# Salary when entering into an agreed debt writedown/ payment schedule



## zxcvbnm (11 Mar 2014)

I believe that before someone is entering into negotiations with bank upon voluntary surrender of properties the bank may strike a repayment deal instead of a PIA/ bankruptcy. 
In that scenario it would be to their benefit to have as small a salary as possible - otherwise they would be paying out way more. 

I don't understand this. 

I understand that they would be paying out more - but surely what matters is what they have left after payments?

E.g. 
If I earn €5,000 net a month I may be allowed live on say, €2,000 a month including rent , meaning I pay out ,€3,000. 

OR

I earn €2,500 net a month. I'm still allowed live on €2000 a month  - meaning I pay out 500 a month. 

So in scenario A, I am paying out way more. 
But in both scenarios I am living in the same amount anyway. 

So what difference does it make  ?


----------



## Brendan Burgess (12 Mar 2014)

Hi z

Apart from AIB and maybe the sub-prime lenders, I don't think that any of the banks are entering into deals on the shortfall _before _the sale of the property. 

But you are quite right. Someone on a low income will get more of a write off and a less demanding repayment schedule afterwards. 

I recommend to people who are unemployed to try to do a deal on the surrender and write-off while they are unemployed. 

Brendan


----------



## zxcvbnm (12 Mar 2014)

Hi Brendan. I'm with aib. Undustainable neg equity. 
A number of investment of properties. Awaiting official word from aib to put them up for sale (Im a step ahead in that they are already at sale agreed )

Obviously you can't answer this with certainty.
But currently i am working (IT contractor). Contract is up in June. (Living in uk by the way)

So are you saying I would be better if if that contract wasn't renewed ? 
(I expect another 3-6 months before aib respond to my SFS according to a letter I received from them)

Or out of punishment would they just make me babkrupt anyway ? (That would seriously impact future employment prospects)


----------



## LondonBoy (12 Mar 2014)

zxcvbnm

Firstly, AIB or no Irish Bank will seek Bankruptcy proceeding against you either in UK or Ireland.
There has only been less than a handful of Creditor Petitions and these had very high profile debtors to which the bank wanted to make examples.
The cost against return is just unwarranted.

The scenario at present is you agree terms of sale of your assets with the lender and on execution of same the balance will be reviewed as part of a longer term settlement, most probably in your case against income for set number of years. Usually 5-7

Other scenario you walk from assets and the lender gets summary judgement for loans outstanding. They can then go to courts and get payment order on your income until satisfied.

Or finally if your based in UK, Bankruptcy for 12 months and off your go.


----------



## zxcvbnm (12 Mar 2014)

Thanks LondonBoy.

I am currently dealing with my solicitor - the idea is sell the properties, and of what shortfall there is (which is hundreds of thousands meaning i can never pay it all back), enter into an informal agreement with the bank whereby they would look for payments out of salary for a number of years. (payments probably not dissimilar to a PIA - but informal).

My query is - if i was unemployed what kind of deal can the bank strike with me then given i have no income? (albeit most likely temporarily)

Brendan's post above seems to suggest this would be to my advantage. Just trying to figure out a likely outcome in that scenario.


----------



## Brendan Burgess (12 Mar 2014)

You should be taking professional advice from a debt advisor, rather than a solicitor. 

If there are hundreds of thousands, and you cooperate with AIB, you might well be able to do a deal on the lot to walk away with the shortfall written off.


----------



## zxcvbnm (12 Mar 2014)

Brendan Burgess said:


> You should be taking professional advice from a debt advisor, rather than a solicitor.
> 
> If there are hundreds of thousands, and you cooperate with AIB, you might well be able to do a deal on the lot to walk away with the shortfall written off.



Brenadan - Its a solicitor that specialises in debt solutions as well. I am currently co-operating with AIB.

Getting back to your earlier point where you mention its better to attempt a deal of surrender and sale when unemployed.
Im unsure what you meant by that.

I'm just trying to get my head around what kind of deal a bank in practice could possibly do with someone with no income - other than leave them off completely - or out of punishment force them into bankruptcy.
Or am i missing something?


----------



## LondonBoy (12 Mar 2014)

zxcvbnm

From your point of view, in dealing with a shortfall, the smaller the salary the smaller any repayment capacity.
But how sustainable is it to have a low ball salary going forward ?
No income is fine, but you will still be required to fill out a Statement of Affairs annually to satisfy the bank for years to come.

I agree with Brendan, if you have large shortfall, i know of clients who have settled for faction of amount (10c in €1) raising money through family and friends.
Banks need the cash now as the debt has been written down or off, so any cash is booked immediately as profit !
The option to low ball them is there, but you need a good debt advisor to push hard for you.


----------



## zxcvbnm (12 Mar 2014)

Thanks again LondonBoy.

My situation is I have c. €40k-€50k lump sum. Neg equity of c. €400k. (I've basically stopped paying into accounts while liaising with bank. They will certainly be asking me to sell which i am fine with)

How do i best position myself once bank gets back to me?

- Do I want to be employed earning a good salary (which is my current situation)
- Am i better being unemployed with the lump sum in the hope they accept that?
- Any thing else im not thinking of?
/
Also - I still don't get how earning a small salary above a big salary is better? (See the illustration in my original post)
Presumably they will just give a basic living of standard and take the surplus?
So what difference does it make to me what that surplus is if the bank gets it all anywAY?


----------



## LondonBoy (12 Mar 2014)

zxcvbnm

To give general advice on this forum on legal routes opened to debtors is a great help for many in organizing their affairs.
To start to micro manage any particular case would be dangerous on an opened forum.
Best advice if your in UK contact Steve Thatcher help with debt.


----------



## Brendan Burgess (12 Mar 2014)

If your Centre of Main Interests is in the UK, why not go for bankruptcy? 

Before that, make an offer to the lenders in full and final settlement. If they don't accept, go bankrupt. 

Brendan


----------



## barryl (20 Mar 2014)

*informal agreement*

Im in a simular boat,and by the sounds of it I bet we are using the same solicitor/Pip.I`m wondering if the banks agree to an informal agreement with you.....

1.Does your name appear on some register like it would if you went the insolvancy route?

2.How is your credit rating after an informal arrangement?


----------



## zxcvbnm (20 Mar 2014)

For question 1 it doesn't enter any register. Quite the opposite in fact. You are in fact forced to sign a non disclosure form. 

Not sure of the answer of the 2nd question. But I'd  imagine in practice for most people by the time it gets to the stage if writedown their credit us ruined anyway.


----------



## Bronte (21 Mar 2014)

zxcvbnm said:


> I expect another 3-6 months before aib respond to my SFS according to a letter I received from them
> 
> Or out of punishment would they just make me babkrupt anyway ? (That would seriously impact future employment prospects)


 
Why would you wait 3 to 6 months for a response from AIB?  6 months is half way to UK bankruptcy, lots of people go bankrupt over there.  Why would it affect yoru employment prospect?  

Have you considered contacting the David Hall organisation, it's free for AIB customers.  

Personally if I were you, I'd be agreeing a no contest orderly sale, with writedown and threat of bankruptcy if the bank doesn't agree.  

All agreements in *writing.*


----------

