Case study I can pay my mortgage but not my arrears

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PatrickJ

Registered User
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170
Hello all,

If you would be kind enough to look over my financials please and give your honest opinions on whether I should vacate my home or stay fighting the cause.

All figures are based on monthly earnings and outgoings: Please note I have been unemployed for three years and accumilated large arrears. I am now sucessfully re-employed.

Income A.T: €3,200.00 from private sector, full time permenant position
Marital Status: Single
Dependents: None
Mortgage: €1,720.00
Interest Rate: 4.5% Variable
Bank: ACC Bank
Unsecured Debt: €300.00
Utilities: 80.00
House Insurance: €40.00
Life Insurance: €30.00
Health Insurance: €60.00
Food Bill: €200.00
Telephone: €20.00

Remaining Mortgage: €380,000.00
Current Value: €220,000.00
My problems lies, in the fact, that I have 60k in arrears on my mortgage. I am able to comfortably pay my mortgage going forward but I have no way in paying my arrears. Arrears were accumilated during three years of unemployment.

My Bank have been understanding but not particularly fortwith in regard to plans going forth.

I have already been deemed unsustainable, when I was unemployed, but my position has now changed.

I would like to honour my debt and stay in my home but I am not one of these people who expect to stay in situ while not contributing.

Cheers for your input.

Regards

Patrick
 
Last edited:
Thank you Brendan. Unfortunatly I am prohibited from doing so until I have 15 posts or more. I will edit the above to add more detail if that helps.
 
Remaining Mortgage: €380,000.00
Current Value: €220,000.00
My problems lies, in the fact, that I have 60k in arrears on my mortgage
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Is the balance on your mortgage €380,000 including arrears or €380,000 + €60,000 arrears?

I would like to honour my debt and stay in my home but I am not one of these people who expect to stay in situ while not contributing.
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While it is admirable to honour your debt, it does seem that you are overindebted. If ACC has designated your mortgage as unsustainable,then you should enter into discussions with them about what will happen to the shortfall if you sell it.

If they do a deal on it, then you should avail of it and move on with a fresh start after a few years. If they won't do a deal on it, pay them what you can afford and await developments.
 
It is cases like this that drive me to tears.

With a surplus of €800.00 a month and a willingness to pay the debt owed. Why, oh why should the TAX payer pick up the tab?

This debt is clearly heavy but it seems quite affordable.

The arrears should simply be recapitialised.
 
Patrick what are you doing with the extra money each month? What actual discussions have you had with your bank. Were they in writing or over the phone.

Well done on the job. Recapitalising your arrears as Kerrigan suggested seems your best bet. They are not going to write down any debt where you have a good income, if you had wanted that you should have done so when you were unemployed.
 
Hi Brendan, the 380k I owe is inclusive of arrears.

Hi Kerrigan, I agree. I would like to stay in my home. I can afford to do so but my arrears are crippeling me. I am paying my mortgage as it falls due each month and not a cent less.

Hi Bronte, all discussions with the bank have been by written corrospondence. I offset the extra income each month against my arrears.
 
Your original post seems to suggest that you have about €800 surplus every month.
How are the arrears crippling you?
 
PatrickJ said:
all discussions with the bank have been by written corrospondence. I offset the extra income each month against my arrears.
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So the issue is that you can afford your mortgage and your minimum living expenses but every other spare penny is going against the arrears and therefore I presume not giving you much of a life?

Did you discuss capitalising the arrears with them. Did they set the minimum amounts for you to live on etc.

What size property is it and general location.
 
Hi Dubrov, I offset the €800 surplus off the arrears each month. I live a very frugal lifestyle but the €800 is not making a very large indent in the arrears. I have also the threat of repossession looming over me and am not confident that the bank will not close in on me shortly so to save myself the heartache should I hand back the keys?

Hi Bronte, I discussed capitalising the arrears but they refused. No minimum amounts were ever set for me to live on. The property is a three bed situated in west Dublin.
 
If you hand back the keys, the bank will sell the property and then chase you for the remaining debt. So it isn't really an option.

They are probably very happy with the current situation where you are paying €800 a month of the arrears.

I suggest you contact them again and push for the capitalisation of arrears. Threatening to stop all payments will definitely get their attention.

If they refuse, just pay what you feel is reasonable each month. Your credit rating will already have been damaged anyway and the bank will have no interest in repossessing the house and realising a loss as long as you are making some payments.
 
I am continuing to pay my mortgage on time and in full each month but I have ceased making repayments off my arrears. I have asked for the arrears to be recapitalised on numerous occassions but have never been responded too. They have however been sending me letters to clear off the arrears in full. Even with the banks lack of response I have continued to be proactive. I have spoken with a PIP who does not believe I should declare bankrupt or hand the keys back.

My remaining mortgage stands at €380,000.00. The value on the property is currently €220,000.00. My parents have offered an inheritence of €200,000.00 to me now.

Is it insane to approach the bank with this sum as a full and final settlement?
 
No of course it's not insane to make any offer to the Bank. However, it is unlikely that 200K will be accepted where the property is valued at 220K. You now have some grounds for opening up a discussion with the Bank but should get professional advice before doing so. It's important to approach this in a professional way and ensure that your offer is reasonably attractive to the Bank. A good negotiator should be ale to strike a deal for you given the funds available!
 
Patrick;

Had an ACC case where they accepted quite a reduction on sums owed , notwithstanding they security worth more than owed.
The security would have been awkward to sell but could have been done.
When I got to the right decision maker I found them very clear and very helpful.

I am of the opinion that ACC want (out) and will take realistic offers.
The k200 seems too little.
As 44Brendan says , get a good trusted negotiator onto it now.
 
It is my understanding that all payments go toward the arrears first. I would imagine that all your monthly mortgage repayment is going against all monies owed. Do you have two separate statements. One showing original mortgage and the second showing the arrears with separate payments going to each?
 
Hi Patrick,
Just a suggestion, I'd take 60k of my inheritance at the moment and clear the arrears.
That will free up €800 per month and you will be a compliment borrower again.

Also paying the 60k should probably reduce the amount that you have to pay per month to clear your mortgage in the original time frame.

I'd leave the other 140k with your parents to manage, as they seem very good at managing it.
Also get proper advice about any TAX IMPLICATIONS of the inheritance.
 
Kerrigan said:
It is cases like this that drive me to tears.

With a surplus of €800.00 a month and a willingness to pay the debt owed. Why, oh why should the TAX payer pick up the tab?

This debt is clearly heavy but it seems quite affordable.

The arrears should simply be recapitialised.
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In this case the Taxpayer will not be picking up the tab.
Ulster/Boi/Start/Ge/Acc/Danske are not (ours).

From looking at what ACC could lose in a Repo/Bankruptcy type situation. I think they would be silly not to properly engage?
Maybe it is just the proper ACC person is not being spoken with?
Am I missing something?
 
It is my understanding that all payments go toward the arrears first. I would imagine that all your monthly mortgage repayment is going against all monies owed. Do you have two separate statements. One showing original mortgage and the second showing the arrears with separate payments going to each?
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Nope not the practise in any bank I've worked for. There is no segregation of arrears in an account. The amount of the arrears only reduces when monthly lodgements exceed the amount of agreed monthly repayments.

I would be very reluctant to take the advice given by Rich in Spirit. Clearing arrears will not address the fundamental problem of the considerable negative equity in the property. Again, please take professional advice before approaching the Bank. For your own sake it is vital that whatever deal is agreed will give you the most beneficial result.
Having said that I appreciate the difficulties in finding an advisor who is both independent and expert. This is where you need to ask around and obtain a good reference!
 
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