How to deal with negative equity following unemployment and relationship breakup

[Carolina]

If I was in his position, Id keep renting it out. Id look for a job, any job and study part time. Id continue to pay my half of whats left after rent has been paid and Id expect ex GF to keep paying her half also.

Id be looking at all of this as a temporary plan, so at some point in the future Id have a better job (either through re-education or progression in whatever job I get).

Obviously all this works only if I can get a job. If I couldnt get a job Id go and talk to the bank and see could I pay less until I could get a job.

Id forget about full time education for the immediate future.

OK thanks for that. I know there are downsides to every approach so I wanted to know what someone would do in his place.

He has to have some kind of plan to get rid of this debt: he could spend his whole life just paying the interest on the loan (17.5k/year) and never have any money or every pay off the capital. Debt slavery. Also there is the problem of irregular income. Minimum wage workers often find their hours reduced or that they are laid off when times are slack. Not good when you are living on a knife-edge.

Full-time education also has some large costs associated with it.

Fees, books, laptop, travel etc....it ain't exactly free wither.

Not being educated is even more expensive. I would consider this is the kind of expense that he could reasonably ask his parents to pay.

After reading all this I am going to encourage him to go for the full time option with BTEA and get weekend & summer jobs to make a little extra cash. I don't think that full time working for min wage while studying at night is a better option. I once taught a night degree course and the students looked like zombies every evening for their 3-hour sessions. As a full timer with BTEA, he would only have to earn 100/week to get his income up to the level that a full time job would pay. So he could work on the weekend and have the whole week devoted to his course. I think this reduces the risk of dropout from stress.

Since originally posting, I have learnt that his place on the course is not yet secure and it seems that applications for 3rd level have massively increased on last year. Also, I have found out that he is paying his parents a near market rate for renting a room from them. I might have a chat with them about this.

I'm going to close the thread unless anyone has any further suggestions and thanks for the advice so far.

 

[Complainer]

If I was in his position, Id keep renting it out. Id look for a job, any job and study part time. Id continue to pay my half of whats left after rent has been paid and Id expect ex GF to keep paying her half also.

Id be looking at all of this as a temporary plan, so at some point in the future Id have a better job (either through re-education or progression in whatever job I get).

Obviously all this works only if I can get a job. If I couldnt get a job Id go and talk to the bank and see could I pay less until I could get a job.

Id forget about full time education for the immediate future.

In general, I'm a very by-the-book kind-of guy, and I generally play by the rules. However, in this case (and the many other similar cases), it is unreasonable to expect the guy in question to play by the rules.

You just can't start off your working life saddled with a €200k debt, when your only sin was to buy a basic apaprtment to live in at the peak of the market. There has to be a better solution, though I've no idea what it is.

Without such a solution, these guys are going to be gone to Oz or Canada, and will never come back.

 

[truthseeker]

Just a quick pov on the previous posts.

Yes - it is unfair that the guy is saddled with such debt at the start of his working life, but lets get some perspective here.

First of all - that debt is shared, he only 'owns' 100k of it.

Second, if he continues to make mortgage repayments, eventually it will come round to a point that the apartment can be sold and cover the outstanding amount left on the mortgage.

At the end of the day he still has an asset here. It may not be worth much now and he may owe the max now, but in time the amount he owes will be lower and hopefully the apartment will come up in value at some stage also. Im talking possibly 15 years down the line - at which point he will only be 40 - so its not like its the whole rest of his life we're talking about.

Ultimately no one forced him to buy, no one forced him to buy with a GF who is now possibly unreliable, and he made these decisions himself as a matter of choice. So there has to be some personal responsibility as well.

Op - there are other options to night time degree courses. Im currently doing a degree with the University of London in my own time, and there are no classes to attend, nor assignments to hand up etc... You follow the coursework in your own time over the year and do exams in May. It requires discipline to cover the coursework in your own time, more so than if you were attending classes. But there is no zombie element at all.
So just be aware there are other options - Open University is also flexible in this manner.

Its a luxury to go back to full time education as an adult, most people cannot afford to do it fulltime - even without the issue of the massive negative equity.

 

[csirl]

I wonder how the courts would treat him if he went to college for 4 yrs full time and just paid whatever he could. Short of locking him up, they can't do much to him. Do you get locked up for failing to pay all your mortgage on time?

You dont get locked up for failing to pay all your mortgage. But you can get locked up if, after consideration of all the facts, the courts decided that he does have the ability to pay off some of the debt and issues a court order to that effect and he doesnt adhere to the order without reason. Giving up work to go to college would not be seen as a valid reason not to pay.

 

[Carolina]

First of all - that debt is shared, he only 'owns' 100k of it.

He is liable for her half is she defaults. His only comeback would be to sue her which is useless if she is broke or unreachable.

At the end of the day he still has an asset here. It may not be worth much now and he may owe the max now, but in time the amount he owes will be lower and hopefully the apartment will come up in value at some stage also. Im talking possibly 15 years down the line - at which point he will only be 40 - so its not like its the whole rest of his life we're talking about.

Keep hoping for that LTEV! If prices flatten out now, and he makes full payments then I think he will have paid off the negative equity by 2031. He will be 46.

Ultimately no one forced him to buy, no one forced him to buy with a GF who is now possibly unreliable, and he made these decisions himself as a matter of choice. So there has to be some personal responsibility as well.

He is taking full responsibility for his choice.

He and gf were on 85K when they took out the mortgage 100%, interest only. It seemed reasonable to them at the time and they were just kids getting on the ladder. I think they're on 5% fixed so they didn't even get a tracker. I feel more sympathy for him than he does for himself.

Op - there are other options to night time degree courses. Im currently doing a degree with the University of London in my own time, and there are no classes to attend, nor assignments to hand up etc... You follow the coursework in your own time over the year and do exams in May. It requires discipline to cover the coursework in your own time, more so than if you were attending classes. But there is no zombie element at all.
So just be aware there are other options - Open University is also flexible in this manner.

Point taken.

Its a luxury to go back to full time education as an adult, most people cannot afford to do it fulltime - even without the issue of the massive negative equity.

I don't think he would be financially better off in part time education w/ full time work.

You dont get locked up for failing to pay all your mortgage. But you can get locked up if, after consideration of all the facts, the courts decided that he does have the ability to pay off some of the debt and issues a court order to that effect and he doesnt adhere to the order without reason. Giving up work to go to college would not be seen as a valid reason not to pay.

But he hasn't given up work, he is long term unemployed returning to college (although in truth he chose unemployment to get the grant).

Without such a solution, these guys are going to be gone to Oz or Canada, and will never come back.

I would imagine there will be a lot of irish people fleeing negative equity abroad. I recently met an aussie who had fled his debts at home so it works both ways.

 

[UptheDeise]

Am I missing something here? Is this an investment property we are talking about?

 

[Carolina]

nope it's residential but he has now moved out and rented it out

 

[lady]

He is taking full responsibility for his choice.

If that was true he would be doing everything in his power to get a job and pay his debt. Its people like him who decided not to pay their debts that led to the recession in the first place... well partly.
I have alot of sympathy for people who lose their jobs and find themselves in negative equity but you've admitted that he hasn't even tried to find another job!

You've gotten alot of great advice here put you choose to ignore it. Why bother posting??

I know alot of people (and i do mean alot) who worked full time while attending part time education and they have done very well for themselves - working their way up the company ladder. Fact is there are scores of college graduates who can't find jobs. Even at the hight of the boom I met a taxi driver who was very bitter about the fact he had a college education but was reduced to driving a cab thru lack of jobs.

At the end of the day this debt isn't gonna go away and he simply cannot afford to go to college full-time write now.

 

[Carolina]

If that was true he would be doing everything in his power to get a job and pay his debt.

Retraining may be a better long term plan for paying back debt.

Its people like him who decided not to pay their debts that led to the recession in the first place... well partly.

Everyone is partly responsible: consumers who overborrowed, banks who overlent, regulators and politcians who chose poor policies, an electorate who chose this system.

I have alot of sympathy for people who lose their jobs and find themselves in negative equity but you've admitted that he hasn't even tried to find another job!

Yes, he has strategically chosen 1 yrs unemployment to qualify for BTEA (3rd person I have come across on this game)

You've gotten alot of great advice here put you choose to ignore it. Why bother posting??

I really appreciate the advice I have received in this thread and I hope it is of use to other readers. I don't think any of the suggestions I have seen so far is better than fulltime education + part time work. However I will do my best to ensure he comes to deal with his creditors and not just ignore them.

Other suggestions in this thread have included: working for min wage full time and studying at night, getting an extended period of interest only, emigrating and hiding.

I know alot of people (and i do mean alot) who worked full time while attending part time education and they have done very well for themselves - working their way up the company ladder. Fact is there are scores of college graduates who can't find jobs. Even at the hight of the boom I met a taxi driver who was very bitter about the fact he had a college education but was reduced to driving a cab thru lack of jobs.

My experience from teaching 3rd level is that there are many students who should not be there because their 2nd level education is insufficient or because they don't have the mental ability. With grade inflation, there is a stream of qualified but ineffective people from a much broader range of colleges. As an employer I avoid these people like the plague.

My mate by contrast has a big brain and plenty of motivation and should have gone to college years ago.

At the end of the day this debt isn't gonna go away and he simply cannot afford to go to college full-time write now.

My conclusion from this thread is that the main choice is between
a) full time low wage job + part time education or
b) part time work + full time education
as (b) is funded by the state at 200/week and will probably lead to him completing college faster and with a better quality of degree, I would advise (b). Hope he gets a place now.

If there are no jobs in 4 yrs time in Ireland, he can consider a period of emigration then.
--edit--

I am going to close this thread now with thanks to all contributors