Help for family

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help4family

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Member of my family's husband signed personal guarantees for business loans. Business is essentially bust but they have not officially closed. (Limited co)

Outstanding loans:
personal car loan 20k to bank (restructured)
credit card: 3k (in arrears of a few months)
personal loan: 5k (now gone into arrears)
arrears for business supplies to 2 companies totalling 14k - personal guarantee on these

House with outstanding mortgage of 80k approx, (paid 185 - prob would get 80k on open market now)

2 children school aged

The spouse who ran the business has made no income from the business in circa 2 years.

The only real income is child benefit for 2 children and approx 350 euros per week after tax for other spouses salary.

The family are getting anything in the way of family income support (taxes not up to date for the company so cannot claim and can't afford accountant to do books), nor mortgage interest relief, and unemployment assistance is nil for the unemployed spouse as was obviously self employed.

Judgement has been awarded for 8k to one of the business suppliers, with sheriff due in the next week.

Only assets is the car, which would probably get 8-9k on open market and any possible equity on the home.

My question is, what is the likelihood of repossession of the home occurring, either for this debt or one of the others? I would imagine the sheriff will start with the family car and possibly clear this debt but then when the next lender receives a judgement what happens? How likely is it that this family will have their home repossessed in the current climate? And if so, how does the bank who hold the mortgage work this out with the creditor who has gotten the judgement?

With a total income of 1680 pm and rough outgoings as follows:
Mortgage is 950.
Food is 400.
Electricity is 60.
Phone: 35
Petrol: 200
Car insurance: 40
Car tax: 50

(above budgets are approximate.) - living in a rural area with no way of getting kids to school or spouse 1 to work/groceries without car.

Any advice for this family?

They have been to mabs and have exhausted all savings and sold personal items in order to get this far.
 
help4family said:
House with outstanding mortgage of 80k approx,

With a total income of 1680 pm and rough outgoings as follows:
Mortgage is 950.
...
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Could they ask to go interest-only on their mortgage for maybe a year to give themselves a chance to get back on their feet, sort out taxes and apply for FIS/whatever else they are entitled to? At a 4.5% rate, interest only would be 300 per month on 80K which would free up 650 per month.
 
the original mortgage was for 180k approx, so no they are not on a high rate, those are the repayments on 180k, there is 80k outstanding
 
orka said:
Could they ask to go interest-only on their mortgage for maybe a year to give themselves a chance to get back on their feet, sort out taxes and apply for FIS/whatever else they are entitled to? At a 4.5% rate, interest only would be 300 per month on 80K which would free up 650 per month.
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Thanks these are all good points, have advised them to pursue all these avenues, they are awaiting to hear back from bank, social welfare and revenue. Sheriff is due next week though, the main problem is the secondary debt.
 
Is the house in joint names and did both persons give the guarantee?

I've never heard of a case where business debts, whether or not covered by personal guarantees, are legally satisfied by taking one's family home.
I would assume by this stage your relatives would have got proper legal advice which is more than anyone can give without knowing much more.
 
No real difficulties with the Sheriff. Will not take goods from the family home. Car is on finance so Sheriff will return a Nulla Bona (no goods). They can register a judgement against the house, but given the associated loan, this would not be an immediate problem.
They have too many loans and no excess income, so are probably capable of paying nothing at present. best option is to hold tight and manage as best as they can on their current income. Talk to the Bank re mortgage and avail of MARP if not already done.
 
The house is in both names. The spouses are joint directors of the insolvent company. The personal gaurantee was signed by one. Not sure where that leaves them?
 
As long as the directors were not doing anything underhand nor extremely negligent then ,as directors rather than personal guarantors, they should be "safe" from any claims.

As only one person is a personal guarantor then it would appear that the house is also safe as it belongs to both parties (though ,as I said, I don't think the house could have been touched in any case.)
 
Thanks oldnick.

No, nothing underhand (as far as I am aware of) the reason for the unpaid debts to suppliers was due to a job being cancelled half way through by the client. The reason for the taxes not being done were the same as we have heard so many times through this downturn, they couldn't afford to have the books done, were burying their heads in the sand, thought things would get better next year etc. They aren't actually liable for any tax because they never made a profit but not having those statements from revenue has held up the FIS claim. Bit of a mess.
 
Re getting accounts up to date and accountant, if they contact local Citizens Information Office they can ask for an appointment with CAVA, this is a voluntary free service provided by accountants to help people who cannot afford to pay for this advice.
 
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