We are going to put the apartment up for sale
4. We are looking for a deal on the shortfall

Would you consider these to be the areas i should be discussing?
I want to be clear what i need to say before i go in as it can be daunting and frightening
If they say no straight away what should my final comment to them be?
Thanks
Freddie


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## Brendan Burgess (10 May 2013)

1. Our current situation financially and that how its not sustainable long term
1a - we have been borrowing money from family members to pay the mortgage. We are taking a break to repay them the money. 
2. We are going to Oz in October -
3. We want to act as responsibly as possible and want to minimise the losses for you and for us. 
4. We would prefer not to go to the UK , but if you insist, we will go there for a year on the way. 
5. What would you like us to do? 
 Would you like us to sell the apartment on your behalf? If so, you should appoint the auctioneer and the solicitor.  
Or would you like us to hand you back the keys? 

What are you offering them? 

We will keep the house in good order to maximise the sale price. 
We have to pay the rent over the coming months to the family, but we will undertake to repay this to  you from our earnings in Oz. 
If you agree to accept this payment in full and final settlement. 

They will say no, but they might ask you to sell the house and they will agree across the table, but not in writing, that they won't pursue you.

You reject this offer. 

Pay the rent to those who have lent it to you. 
Put the house on the market anyway 

Go back to them if you get an offer and sell the house. 

After the house is sold, offer to pay them the withheld rent in full and final settlement of the unsecured debt.


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## Bronte (10 May 2013)

You're worrying about a few things that you shouldn't. Firstly you're trying to do the right thing, but you are negotiating with a bank. Happily you hold all the aces. 

They will know based on your wife's nationality that you are going to Oz so no point hiding it. 

I agree with the suggestion that you sell it, but don't agree that you pay any of the shortfall back, not unless you're walking into some mega job that means you can afford it. You're taking a very big decision on leaving Ireland permanently and you're going to need your incomes to make a better life for yourselves. It will be hard enough to adjust without having to send money back too. 

You're not in arrears so there is no chance of any judgement or even court case, even if you were in arrears, what are the bank going to do? And they act at a snails pace, as does the justice system.


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## freddie99 (10 May 2013)

Brendan and Bronte thanks for you contributions - we appreciate them - its good to get different opinions but there is a common underlying theme - its just not sustainable long term

Brendan have you amended the advise that you gave yesterday re final settlement? Today you advise to pay them the withheld rent as final settlement but yesterday you advised to negotiate for a deal re the shortfall

Can you recommend anyone who we can go to and act with us or on our behalf - we are just very nervous and are afraid that we will mess it up and end up in further trouble in OZ

Thanks


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## Bronte (10 May 2013)

freddie99 said:


> Can you recommend anyone who we can go to and act with us or on our behalf - we are just very nervous and are afraid that we will mess it up and end up in further trouble in OZ


 
You ought to go back into the post and change one of the names (maybe someone sent you a PM)

Don't be nervous, you really have nothing to lose. You'll be well able to negotiate with them. Otherwise you'll have to go to the further expense of a professional, if you want to do that there are companies out there. Otherwise ask your solicitor or accountant to attend the meeting with you, naturally you will have to pay them. Or just have a chat with them about what you're doing. I imagine solicitors in particular are seeing a lot of these cases. In fact I know it. 

If you are going to do the negotiation, then write down what your main points are, and don't deviate. And don't let them threaten you, they might 'pretend' they can get you but they can't. If they are threatening you or upsetting you be prepared to walk. You should be dealt with in a calm and professional manner.


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## Kine (10 May 2013)

I am having these very types of discussions with my bank.

They will stick to the party line of "We don't do debt forgiveness" regardless of how poor a commercial decision it is. I would not be expecting anything else out of the meeting, especially if you have been a good customer to this point. 

Banks are being reactive as opposed to proactive, so I wish you the best of luck. Have you plan / strategy of what you want to discuss but you also need to REALLY think on how far you are willing to go in pushing them. If they don't think you will simply post them the keys etc and walk away, they are unlikely to budge. 

Again, think through all your options, know what you are willing to do and stick to your guns. They will spend a long time trying to get the full amount from you (as they probably should) so be prepared for a long battle. I'm 18 months into mine and have yet to receive anything in writing from them in relation to my proposal made in 2011!

Best of luck!


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## Brendan Burgess (10 May 2013)

freddie99 said:


> Brendan have you amended the advise that you gave yesterday re final settlement? Today you advise to pay them the withheld rent as final settlement but yesterday you advised to negotiate for a deal re the shortfall
> 
> Thanks



Hi freddie 

I think  that your final decision will evolve as you get different opinions and as you see how the bank responds. 

You have very generously offered to be responsible for the full shortfall.  I think that accepting responsibilty for half of it would be fair, but others think you are crazy to be paying anything. That is your decision. 

If you do intend to pay half of it, then you should start negotiating with "I am paying none of it and I am not paying you any more rent". If they respond at all, then I think you can shift your negotiating position. 

But Kine has probably summarised exactly what will happen: 


> They will stick to the party line of "We don't do debt forgiveness" regardless of how poor a commercial decision it is.



In which case, sell the property and forget about them.


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## Time (10 May 2013)

Surely their solicitors would block a sale if one were attempted?


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## Negotiator (10 May 2013)

If I were you I really wouldn't bother meeting them. Call them instead and tell them that you are recording the call, that normally puts manners on them with regards to bullyboy tactics!

Take absolutely no nonsense from them whatsoever, you have nothing to lose so you're totally in the driving seat.

I know it might be hard but try not to show that you're worried about all this because they use every bit of that as leverage in negotiating with you.

Good luck in whatever you decide to do!


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## Bronte (14 May 2013)

Time said:


> Surely their solicitors would block a sale if one were attempted?


 
You cannot sell a house in NE unless the bank agrees. But people are putting their NE houses on the market, getting a buyer and going to the bank with the price and asking the bank for permission to sell at that price, it's happening all over the place now (I saw one such recently) but these deals are being done in secret as the banks make people sign confidentiality agreements. 

Incidentally solicitors have refused to sign the confidentiality agreements as they feel it's already covered by their own duty of care etc and now I see that accountants are going to refuse also.


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