Case study Bank threatening legal action

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michaelg

Registered User
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Would really appreciate any help on this, I'm honestly at my wits end here

Income details
9,000 approx , self employed
Income history: lost most of my work around 2009 as buisness closed but managing to just about get by working self employed.
Net income partner/spouse: single
Amount of child benefit received 00.00
Amount of Mortgage Interest Supplement received 00.00

One adult
I have a car which i need for work
I have no children
no special expenses

Home loan
Lender: Bank of Scotland
Amount outstanding: 212,000
Value of home: 80,000
Interest rate: SVR
Monthly repayment 860approx
Amount in arrears 4,000
I rent out rooms and pay them 400 per month

In Marp since mid 2011 , property is jointly owned and the other person has emigrated, i have no contact with them

Second property - Site (bought in 2008 with the intention of building on)
Lender: ulster bank
Amount outstanding:110,000
Value of site: 50,000
Interest rate: 4%
Monthly repayment 480approx
Amount in arrears 4,000
Monthly rent received 00,00

No further loans

No savings or investements

Do you expect any lump sums in the medium term future?
No
Redundancy, inheritances, injuries awards.
No


How important is retaining the family home to you?
Which of the following best describes your situation?

I would like to keep it, but will get rid of it if it means I can get rid of the mortgage associated with it.

Any other relevant information

What is your preferred realistic outcome?

Just want to be free from the banks.

Additional details:

I jointly own 2 propertys and have mortgages on them.
One is a house the other a site.
The other co-owner has emigrated and i have no contact with them .
At the moment i am renting out rooms in the house and pay the bank all rent taken.
The bank refuse to negotiate an arrangement until i get power of attourney, but i cannot contact the other person and dont know if they would agree to this. So im in limbo and going further into arrears.

The site was bought during the boom and my ex-partner and myself planned to build on it, unfortunatly it didnt happen due to the crash and the stress of this along with other things made us spilit up.
They have emigrated and the bank is threatening me with legal action.
I have offered a voluntary sale but they need the other persons signature for that and i cant get it.
Not sure where to go from here, ANy advice is greatly appreciated.
Thanks
I am renting a room down the country in the search for more work, i have kept a room in my own house and stay there once or twice a month when working in the area, this gives me a chance to collect rent and keep an eye on the upkeep of the place.
 
Last edited:
michaelg said:
Income details
9,000 approx , self employed, single

Home loan
Lender: Bank of Scotland
Amount outstanding: 212,000
Value of home: 80,000
Interest rate: SVR
Monthly repayment 860approx
Amount in arrears 4,000
I rent out rooms and pay them 400 per month

In Marp since mid 2011 , both properties are jointly owned and the other person has emigrated, i have no contact with them

Second property - Site
Lender: ulster bank
Amount outstanding:110,000
Value of site: 50,000
Interest rate: 4%
Monthly repayment 480approx
Amount in arrears 4,000
Monthly rent received 00,00

Just want to be free from the banks.
Click to expand...

Didn't spot your post until now. Why is the rent on the 'home' so low? Actually I've only good news for you, you're in a hopeless situation financially it would seem to me, so let the banks take both the site and the house ?

You are also playing dicey with revenue on the 'home.' It's not your home, it's an investment property, so you're liable for PRTB, NPPR, and maybe, but unlikely tax on the rent.

Ulster are threatening you with legal action on the site, because you cannot sell it without the other owners consent, so let them take the legal action, but tell them in writing that you will help them in any way whatsoever in relation to this.

What are your discussions with BofS? You're not in limbo, the bank is. By paying them something you are only actually delaying the solution for yourself. Pay them nothing and you'll soon see how long you'll last in limbo.

Why would you want to keep the home? Wouldn't you be better off without it and starting again? Have you had a talk with Mabs to see your options under the new insolvency regime.
 
Bronte said:
Didn't spot your post until now. Why is the rent on the 'home' so low? Actually I've only good news for you, you're in a hopeless situation financially it would seem to me, so let the banks take both the site and the house ?

You are also playing dicey with revenue on the 'home.' It's not your home, it's an investment property, so you're liable for PRTB, NPPR, and maybe, but unlikely tax on the rent.

Ulster are threatening you with legal action on the site, because you cannot sell it without the other owners consent, so let them take the legal action, but tell them in writing that you will help them in any way whatsoever in relation to this.

What are your discussions with BofS? You're not in limbo, the bank is. By paying them something you are only actually delaying the solution for yourself. Pay them nothing and you'll soon see how long you'll last in limbo.

Why would you want to keep the home? Wouldn't you be better off without it and starting again? Have you had a talk with Mabs to see your options under the new insolvency regime.
Click to expand...


Thanks so much for you reply Bronte, it really means a lot to me,

The rent is so low because that's what rents are like in this part of the country, and because Im renting out 2 rooms and keep a room there for myself if Im working in the area and to store some personal belongings.
This also gives me a chance to keep an eye on the place/maintenance etc etc.
The house was never an investment property, it was my home for many years. whats PRTB and NPPR ? (excuse my ignorance)

My last discussion with BOS was about 2 weeks ago, they asked me to apply for Mortgage interest supplement and for legal aid to get power of attorney.
I've been refused interest supplement for a few reasons being
*its not my main principle residence
*I'm not currently in an alternative payment arrangement

I'm eligible for legal aid BUT I've been told by them the waiting list is 12 months and growing , however they have offered 30 minutes of advice within the next 2 months for 30euros.
I'm thinking of meeting them and asking if they'd arrange a bankruptcy or insolvency for me ?

It was actually BOS who talked me into renting out a few rooms in the house, I was led to believe that id be in a better place to negotiate if i was paying them something. It seemed to be the right thing for me to do at the time.

I guess i'm only interested in keeping it because it would be a shame to loose all the interest I've paid in over the years, I'm guessing a lot of the interest would be paid off by now.
I haven't been in touch with mabs for next to a year now, they advised me then to lay my cards on the table with the banks and try to negotiate some arrangement with them, I guess that's what I've been trying to do but I'm going nowhere with this.
Maybe its time i called into mabs again ?

Bronte, again thank you for your reply, this is emotionally very hard for me sometimes.
 
Your home property has to be registered with the PRTB. You will probably have a 500+ of fees and late penalties. You have to pay the nppr tax. With fines that amounts to many thousands. There's a thread here about it. It's also important to declare this income to revenue. I know you're struggling but ignorance is no excuse.
 
Thanks Tommy
Just off the phone with a friend who says that i only have to register with the PRTB if i'm renting out the whole house , not if Im renting out 2 rooms and am there myself sometimes, ???
 
Anyone any idea why BOS/certus would ask me to apply for interest supplement ? I'm sure they know that even if i was entitled to it, it would be a drop in the ocean of mortgage debt that I'm drowning in.
 
Legal aid will do very little for you to be perfectly honest. The system is stretched to the limit with family law cases that they have no time for debt cases. Apart from basic advice you are really on your own.
 
michaelg said:
Thanks Tommy
Just off the phone with a friend who says that i only have to register with the PRTB if i'm renting out the whole house , not if Im renting out 2 rooms and am there myself sometimes, ???
Click to expand...
Unfortunately your friend is wrong. If you are staying there for 1 or 2 days a month then it is not your principal private residence.
 
Given your very low income, and considerable borrowings I would agree with the advice given by Bronte. Forget paying anything to the banks. Write to them outlining your financial position and offering to hand back the security. Pay them nothing else. If they take action against you, there is really nothing they can do unless your income position increases significantly. Your credit rating is shot anyway, so there is no point in worrying about that. Your'e only real concern is the property tax. revenue will continue to pursue you for this, but BOSI will have to pay it in order to sell the house. New start is required and while the next couple of years are likely to be tough, you are now the proverbial stone and cannot be squeezed for blood that is not there. Toughen it out with the Banks, they have a bigger problem than you have in this case!
 
I guess i'm only interested in keeping it because it would be a shame to loose all the interest I've paid in over the years, I'm guessing a lot of the interest would be paid off by now.
Click to expand...
Forget about the past. You now have a mortgage of €212k on a house worth €80k. House prices will need to treble before you are out of negative equity and you will still owe €212k which you won't be able to pay off.

Likewise with the site.

They have emigrated and the bank is threatening me with legal action.
I have offered a voluntary sale but they need the other persons signature for that and i cant get it.
Click to expand...
You are in a great position and now is the time to exploit it while your income is so low.

These properties have to be sold and you should seek to have the shortfall written off as quickly as possible.

You will need to pay for professional advice. So you are going to need to build up a fund of around €2,000. You should write to the bank and tell them

  • You will be applying for bankruptcy
  • You have no contact with your joint owner
  • You will cooperate with them in full in their court case to seek possession of the property
  • You will need some money to pay the deposit for the rent on the new premises
  • You will need the fees for the bankruptcy application
  • You will be making no further payments on the mortgage
Then forget about paying the bank.

Build up a fund to help you through the mess
If the bank begins repossession proceedings, write asking them how you can facilitate them.

Show up in court and tell the judge you have no objection and that you will be going bankrupt.


It will be a lot easier to sort out if both properties are sold off and you are left with unsecured debt. In fact, you will probably not need to go bankrupt. You may be able to do a deal with the lenders at that stage on the shortfall.
 
I sincerely thank everyone for your advice

Brendan and others

What professional advice will i need ? a solicitor or PIP who deals with debt/bankruptcy?
Should i write a voluntary surrender of both property's ?
Not sure what i should do with the tenants ?
Being that the other co-owner has emigrated , how long will it take before the banks repossess both property's ?
 
michaelg said:
I guess i'm only interested in keeping it because it would be a shame to loose all the interest I've paid in over the years,
, I guess that's what I've been trying to do but I'm going nowhere with this.

Maybe its time i called into mabs again ?

.
Click to expand...

Your obviously quite stressed if you're so relieved to be getting replies on here. In your situation I can only see positives. You have nothing to lose now. You're wrong to concentrate on interest paid. Instead you should be focusing on how much NE you have and the fact that 'yes' you can get out of it. Do you know how many people would love that.

You have to think of this as a battle or game, the bank versus you. They wanted you to get mortgage supplement only because then they'd happily keep you tied to the house, while being paid, and then as soon as there was no NE you can be sure they'd land you will all sorts of fees and charges and you'd lose the house (that's cynical me whose been around too long). It's the same story with them getting you to rent out the rooms, and they know full well you're storing up a whole heap of other trouble with revenue on this score. It is quite clear this is now an 'investment' property, not your home, and you already owe goodness how much in NPPR (don't worry, there's a solution for that too).

You mentioned something that is quite important, that you were 'led to believe', that by cooperating with the banks demands you would be better able to negotiate. It's important for not just you but others, to understand at the end of the day the bank is only battling for itself. And people should be very careful to hear what the bank is saying but watch what they do. And in a situation such as yours, which is hopeless financially, you actually hold the cards, the bank knows this, as ultimately the minute you cease to pay, they will then properly negotiate. Nobody should understand my meaning as being uncooperative, but be cooperative as long as it it is your own best interest first.

Legal Aid

I think you're not going to get any help from Legal Aid, 30 minutes is nothing, and I'm shocked they are charging you, but I'd go prepared with all your ducks in a row and as many questions as you need answering preopared so that the time is of worth to you. By all means ask them if they'll help you through bankruptcy - very interested to see how they approach this. Also ask them if the two people who suggested that you give up on the property are correct. And of course go to Mabs, you have to be proactive, the are not going to be. Gain the knowledge that will help you make a decision, at this stage it is only you holding yourself back.

I think it's laughable that the bank suggested you try Legal Aid to get power of attorney for your ex. You can be sure that Legal Aid have more important priorities. I find it hard to belive that the bank is not fully aware that Legal Aid have no time or money for cases like yours, or that yours will be bottom of the heap for solving. And Legal Aid know that ultimately the bank will pay for sorting out this mess if you don't. Did they put that advice in writing to you, I'd be amazed if they did.

PRTB

Your friend is wrong, you are not 'living' in the house. You might get away with it though. Others have.

NPPR

When BofS sells they will have to pay this, and the household charge and the property tax. So there's a solution for that. They'll also have to pay for the auctioneer and the legal fees.

Don't go back into the ether now and do nothing and be waiting around for solutions. You are the solution. As a first step can you look on here on the bankruptcy thread. As Burgess pointed out you need a war chest of about 2K to go with this process on your own, but it can be done. And you can come on here on AAM every step of the way and we'll try and help you as best we can.

Draft the letter

How about you mulling over the advice on here this weekend, and you doing a draft of a letter to the banks, you can do the one letter to the both of them, and come back on Monday and tell us you've made a decision and drafted a letter. You know who Burgess is, you know that Brendan44 works in a bank and has a lot of experience on this so I don't think you can go wrong by taking their advice. Me I just hate banks and hate to see people so stressed.
 
michaelg said:
What professional advice will i need ? a solicitor or PIP who deals with debt/bankruptcy?
Should i write a voluntary surrender of both property's ?
Not sure what i should do with the tenants ?
Being that the other co-owner has emigrated , how long will it take before the banks repossess both property's ?
Click to expand...

Can you afford legal advice? You need to go bankrupt it would appear to me.

Yes voluntary surrender both properties by telling the banks you can no longer afford them and that you will do everything in your power to help them in their repossession.

You need to keep the tenants to build a war chest for the costs to come.

Forget about the co-owner, not you problem now. It's the bank's problem, and I imagine at least a year before repossession, not sure if you go down the bank ruptcy route if it will be faster, then I guess the problem goes to the Official Assignee (not sure of his title, but he was on Marian Fincane very recently and seemed a nice enough chap to deal with - as long as you are honest).
 
Thanks Bronte and others,
Had a good think over the weekend and its hard to find reasons NOT to do as is suggested here.
What would i need the 2K for ? solicitors,courts and PIP's fees ?
Im going to one of the New Beginning seminars this week, wondering if it would be worthwhile paying for their services ?
 
Brendan Burgess said:
Forget about the past. You now have a mortgage of €212k on a house worth €80k. House prices will need to treble before you are out of negative equity and you will still owe €212k which you won't be able to pay off.

Likewise with the site.

You are in a great position and now is the time to exploit it while your income is so low.

These properties have to be sold and you should seek to have the shortfall written off as quickly as possible.

You will need to pay for professional advice. So you are going to need to build up a fund of around €2,000. You should write to the bank and tell them

  • You will be applying for bankruptcy
  • You have no contact with your joint owner
  • You will cooperate with them in full in their court case to seek possession of the property
  • You will need some money to pay the deposit for the rent on the new premises
  • You will need the fees for the bankruptcy application
  • You will be making no further payments on the mortgage
Then forget about paying the bank.

Build up a fund to help you through the mess
If the bank begins repossession proceedings, write asking them how you can facilitate them.

Show up in court and tell the judge you have no objection and that you will be going bankrupt.


It will be a lot easier to sort out if both properties are sold off and you are left with unsecured debt. In fact, you will probably not need to go bankrupt. You may be able to do a deal with the lenders at that stage on the shortfall.
Click to expand...

Thanks Brendan
How on earth would it be possible to do a deal with the shortfall if i have nothing to bargain with ? (ie the house is gone)
Why might i not need go bankrupt ?
 
Hi Michael

If you have nothing, bankruptcy won't achieve anything for the bank, so they might do a deal with you.

If you show that you have cooperated all along, then they might do a deal - for example - pay any excess of your income over €20k for three years and then they will wipe off the remainder.

It's worth asking for.
 
michaelg said:
What would i need the 2K for ? solicitors,courts and PIP's fees ?
Im going to one of the New Beginning seminars this week, wondering if it would be worthwhile paying for their services ?
Click to expand...

I've no idea if NB are worth paying. I would be very slow to part with any money unless I knew what I were getting.

To go bankrupt yourself would seem to need about 2K. That's 650 Euro court fee and an ad in the main newspapers and stamping of documents. It might not cost 2K. Apparently you do not need a PIP to go bankrupt.

As Burgess points out you may not need to go bankrupt if the bank agrees. But I think that you need to get it in writing from them that in return for your full cooperation they will write off your debt after 3 years. The great thing about the bankruptcy option, and it's only a new option that we don't have full details on, is that there is finality to it. So if in the future you come into an inheritence, or make good financially it cannot be taken away from you because of what happened in the past.

I would not trust a bank to honour anything that is not in writing.
 
Bronte said:
I've no idea if NB are worth paying. I would be very slow to part with any money unless I knew what I were getting.

To go bankrupt yourself would seem to need about 2K. That's 650 Euro court fee and an ad in the main newspapers and stamping of documents. It might not cost 2K. Apparently you do not need a PIP to go bankrupt.

As Burgess points out you may not need to go bankrupt if the bank agrees. But I think that you need to get it in writing from them that in return for your full cooperation they will write off your debt after 3 years. The great thing about the bankruptcy option, and it's only a new option that we don't have full details on, is that there is finality to it. So if in the future you come into an inheritence, or make good financially it cannot be taken away from you because of what happened in the past.

I would not trust a bank to honour anything that is not in writing.
Click to expand...

Where did you hear about not needing a PIP ? I could certainly do most of these things on my own but i might need a guiding hand here and there to make sure im doing things right.
Do you know when the new laws will be finalized ? i thought this was meant to be sorted last month by the gov.
 
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