# Can someone help me with the decision that I have to give to New Beginnings ??



## Seamie12 (7 Nov 2012)

Hi,

I purchased a two bed appt in June 2008 where my current mortgage outstanding is €260K but the value of the appt is only €130K. Im making reduced mortgage payments of €800 a month with the full repayment at €1,200 so Im getting into arrears of €400 a month. My current arrears amount is €3K.
Im unable to make full repayments because of salary cuts over the years.
I registered with New Beginnings and they gave me two viable options that they would fight for me.
These options are not strictly in law as of yet but New Beginnings assured me that they were in the pipeline to come into law.
1.
DSA (Debt Settlement Arrangement) where in simple terms I would lose my home. The Bank would sell the appt and the negative equity of €130K wouild become an unsecured loan which I would part pay over a period of 5-7 years .
So for instance typical payment would range from 15k-35k based on what they believed I could afford. At the end of the 5-7 years I lose my home but I am debt free. This is similar to the case of the Nurse who won her case against BOI. New Beginnings fought against the banks in this scenario.
New Beginnings said that the DSA would be the easier option to acheive.
Or
2.
PIA (Personal Insolvency Arrangement) where I keep my home. So I pay interest only on my mortgage for a period of 5-7 years and some or all of the negative equity of €130K becomes an unsecured loan which I make a contribution towards. By the end of the 5-7 years some or all of the negative equity is erased leaving a more affordable mortgage.
New Beginnings believe this will come into law.
The PIA is harder to acheive according to New Beginnings.
On a purely Financial basis which option do you think I should ask New Beginnings to fight for given that the DSA is more likely to be acheived than the PSI ??
Which option would I better off in the future ??
Any feedback would be greatly appreciated as Im really struggling with this decision.
Regards
Seamie


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## Brendan Burgess (7 Nov 2012)

Hi Seamie

It's best to provide all the information in the Standard Format. 


What is the interest rate on the loan?  Is it a tracker or SVR or fixed?

Who is the lender? 

What is your current salary?  Presumably enough to pay €10,000 a year in repayments. 

Are you happy enough to lose your home?  (Presumably so if you can escape negative equity) 

Brendan


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## Seamie12 (8 Nov 2012)

Hi Brendan,

Thanks for your response.

Here is some of my Personal Information you requested :

*Personal and Income Details*

Income art Qualified Accountant ( having difficulty passing final exams)

Salary :  €40,000 per annum

Income History : Im working for a Semi state Organisation for the last 5 years.

Income Partner : N/A

Number of Children : 0

Amount of Mortgage Supplement : N/A


*Home Loan*

Lender : Haven Mortgages ( EBS)

Amount Outstanding : €264,000

Value of Home : €130,000

Interest Rate : 4th of 5 year Fixed 5.45 %. Go back to Variable after fixed rate commences. Variable Rate at moment 4.35%.

Monthly Repayment :€1,200 full repayment only paying €800 the last 7 months.

Amount of Loan Left : 30 years 7 months

Amount in Arrears : About €3,000

I have been taking part in the Marp process since December 2011. Im only paying €800 per month since April 2012.

I have no additional loans or Savings and Investments although I would like to drive and buy a car in the future.


*Summary*

I do not mind giving up my home. I am looking at the best alternative that will save me money in the future ie Debt Settlement Arrangement ( Where I lose my home) and have some remaining debt left to be paid over 5 years or so or Personal Insolvency Arrangement ( where I keep my home and hopefully get some of the negative equity wrote off.

Any feedback would be greatly appreciated.

Regards

Seamus


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## manninp2 (8 Nov 2012)

A single person on €40,000 gross is taking home ~€2,500/month.

Full repayments would be €1,479/month.

Are you not receiving TRS? A single FTB who bought in 2008 would receive €250/month. This would leave a monthly balance of €1,229/month.

Unless you missed some info how come you can't afford the €1,229?

Also you have a two-bed apartment, could you rent the second bedroom? The rental income would be tax free up to €10,000.

A DSA or PIA seems like an extreme measure in your scenario.


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## Brendan Burgess (9 Nov 2012)

Hi Seamie

Renting a room seems to be the best option.  
Alternatively, rent the entire apartment and get cheaper accommodation elsewhere, although I am not sure you will get it much cheaper. 

I would have thought that both the DSA and PIA were unsuitable. It is likely that the EBS would veto them as you can pay at least the interest on the mortgage. 

When you qualify, you will earn a higher salary and be able to resume capital repayments. 

I think you should rent the spare room and pay your mortgage. However, if you are going to do something dramatic, ask the EBS to agree to the voluntary sale of the property. When it is sold, go to the UK and go bankrupt over there. You will be done and dusted in about 18 months.  As an accountant, you should get work in the UK fairly easily. As a single person you don't have to worry about your family settling into the UK.


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## Bronte (9 Nov 2012)

I'm confused as to what New Beginnings are able to do for you right now. How can they get you to decide between two options when those options have not been passed into Law and could be substantially changed.

Before you go down the route of fully renting the apartment you would need to have an exact idea of whether this would make financial sense as taxes and charges are now very high for landlords.


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## Brendan Burgess (9 Nov 2012)

Hi Bronte

The odd things is the Act will make very little legal difference. New Beginnings could put a proposal to the lender now. They can just as easily agree to it or veto it now as they can in 12 months' time.  The Act would probably make them more likely to agree to it and of course, the Act would make it binding on all other creditors.

However, I suspect that New Beginnings are only telling the OP now what his options might be. 

Brendan


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## PiedPiper (14 Nov 2012)

*Other alternatives could be looked into*

https://www.mortgageholders.ie/about/

David Hall who set up new beginnings initially has a new group.

Personally I dont like either of those options dont sign up unless you are 100% sure.  I keep an eye on my lender in the media.


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## Kerrigan (14 Nov 2012)

Bronte said:


> I'm confused as to what New Beginnings are able to do for you right now. How can they get you to decide between two options when those options have not been passed into Law and could be substantially changed.



I was in my accountants office last week and saw umpteen pamphlets on the insolvency bill strewn around for people to take a copy.  I have also spoken to other accountants who have been made aware for months what was coming in the bill.  Says a lot for democracy, huh?

There are debt management companies also singing of this 'proposed' hymn sheet.

The new bill is a farce and is only bank friendly.  It was written by the banks for the banks.

I agree with Piedpiper, neither of these options are ideal.


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## PiedPiper (15 Nov 2012)

Its my view that that nurse got a profoundly bad deal, There are lots of other better options.


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## 44brendan (16 Nov 2012)

130K of negative equity is a significant burden to be carrying. Giving your income position and (assumed) relatively young age, if it were me I would be looking for a much better deal from the Bank than that! Also, I would consider the option of UK bankruptcy if the Bank were entrenched on the negative equity. I don't see the options offered by New Beginnings as giving you any comfort and would be very reluctant to accept them. If you are prepared to voluntary sell or surrender this property to the Bank, the quid pro quo should involve a much better deal on the negative equity.


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## Kerrigan (17 Nov 2012)

I agree.  Not ideal options.

I am also surprised that NB are dealing with your case so early on.  Your arrears are not enormous, nor would you be in the spotlight for repossession.


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