House sold and left with 160K debt

T

TigerDebt

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In 2014 my sibling and I sold our home as we could not afford the mortgage. EBS acknowledged the mortgage was unsustainable but would not allow us consent to sale unless we agreed to pay the shortfall over 20 years @ 1K a month.(Deal was hashed out by a solicitor we employed)

We reluctantly agreed as we both needed to move on. We now rent separately and can never afford to pay this debt back. We have not made any repayments on this 'mortgage loan account' in nearly a year. We were advised to go to the bank with an offer in another years time to get a deal/writedown.

Has anyone got any experience of getting a deal after your home was sold? Any advice with how to approach this?
 
Hi Brendan

I have considered all the ISI facilities but am worried about the future implications of a DSA etc when applying for a mortgage/finance at a later date.
I am looking to see if anyone has gone informally to a bank and got a deal(one of payment/writedown/significantly better terms) post voluntary sale for loss scheme??

Tiger
 
TigerDebt said:
but am worried about the future implications of a DSA etc when applying for a mortgage/finance at a later date.
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Hi Tiger

You can forget about that. You have unpaid debt of €160k. You will not be able to apply for a mortgage for a very long time.

By getting the debt written off now through a DSA, you will begin your process of recovery.

Brendan
 
Brendan

Surely arranging a once off lump sum payment to EBS(via a loan from a family member) to write off the debt is better than paying a DSA arrangement for up to 6 years where I would be registered as being officially insolvent?

I recently applied for a large loan from my bank (BOI) and no questions were asked re arrears etc and I was offered the loan. I'm aware ther's a big difference between a loan and a new mortgage but this was just to test the waters and I was shocked the banks wern't on the same page
 
Hi Tiger

Sorry, it hadn't occurred to me that you had money available from relatives, and yes, this would be much better than going insolvent.

Do you have any other creditors? Sorting out EBS might not be enough if you have other creditors.

I don't really know if they will accept it or not. I suspect that you will have to try a short-term PIA to get their agreement, but maybe not.

Have you spoken to the Irish Mortgage Holders Organisation? They have a special unit which deals with AIB and they might be able to negotiate a deal on your behalf.

I am surprised that you got loan approval from Bank of Ireland. Have you had a look at your ICB record? Is the EBS loan not mentioned on it?

Brendan
 
Brendan,

Yes EBS is our only creditor. I've been advised to wait approx 2 years before offering the bank a once off payment but nothings certain.

I'm happy to explore the IMHO-AIB/EBS Grant Thornton route, if it could be resolved sooner. So I will look into that in the meantime.

No that's the next step, I will apply for the report as they may have just been slow to catch up with me.

Considering all this I hoping to get some sort of once off deal which would enable me to restore my credit rating sooner, save regularly over a five year period and give me a chance of getting back on the ladder with a sustainable/affordable mortgage. Do you think that's possible?
 
I really don't know what deal EBS would do with you. If you have the income to save, then you have the income to pay at least some of the €1,000 a month. You are just choosing not to do so. This will probably be obvious to EBS, so that might discourage them from doing a deal.

Brendan
 
Brendan

We will obviously have to pay off a loan from a family member so this will take time to clear.

The original mortgage was 1300 but in 2013 we lost the TRS, had to pay back 50 per month for one months arrears and an interest rate hike sent us over the edge. This pushed the mortgage to up over 1550 per month. Coupled with the fact that we are both public sector employees our salary took a huge hit quite soon after we took the original mortgage out.

We were very proactive with EBS by informing them of our situation prior to getting into difficulty. They said our mortgage was sustainable and told us to cut back on outgoings etc. The fat was already trimmed since 2008 and all other avenues explored to keep the house but our best option seemed to be voluntary sale for loss in 2014 as substantial arrears accumulated on the account. Once they agreed to the sale, they acknowledged the mortgage was unsustainable.

They accepted 1550 per month was unsustainable yet the best deal they could give us was 1000 per month with the house sold. Now renting elsewhere our combined housing costs are 1800 per month.(400 each per month rented accommodation+1000 per month to service the loan). How is this sustainable, taking reasonable living expenses into account? In this case we were better off keeping the house.

I now believe the bank never had any interest in doing a deal pre or post sale as the terms are so unreasonable and for this reason I have chosen to disengage with the bank. On many occasions they ignored my letters, with alternative solutions but this has been fruitless.

The bank was in line to make a huge profit from this mortgage but it just didn't work out that way. They have not contacted us once since the sale went through or queried missed payments. I wonder if this was a business loan or a buy to let property would they have written it off sooner.
 
Friends of mine are using IMHO / Grant Thornton to organise a DSA with the same bank.

The house is not yet sold, but Grant Thornton informed them that an informal deal wasn't acceptable to the bank and that the solution had to be a full and final lump sum DSA on the projected shortfall. The projected shortfall is 100K - 120K and GT informed them that 25 - 30K would the smallest amount that EBS would accept on the shortfall.

I'm not sure of the wisdom of waiting another 2 years if you're anxious to re-start your life.
 
Epicaricacy

Thanks for that information.

The two year gap was advised from the date of sale so we have another year to go. The idea being the bank would get nothing for two years then dangle the carrot as a ''something better than nothing'' once off lump sum offer of approx 25-30K which is also a figure I have been unoficially quoted. Failing this offer, try a structured DSA, failing that proceed to the UK for bankruptcy(last resort but willing to do)

In the meantime I will ask the IMHO to setup an appointment with Grant Thornton to see where that brings us.
 
That's a great deal your bank got, sell the property and also pay €240k over 20 years. Which is another mortgage again..and you employ a solicitor to hash it out. I know hindsight and all that, but for other folk in your situation, looking back, would you do things differently, ie, rent the property. Out of curiosity, has the market improved since your difficulty. The reason I say that is, your on the hoof for a long pay back anyway so, I don't see what you had to loose in stringing out you issue. You were both public employees with guaranteed income come hell or high water. There had to be some reason your solicitor guided you on this road.
 
Hello LS400,

So far so good. We are really happy we sold the house. Stress, broke, no hope. At least now we have some hope.

Renting the property wasn't an option as we could only get 900 pm and the mortgage was 1600+associated costs of renting out a house. To cover the rest each, and rent elsewhere, we were back at square one. Also we both wanted to move in with our partners and we could only do this by selling up as neither of our partners could move in and take over the mortgage as it was in such negative equity.

Being a public sector employee sounds great. You are guaranteed a wage alright but that wage is seriously diminished these days and the pay scales for future progression ain't worth talking about.

Since we went sale agreed in early 2014 to now, the house increased in value by 50,000 yet the bank didn't say hang on, we'll wait a few months then let them sell it. They just wanted to recoup some capital and in doing so the debt on there books looks better.

Owing 160K or 110K is the same to us.Never in a million years could we manage to pay either back. And yes there was a very specific reason why we were advised to go down this road and sell when we did.
 
I am sorry to hear that you lost your house and I can certainly believe that as you say "I now believe the bank never had any interest in doing a deal pre or post sale". In my opinion the banks just try to get the most they can for themselves out of these situations.

As for the loan from the relative, the banks tend to think, if the customer has the money available and the customer owes us money, why are we not getting it. The don't accept that the relative is providing the money to help the their family member not to help the bank.

Now at the risk of being banned from my favourite time consuming hobby I will comment on this

TigerDebt said:
Being a public sector employee sounds great. You are guaranteed a wage alright but that wage is seriously diminished these days and the pay scales for future progression ain't worth talking about.
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Guaranteed a wage, and a pension to the day you die, with spouse benefit. Who else except public servants has pay scales for future progression. The rest of us who want a pay rise have to look for a better job. (And pay your pay scales)
 
Yes I agree with your second paragraph but I can't preempt what the banks view will be at the time.


Well, I'll put it to you this way. 8 years ago I was on 300 more net per month than now. I've moved up 7 pay scales in that time with more responsibility, hours and workload. If I was lucky to be promoted or move up 5 or 6 pay scales in the next 5-10 years I would only take home an extra 25 euro per week after tax.

I must work 31 years to receive a pension and start paying it the day I start(no choice) How many people in the private sector start a pension in their teens or early twenties? If I do any overtime I'll never receive it my pension. For example if I work 40 hours per week I could pay for example 50 euro in pension related deductions. If I work 20 hrs overtime(which is not voluntary) I could pay 100 euro in pension deductions yet I will never see that extra 50 euro back in my pension. It's not all gravy, some people only hear the good side of it.

I agree that in the private sector the threat of losing your job always looms and think private pensions should be compulsory but in the public sector you have to jump through some hoops to get that pension.
 
I recognise that loosing €300 a month in take home pay is difficult for anybody. I am surprised that a promotion would only net you €25 a week, though in fairness from what I know of the public sector (civil service) promotions are not luck, the process is very competitive.

We talked about pay scales, there are and will also be increments I think.

I have posted many times before about public sector pensions and that people fail to understand just how valuable they are. A pension of €40,000 p.a would cost €1.65 million to buy (discounted at 2.5%).

You must work 31 years, does that mean that if you join at 23 you can retire on full pension at 54 ? Am I correct in thinking that your pension will be based not on your contributions but on your final salary (averaged over final 3 years) ?

I know that none of this helps with your housing situation today, nevertheless!
 
Yes the increments have been spread out to every 18 months now and the small jumps are negated by tax. My point was, staying for the long haul to get the pension is great in theory but the wages now combined with little progression really discourages staying.

Correct 31 years, retire at 54 with full entitlements. Best 3 years out of ten.

So typically a person retiring @ 54 on the expected average pay scale after 31 years would receive approx 18000 euro a year. So say Mr X lives for another 30 years, he would receive approx half a million over that period(After 67 he would also be in receipt of the OAP which is then tax deductible from his pension.

Mr X would probably only make a fifth of a contribution to the total sum he would receive in retirement. Yes it's very good but in some public sector jobs there is a heavy price to pay for that 31 years. This 31 year pension is equates to a 40 year pension within different sectors of the public sector.
 
31 years for roughly half your final salary - for life - that's an outrageously good deal.

I'm also sorry to hear that you lost your home but your pension entitlements are extremely valuable by any standards.
 
thanks.

Yes it's really good but this is a new pension arrangement since 2005 and nobody has got to that magic 31 years+there is an attrition rate of approx 60% in the first 5 years in my sector of the public service. So the benefits are there but people cant/wont stay for that period of time.

May I ask, what would a person in the private sector receive after contributing to a pension for 40 years on a salary of 40,000 pa?
 
TigerDebt said:
May I ask, what would a person in the private sector receive after contributing to a pension for 40 years on a salary of 40,000 pa?
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Most people in the private sector have no pension other than the state pension.

Most people who do have a pension have a defined contribution pension. They don't know what they will get until they retire. To get €40k p.a. with spouses benefit and index linking would cost about €1.6m

All pension income is taxable.

I dont understand where you are getting the €18,000 figure. I suggest that the average pension for a full time public employee on a full pension is considerably higher.
 
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