Case study Both unemployed, may need to relocate to find a job

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ellenb

Registered User
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Personal and income details:
JSB €944 per month.
Income history:
Husband made redundant in 2008. Has had 3 jobs since then lasting 6 months, 4 months and 5 months since 2010. Last two based 100 miles away and unsustainable due to travelling cost. Taken because of promises of higher income down the line that never happened.
Net income partner/spouse:
JSB €655 per month
Had to leave last position in Oct 2012 due to hearing disability. Was full time, then hours cut and put onto a 2 day week, increased to 3 days in 2012. Disability shouldnt affect looking for work overly but last position it was causing big problems and huge stress.
number of children:
2
Amount of Mortgage Interest Supplement received:
None. Depending on what outcome of this is, we know we are now eligible though. We were not eligible when I was working and husband unemployed.
Home loan
Lender:
Ulster Bank.
Amount outstanding:
€195,391
Value of home:
Unsure-between €100 and €200k
Interest rate:
Tracker-currently 1.5%
Monthly repayment:
€812
Amount in arrears:
€2606

Summary of discussions and agreements with the bank:
In Marp process since 2010.
6 month arrangement to pay €177.86 (€777.40 was full amount due incl TRS)
wef 1/8/10 to 1/1/11
9 months arrangement to pay €199.38 (€815.62 due) WEF 1/7/11 to 1/3/12
3 month arrangement to pay €0 (€816.40 due) WEF 1/4/12 to 1/6/12
End of last year completed another SFS over phone and it was deemed we could not afford to pay anything, I began to panic and amended all figures with him and I stupidly said we would pay €400 a month as at least this would cover interest.
Husband took up new job around same time so we thought we could afford it but travel costs were colossal and car needed repairs etc, grandparent died & I needed to travel to UK for funeral, then Christmas came and were completely unable to recover or pay what we had agreed. I did pay approx €150 from Oct 2012 to date.
Arrangement is now finished and terminated as we didnt keep to agreement but I rang and told them after Christmas we could not afford it. Husband then lost employment and could not complete another SFS until we knew what social welfare payments we were to receive. I kept in touch and let them know where we were all this year.
Completed another SFS over phone on 2nd April 13. It was deemed we could not afford to pay anything. It was agreed a KAM agent would call out to us to discuss possible voluntary sale.
No one has contacted me since, I have chased it up three times since then.

Other loans and creditors
Overdraft-€1000 at 15.5%
Credit Union e.g. Loan of €27,500 against shares of €1,500. Int accrued €1865. Arrears over €6k
Credit Card-€670. Paying min payment and used only in emergencies-reluctant to cancel as this is our only form of credit available to us.
Littlewoods-€240 balance. Only form of buying clothing where we can pay back monthly. Aware it is more costly and will cancel if need to.
Family
Owe thousands but no one calling in that one on us just yet. However family have not been able to help out financially for some time.
Other savings and investments:
None-all used on fertility treatment and finishing our new build back in 2007-2010.

How important is retaining the family home to you?
At this point, I don't think keeping the home is going to be an option. We are having a hard time with that.
However employment situation where we currently live is awful. Even if employment was found, at current wage levels we would still not be able to pay off all our debts every month. So I dont think we have much choice.
House is probably in negative equity-hard to get a realistic figure as houses just not selling here.
Kids are 3 and 1 so if we are going to have to move, doing it before they start school seems the least painful option.
We should be eligible for social housing in Dublin, as husband was born and reared there and we bought a house in same area in 2003 and he has family still living there.

Which of the following best describes your situation?

Both. Need to be sensible and realistic about this.
I don't care about keeping the family home.
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?
We will never be in a position to repay the home loan. So we want to sell the house and deal with the shortfall.
We cannot afford to sustain the house bills let alone the debt, our heating system has broken down (again) and we cannot afford to get it repaired so we cannot afford to stay another winter and therefore want to be able to move out over the summer.
 
Looks to me like you are hopelessly insolvent.

Option 1 - UK bankruptcy

You have very young kids, so moving is not an issue and there are the two of you.

Option 2 - stay and get mortgage interest supplement

You mention that it will be near on impossible to get employment where you are so long term that is not a realistic option. Staying on the dole forever gives one no hope and is bad for you and for society.

Option 3 - sell with banks consent

If you're going to move to Dublin than stay in the house until the sale is agreed, stop paying them anything as you cannot afford it. Maybe they will then write off the shortfall which they should do for people on social welfare, if they don't go for Option 4

Option 4 - Irish insolvency

Until this is up and running and we see how it's working I'll leave others to comment on how this would be suitable for you.

Personally I'd go for option 1, nice clean break of 15 months and start life again. Better possibility of job in UK if you decide to stay there permanently, if not you can return to Ireland debt free and try and get jobs in Dublin. I don't see any upturn in the Irish economy for some time, austerity is quite plaintly not working, so long term people need to go where the jobs are. Canada Australia etc are also options for you and with the young kids it's a better future.

Question for you. What is a KAM agent?
 
Yes KAM key account manager. I'm assuming they won't make the appointment as PI stuff just announced and yet to be finalised.
Would a PIA be an option when there is (at moment anyways) no income coming in? We ideally want to move to Dublin ASAP as one child is due to start Playschool in Sept. I want this to be as kind as possible for our kids. It's a big move just going from rural to city, also away from family etc. Can't bear the idea of making friends at school only to take her out part way through. Better to start in Dublin.
We are considering putting house up for sale for 4 weeks and see what if any interest there is and if no joy think about voluntary surrender in order for us to move. Any thoughts?
 
ellenb said:
Better to start in Dublin.
We are considering putting house up for sale for 4 weeks and see what if any interest there is and if no joy think about voluntary surrender in order for us to move. Any thoughts?
Click to expand...

Ok so you are definitely goign to Dublin. Write to the bank and tell them the mortgage is unsustainable and that you've put it up for sale. When you get an offer inform the bank of this and see what they then say. Presumably they will agree to the sale. They will probably tell you that you are 'liable for the shortfall' which you are. But they will not be able to recover this from you, you have no assets, and you have no income (dole does not count for the purposes of a bank getting an instalment order). When the new insolvency regime comes in than you apply under that whichever of the 3 options on there is the best option for you.

The Master of the High Court, Ed Honohan, said on Marian Finucane that you can go bankrupt for 60 Euro (I'm going to do a thread now to clarify this)
 
So update if anyone can advise? CAM manager contacted me today and arranged to meet next week. I asked him and rang mortgage head office in regards to getting no letter re last SFS done at beginning if week. They will not send a response. I asked both re letter to state mortgage is unsustainable and was advised today that no letter will be given at any time. This means that we cannot apply for social housing as will be deemed as making ourselves homeless. CAM agent said he'd organise another 6 month payment break while house is up for sale but refuses to give anything in writing. Suggested we consider renting house out and us moving which is completely out if question with us both being out if work, not only is house not in fit state to rent out (heating us broken and can't afford to get repaired) but where would we live? At breaking point at this stage, damned if we do and damned if we don't. No one seems to know why they won't give letter and CAM agent said it wasn't policy since last year. Can anyone please help? Was advised we should have had letter to inform us of repercussions if voluntary sale or surrender but they just won't issue us with anything though I have requested at least 5 times since 2nd April. Anyone??
 
Hi ellen

If you could do up the house and rent it out, how much would you get?

You have a €200,000 mortgage with an interest rate of 1.5%. That is €3,000 a year in interest.

A house worth €100,000 should get a rent of around €6,000. It's also possible that you could get more - maybe €8,000. Therefore you have a potentially profitable investment.

If you have no other income, the rental profit won't be taxed.

If you could get someone to pay a couple of months' rent in advance, then you could fix up the heating.

Assuming you can't or just don't want to rent it out...

Amount outstanding: €195,391
Value of home: Unsure-between €100 and €200k
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That is a very big gap. It is the difference between being solvent and being insolvent.

You owe €26,000 to the Credit Union. Are you under any pressure on this?

The whole thing is very messy and there is not a clean solution to this. Even if you get a letter of unsustainability from UB in the morning, you might run into real difficulties getting Dublin City Council to deal with you.

I don't think you should move until you or your husband gets a job.

Let's say your husband gets a job in Dublin. It's not ideal, but he can stay in Dublin during the week and come home at the weekends. I know a lot of people doing this.

He will have an income.
He will have low rent costs as presumably he will share or stay with family or friends.
You have a nice house which you built yourself and you will be living in it rent-free.

You have done your best with Ulster Bank. They are not hassling you.

If your husband has an income, he might be able to save up enough money to get the house ready for renting. He might be able to save up the deposit on a property to rent for the family in Dublin.

I don't think that you should abandon the house and put yourself at the mercy of Dublin City Council and the Dublin jobs market. When you or your husband gets a job, then you can decide the next step.
 
Hi Brendan. With regards renting out the house:
We have been told it would be very difficult to rent it. We live in the backend of the backend of beyond. While we love it, it would not suit those who are looking for somewhere close to work or who do not have a car. It would suit a family only as we could not afford to buy beds, redecorate child's bedroom and nursery etc.
However, if we were able to find someone willing to rent it, rent expectations would be somewhere from €275 to €350 pcm. Estate Agent said probably about the €300 mark due to location. We live in Section 23 world, full of empty buy to let properties. Landlords in bidding wars to get tenants. Most tenants were immigrant workers and alot have now left since employment is so poor here. So there is steep competition.
So annual income would be approx €3600. Not allowing for property tax or unoccupied house tax, insurance increase for tenants, supposedly signing up to some tenancy group at a lovely €90 p.a and maintenance on the property, I think you can see it is a non runner. Or maybe we are missing something? That was our take on it.
It also leaves us with the question of where do we live? We could no way afford childcare for 2 kids in Dublin. Any potential wage I might get would not cover them both. So we would have to afford to live there based on hubby's potential income. Rent is too high. Little point in renting in other parts of the country, as far as I can tell.

So if I go by the next part of post: Not able or willing to rent out.
As I said above, we are in section 23 land. Very few houses are actually selling and those that have have gone for stupid money like €30k while others have gone for more, if the farmer wants the land or some other reason to want it. There are no bidding wars, it is hard to advertise a property in back of beyond. Unless you type in the nearest town, which no one would have ever heard of, our house will not be found.
We cannot afford to advertise extensively. So it is difficult to place a proper valuation on the house. It is an amazing house, though I would say that. It far surpasses anything for sale locally. But its the location that is critical. You would either love it or hate it.
While one might say gorgeous modern house, beautiful views, private and rural another would say it's difficult to heat, in the back end of beyond, no where near work towns (min 50 mile round trip to nearest two towns) and very isolated.

I think it's going to be near impossible to sell it. And I really don't expect it to fetch anywhere near its real potential.

Credit Union have finally agreed we cannot afford to pay anything to them for the moment but they are constantly on our back. We probably have about 4 to 6 week reprieve at the moment. I am enjoying it immensely.

We have strong local connections to area we wish to apply to for social housing. Have spoken with them extensively and apart from the letter from the bank, there appears to be no other obstacles in our way.

In terms of staying in the house and Husband staying in Dublin. We have already done this for last 12 months on and off. There is only so long you can expect people to put you up.
They have their own problems at the moment and we really dont feel its fair to them to continue down that path. Friends wont mind the odd night here and there but not every night-they have young families themselves and also in difficulties too.
Plus while alot of people are doing it (we have done it ourselves) at this stage I just dont think not seeing you wife and kids for an entire week is ok. I just dont see the point. THe financial stress and working away from home has caused severe marriage difficulties which we are working out but at what point do you say or can you say that enough is enough? At what point do you say, do you know what? this isnt worth it anymore. It is a house. We can make a home wherever we go. It will be difficult and this decision to give it up has not been made lightly.
It is killing me to lose our home. It is killing me to have to move our kids away. It is killing me that I will have no control over where we end up living and what that area will be like. It is killing me that we have no way of avoiding any of this. But surely the most important thing is family and staying together?

As I say, I really feel we have exhausted all options at this stage :(

So realistically our only chance is to start again. Lose the house, apply for social housing and somehow try and explain all of this to our kids when they get older. I don't know if I will ever forgive myself. We never considered child care costs when we looked for current mortgage back in 2005. We were young, naive. I just assumed banks would take that kind of thing into consideration when they did the "stress testing" bit.
As for the fact that our earning potential is down a min 20% and we weren't earning huge amounts even in the good times, well I guess nobody predicted that.
 
Hi ellen

OK, so we rule out letting out the house.

But I am still a bit confused.
Kids are 3 and 1 so if we are going to have to move, doing it before they start school seems the least painful option.

We should be eligible for social housing in Dublin, as husband was born and reared there and we bought a house in same area in 2003 and he has family still living there.
Click to expand...
I got the impression from this that you wanted to move to Dublin.

We have strong local connections to area we wish to apply to for social housing. Have spoken with them extensively and apart from the letter from the bank, there appears to be no other obstacles in our way.
Click to expand...
Why would you leave a house you love to move into social housing in the same area? Did you not say that you now qualify for MIS? Apart from their administrative inefficiency, have UB not been reasonably flexible with you?

End of last year completed another SFS over phone and it was deemed we could not afford to pay anything,
Click to expand...
They don't seem to be putting you under any pressure to pay anything? Why are you putting yourselves under pressure?

UB may figure that your home is unsellable and so there is no point in repossessing. If they thought it was worth €200k, surely they would be delighted to agree to a voluntary sale?

This seems very clear to me.
Stay where you are until you or your husband gets a permanent job.
If you have to move at that stage, then move.
If you are both going to be unemployed for some years to come, are you not better off staying where you are?

From the government's point of view, MIS will cost them €3,000 a year - 1.5% of €200,000. That will be a lot cheaper than providing you with social housing.

I don't think you should be pushing UB on this at all. If they don't chase you, then you should not chase them.

Brendan
 
To clarify, yes it is Dublin for social housing. UB are chasing us and expect full repayment on 1st May, get letters every month saying we are in arrears and finally said we will sell. Now they won't give us letter of unsustainability so wearer considering taking house off market and going through yet another SFS and seeing what they suggest next
 
Ellenb I think you need to step back from the situation for a few days and then once you have made a decision either to stay or move back to Dublin use this as a starting point. Tell the bank you need your letter to apply for social housing. Complain to the financial ombudsman write to your local TDs and most of all don't let the situation get to you.
 
I would imagine you will have difficulty convincing social welfare to accommodate you in Dublin where the rents are higher than where you currently reside. Dublin would be approximately €6,000.00 a year more expensive for social welfare than where you live and they do take this into consideration.
 
Dermot, you can apply for social housing anywhere in Ireland provided you have a strong local connection to that area, even if not currently living there. In our case, we have that local connection.
Our plan would be to apply for social housing but long term to be able to support ourselves. Social housing would be a last resort but there is no work where we currently live so moving is our only hope of finding work in the future.
If we stay where we are we will definitely have to rely on help for a long time. Moving gives us more options. We only want to try and better ourselves.
 
Long term option advice

Hi, in MARP since 2010 and have had 2 moratorium's, and several less than interest only agreements since then. Have had house for sale since Feb this year but nothing happening there.
Spoke with bank a few weeks ago and they suggested if we paid interest plus some capital, we could apply for long term option of 5 yrs.
We were told this months ago but they said it was interest only.
We cannot afford it at the moment yet we understand it is a good deal.
They said they wouldn't offer anything else going forward.
If we take it and then run into difficulty in few months time, can we go back and tell them we can't afford it and hope they do something for us then and maybe we might get a buyer in mean time? Or should we be honest now?
Stress is taking its toll at this stage but we just don't have the amount they want us to pay.
 
ellen - Sorry to hear you are still struggling.

I added your new topic to your case study, as the title was too vague and there was no context.

You have a mortgage of €195k @1.5% which is less than €300 per month.

As you say, it's a great deal. It is certainly the best deal you can get.

Are you paying anything at the moment towards your mortgage?

You qualifed for MIS - how much is that? Are you paying that over?

If you can't pay the €300, your mortgage is clearly unsustainable.

But you won't be able to get accommodation anywhere else for less than €300.

I don't think that you have any choice but to agree to the interest only deal.

If you or your DH get a job, you will be able to pay the €300.

If you can't pay, then wait and see what UB will do. They probably realise that you are trying to sell it so there is little point in them repossessing it.

I think that this all depends on where your husband (or you) gets a job. You are better off being unemployed where you are than being unemployed and homeless in Dublin.

Brendan
 
IMO you are very unlikely to get social housing in Dublin. If the council accept you are unintentionally homeless which is a big if they may accept you on to the list and give you a letter so you can apply for rent supplement. Landlords are aware that rent supplement often takes 3 months to come through so you would need a months deposit and three months rent cash. Could you stay with relatives in Dublin while waiting to get all this sorted out?
 
Thanks for the response. We are going to ask for the deal to be put through and just hope either of us gets work soon. If we can't keep up repayments, then we will look at plan Z I guess. Thanks again
 
Next Step..?

Posted on here a while back. Story is we have a mortgage on our family home. We have been in MARP since 2010. Have been on short term arrangements and two separate moratoriums in that time.
Completed latest SFS and sent it in along with a letter outlining our position. We are both out of work and have two young children. This situation has been ongoing since end of 2008-so five years at this point and we are actually worse off now than we where then. Our prospects here are not good.
We want to sell the house or give it back and start over again.
The bank have agreed to let us sell the house in NE though they wont put that in writing. House has been up for sale since earlier this year with no joy. Thought we had someone at one stage but all fell through.
However the bank wont send us a letter stating that voluntary sale/surrender or repo is the next step.
Verbally what we are being told now is that they are considering two options for us: one is another another six month moratorium even though we have already had two and they told us previously we would not be eligible for another.
Two is they want to offer us a long term deal-somewhere between 1 and 3 yrs-an interest and part capital deal also. But we cannot afford to pay what they are asking now that MIS has been scrapped. They had previously said it would be interest only but now that has changed to include some capital. It is completely out of our reach.
Even if we had our heart set on staying where we were, we could not afford it with no prospect of any work-full or part time anywhere remotely near to us. We have tried commuting but it costs too much. We have tried everything possible to hold on to everything but we cant do it anymore.
We cannot understand why the bank are trying to stall things here. Or why we were never offered a long term deal before now-when we could have applied for MIS.
I have insisted in my letter that they write to us outling all of these proposals but have been told it could be another three to four weeks before I receive it, which means MIS is definitely out.
When we do get whatever offer they decide to throw to us, can we appeal it and if so how do we go about it? Are they allowed to offer a long term option if our SFS shows we cant afford what they are asking us to pay? I dont understand how they can ask us to fork out X amount when we dont have X amount left over. We are minus figures, there is no surplus.

And who can we talk to regarding bankruptcy in Ireland? No interest in going to UK. Two extra years is not worth up-heaving my family to live in a different country away from friends and family and school.
I dont think we qualify for a PIA or DSA as we dont have any money left over to pay debtors when ISI figures are taken into consideration so no deal could be struck.
 
We want to sell the house or give it back and start over again.
The bank have agreed to let us sell the house in NE though they wont put that in writing. House has been up for sale since earlier this year with no joy. Thought we had someone at one stage but all fell through.
Click to expand...
Ellen

You have to take this in clear logical steps.

1) You want to sell the house
2) You want to move to Dublin

It doesn't really matter that much what deal the lender offers. They have given you permission to sell the house and you have it on the market. But you can't find a buyer.

You can accept or reject the deal as you see fit. What can the bank do? They can start repossession proceedings. So what? You want to get rid of the house anyway.

3) How can you get accommodation in Dublin?
It's going to be very difficult.
Have you applied for social housing in Dublin?
I presume that they will refuse you as you have a house available to you in Dublin.
But you should apply.

4) You are both unemployed in your current location.
You will be both unemployed initially when you move to Dublin!



5) If you move to Dublin, you will be both unemployed and homeless.
6) If you stay where you are, you will be both unemployed but you will have a home.

7) So your husband should move to Dublin first and get a job. It could take him some time to get a job.
8) You should stay in your current home until he finds a job.
9) When your husband gets a job in Dublin, he can get accommodation for you all and you can move to Dublin.



Summary
Stop paying anything to the bank. You will need to build up a fund to pay for the costs of insolvency and to pay for the move to Dublin.
Write to the bank and tell them what you are doing.
Husband should move to Dublin anyway and start applying for jobs.
You should stay put in your present home until your husband gets a job.
The bank will begin repossession proceedings and you can use that letter to apply for social housing in Dublin.

What type of insolvency?
When the bank starts the repossession proceedings, you can decide what you want to do then.
If your husband has not found a job in Dublin, then you will need your home, so you will resist the repossession proceedings.
If your husband has a job in Dublin, then tell the bank you will not dispute the repossession proceedings, if they agree to write off the shortfall.
In practice, you want it repossessed as quickly as possible so that your mortgage becomes an unsecured debt.
When the debt is unsecured, you should apply for a Debt Settlement Arrangement.
I doubt if the bank will veto it, but if they do, apply for bankruptcy.
 
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