Case study I can pay my mortgage but not my arrears

Thanks very much. Your post makes a lot of sense and gives food for thought. I was never too concerned by the negative equity as I seen the property as a home and not an investment for speculation. I note this morning that my arrears have been recapitalized. Maybe they want me to stay in situ after all! Joking aside the bankruptcy route almost feels like the debtor is on trial. It still sends shivers down my spine just thinking about it but if interest rates rise and rise I will have no option.
 
You will always have options. The main issue here is to assess all of the information that affects your circumstances and come to a decision. If you are ultimately taking the insolvency route there is little point in making any capital reductions on your loans. In fact Steve Thatcher would advise that you put all available funds aside for a period to build up a warchest to sustain you while you are building up your COMI in the UK.
Reposession proceedings are very slow, so you will have plenty of time to make up your mind. The lodger idea is also a good one as it can be tax free income under the rent a room scheme" and would greatly assist in meeting loan repayments, should you decide to keep the house.
Forget any "shame" issues in making your decision. Most of your friends colleagues will be totally unawre of bankruptcy and many will have their own financial difficulties. The days of being ashamed of having financial difficulties and finger pointing are well gone!!
 
PatrickJ said:
Thanks very much NM.

Absolutely, the Irish system is not the way to go.

Feel free to tell me to take a hike but do you mind me asking how did you manage to survive when you moved country re money, rental etc?
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I was working before I went over and I brought my last month's wages with me. I had approximately £2k going over. I didn't have to pay rent for the first few months as I was staying with a friend.
 
Hi, just keeping this thread updated for others in similar circumstances.

Legal action has began taking place. Had been advised by PIP not to leave the property. Can no longer take the pressure so I am going against PIP's advise and handing the keys into bank next week. I know this is not the norm but I have no option. Every proposal that has been submitted to the bank has been rejected. My case is being moved from one case manager to the next. Why?

Anyway I have arranged rented alternative accommodation.
 
There are 2 types of borrowers in circumstances like this:
1) Type 1 has hard neck and letters/phone calls mean nothing. Either ignores them or makes promises to pay that are never fulfilled. He/she/they will pay nothing and ignore all legal correspondence. Generally repossession proceedings are slow and can take bank a couple of years to re-possess property. Borrower gets the benefit of staying in the property and will only move when the bailiff knocks on the door. This type of borrower sleeps fine and has no real concern about any legal or other consequences.

2) Type 2 borrowers are more prevalent. They are constantly worried about their financial position and try to deal properly with all letters & calls. While their financial position is equally poor they will try to pay back what they can. Legal proceedings represent the ultimate shame and they view this as being a failure with a perception that all neighbors/relations will be talking about them and reading about them in the papers. They can't sleep properly and ultimately health issues can arise.

I would advise a more pragmatic approach than either extreme. Generally for Type 2 borrowers the financial difficulties are not their fault. Circumstances have led to the problems and while they will try their best to resolve them, they must realize that this is a temporary situation and take a "this too shall pass" approach. Many banks don't help in their approach. They tend to bully the Type 2 borrowers because they are getting nowhere with Type 1's. Patrick, You need to stand back a little from your circumstances and make decisions that are best for you rather than reacting to pressure from others. Your financial situation is what it is! All indications from your posts are that you have co-operated to your utmost ability. Once you have made your decisions (whatever they may be) you are moving towards a specific goal of resolving your problems and hold your stance with any bank or other creditor. If calls are putting you under pressure formally write to the banks concerned and advise them of this. Insist that all communication is in writing or directed to your PIP. I'm not saying that you need to change to a Type 1 borrower but you do need to take control of your own circumstances and aim towards a debt free future!!
 
44brendan said:
I would advise a more pragmatic approach than either extreme. Generally for Type 2 borrowers the financial difficulties are not their fault. Circumstances have led to the problems and while they will try their best to resolve them, they must realize that this is a temporary situation and take a "this too shall pass" approach. Many banks don't help in their approach. They tend to bully the Type 2 borrowers because they are getting nowhere with Type 1's. Patrick, You need to stand back a little from your circumstances and make decisions that are best for you rather than reacting to pressure from others. Your financial situation is what it is! All indications from your posts are that you have co-operated to your utmost ability. Once you have made your decisions (whatever they may be) you are moving towards a specific goal of resolving your problems and hold your stance with any bank or other creditor. If calls are putting you under pressure formally write to the banks concerned and advise them of this. Insist that all communication is in writing or directed to your PIP. I'm not saying that you need to change to a Type 1 borrower but you do need to take control of your own circumstances and aim towards a debt free future!!
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Excellent post Brendan. It is critical to leave emotion to one side when dealing with any issues to do with money. I appreciate that is easier said then done but there it is.
 
Very well said Brendan. You are a mine of information, always very helpful and positive.

I had to leave work early yesterday, heart racing and generally light headed. I don't do pressure well especially bank pressure! How long am I looking at before my case is before the courts?

What's with my case being moved from one manager to another? Once a manager seems to make any progress the case is removed from them and sent to another.
 
I was type 2 but now I'm about 1.5. I lose very little sleep over money.
Also your arrears are not an additional amount of money to be added to what you owe. They are just a 'speedometer' reading of your previous repayment history. You may have the total figure wrong of what you owe on your mortgage. You mightn't owe as much as you think.
 
Don't hand back the keys and rent an alternative property under any circumstances. A Cork couple - who were featured on a Prime Time special on personal insolvency - did exactly what you are planning and their problems worsened.
Handing back the keys equates to you handing back whatever leverage / control you have.
Allowing uncomfortable / recurring thoughts, feelings (fear) or body sensations (panic, increased respiration, heart palpitations) to influence your decision re. your house is understandable, but not advisable. I understand the 'any action is better than inaction' impulse - but again, it's an ill advised course of action, especially when your decision to hand back the keys will lead to, at best, a temporary reprieve before the bank come after you for the shortfall. You will then face all of the same stresses without the advantage of any leverage. Listen to your PIP.
 
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PatrickJ said:
What's with my case being moved from one manager to another? Once a manager seems to make any progress the case is removed from them and sent to another.
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Patrick it should make no difference as to who is dealing with your case. banks differ in their approach. Some banks allocate cases to specific case managers who will continue with those cases to conclusion. Others apply a pool caseload where cases come up for action and actions are applied from within the actual pool. From what I have seen Ulster seem to apply this pool approach and there is virtually no consistency in their dealings with clients.
You will get plenty of notice before any Court Hearing. Unless you have received notice recently that your case is down for listing it is likely that any hearing is still some time off. Has the loan been formally called in? This is the necessary first step in the process.
 
Helping a friend in a similar position as PatrickJ . His loan has been formally called in about 10 days ago. He has suffers all the emotions described in post 69 and he cannot help or control it. He would be a type 2. I have shared some of his problems as we have been friends for a long time. Sadly he is in his 60's so not much prospects of recovery for him and has zero income now.
I have to say that post 65 by 44brendan is a great post having seen what life is like at close quarters for a Type 2 borrower
 
PatrickJ said:
Folks, an offer has been put on the table. I'm completely illiterate when it comes to interest rates etc so any input would be great please:

Remaining mtg: €380,000
Substantial arrears: €60,000
I pay my mortgage in full each month.

Offer from bank:
Recapitalize arrears which brings the over all debt up to 440k on a current house value 220k
Pay debt off within the original time frame. No elongating of mortgage duration which will increase the monthly repayment to €2200 per month
I presume this includes the interest on the arrears.
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I don't think your bank understands arrears PatrickJ. It could be a point to challenge them on in court if you go to court.

Arrears is a hard figure for anyone to understand. They are only a measure of how much you have deviated from your original payment schedule. They are not in addition to your loan.
As a real life example I have an unsecured loan of €50000 with €50000 in arrears. I don't owe the institution €100000, I still only owe them €50000. I'm making regular just about affordable repayments and my loan is reducing.
I thought before that my arrears could be more than my loan but no now that my arrears have hit the same figure as the loan the arrears just equal the loan and are also reducing along with the loan.
In your case to explain better you owe €380,000 originally over a certain time frame. You missed €60000 of repayments because of unemployment. Now you have an extra €60000 of repayments to repay alongside your original loan to meet the original time frame. But it's not €60000 of extra capital that you have to pay.
I think your bank is just playing hard ball with you over the arrears because of their own corporate reasons.
I think you have a very good chance of avoiding repossession even if this goes to court.
We could do some number crunching here to give you various repayment options that you could present to the judge if it goes that far. I think there's enough information in this thread to figure out all your figures and suggest options.
Don't give up hope.
 
Richinspirit I can see that you feel for PatrickJ. But are we all losing sight of the bigger picture here. He is hopelessly indebted and his whole life is devoted to his mortgage. No wonder he is totally stressed out. Is a house worth it for a young single man. One who has a decent job, a probably inheritence and who has no dependants.
 
Dermot, the PIP was telling me that the amount of zero income debtors was astronomical especially people who were once self employed. It's scary especially at your friends age. What are his arrears and is his family making any payments?

Richinspirit, yes you are correct regarding arrears. When I first started this thread I thought I owed a lot more than I did but when PIP requested information I was somewhat pleasantly surprised. As mentioned in previous posts the bank have went ahead and recapitalized my arrears but I have not paid them since. I am aware they are able to do what they have to do after 3 months missed payments as per the mortgage code of practice; I think??

44Brendan, I spoke with bank and they informed me the loan has not as yet been formally called in and generally they don't know what I'm playing at as I have enough income to meet the payment and to just the few thousand euro arrears that have mounted since my loan was rescheduled.

Bronte, I smiled reading your post because what you say is correct regarding "is a house worth it"! If I was starting all over again tomorrow I would not take out a mortgage.
 
PatrickJ said:
It's scary especially at your friends age. What are his arrears and is his family making any payments?
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Scary is coming close to it. Yes he was self employed. Arrears are 60k. Mortgage 175k approx. Total 235K. House now valued at 100k. He made a last offer (3 friends genuinely underwriting it and bank made aware of that) as follows; Pay 100k for house and 40k in full and final settlement of his outstanding debts. This was made almost a year ago. Bank would not write off outstanding debt so they rejected same.
Meanwhile they have received no payments since and arrears are increasing and the house is still worth about the same. The receivers will have to get their cut, Auctioneers and legals ditto and for the next 6-9 months no repayments either.
Bank may not get the 100k in a forced sale of a family home either.
Bank knew that that was the price of the house at the time and they know he has no money and no income either.
The best of luck PatrickJ what ever you decide.
 
Morning all. The latest on this long drawn out process. As previously mentioned I was sitting waiting on legal proceedings; the proceedings did not happen. I stopped paying the mortgage all together to bring the account into arrears again as the arrears I previously in was recapitalized equating to a mammoth mortgage payment each month.

Currently now in a relatively small amount of arrears yet again and my latest correspondence from my creditor is that if I am a good boy and get back paying my debt on time they will recapitalize my arrears again and will not go down the legal route. It seems they will do anything to keep me in situ.

Of course this constant recapitalization is crazy but do you think they maybe now softening as regards to doing some form of deal?
 
What sort of deal are you looking for? They will not write-off any of the debt!! From a bank perspective you will be expected to meet a regular mortgage payment based on your net income. You are also expected to prioritise your mortgage payments over other loans. Ability to pay is broadly measured in terms of net income as against standard household expenditure per insolvency guidelines. You are a single man trying to support a large mortgage on 1 income. You have the option of taking in a lodger but appear reluctant to do so! this debt is not going away and forget deals as no bank will do a deal unless your income indicates that they have no option.
 
Is there any case law to show part payments are sufficient to cover outstanding debts especially if its the maximum you can afford?
 
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