Interesting account of one person's experience of bankruptcy

[44brendan]

Hi Pat, I understand and have some sympathy with your predicament. However, I think that there are some flaws in your strategy and expectations. In terms of your last post I would make the following commentary on the points listed by you:

1. The reality here is that you have a high mortgage and no existing capacity to meet even a realistic portion of the repayments. the couple of years expectation is hardly realistic. per your blog you have a number of years of full time education left before you are even in a position to work. In the meantime why on earth would any bank sit back and wait in expectation that you will "eventually" start paying P&I on a much higher level of debt (due to interest accruing)?
2. Fine, but how is this relevant to your current opposition? I.e. you cannot afford to rent a similar house, so until your own house is repossessed you will be living rent free!
3. The bank will never offer a plan. It is up to the client to propose a plan and the bank to accept or reject it. Having said that see my next response.
4. The bank applied poor logic in refusing to accept the surrender of the property. BoI appear to have a very one dimensional approach to any settlement agreement. I.e. They decline everything that means an ultimate write-off. This appears to be a Ritchie Boucher led "we will write off nothing" attitude which is totally unrealistic.
5. reasonable point, but nothing to do with your current position. I.e you cannot afford to rent a property but that has no relevance to your insolvency position. If you surrendered the property would you not be in the same predicament?
6. Not really likely. Best option for the bank at this time would be to accept the voluntary sale of your property and move on. You are not earning and unlikely to be earning for a number of years. potential to earn in the future is at this stage only that!
7. When you leave bankruptcy you will not have a mortgage as your house will be sold as part of the process or perhaps outside the process. In line with Brendan's earlier discussion this process is likely to take a couple of years.

I'm not quite sure why you choose the bankruptcy route!!! You have no earnings so the only disposable asset appears to be your PDH. Why not just let repossession take its course. By the time you commence earning again and are back on your feet the bank will likely have forgotten about you!!

 

[44brendan]

Neither closed nor frozen. As a bankrupt the assignee will not interfere with your bank account.

 

[michaelg]

Thanks Brendan
Is this only a very recent change ? I was informed last year that they would close your account, then a few months ago by the IMHO that they would freeze your account and remove anything over 1000 euros ?

 

[Matthew Moore]

Hi Pat, I understand and have some sympathy with your predicament. However, I think that there are some flaws in your strategy and expectations. In terms of your last post I would make the following commentary on the points listed by you:

1. The reality here is that you have a high mortgage and no existing capacity to meet even a realistic portion of the repayments. the couple of years expectation is hardly realistic. per your blog you have a number of years of full time education left before you are even in a position to work. In the meantime why on earth would any bank sit back and wait in expectation that you will "eventually" start paying P&I on a much higher level of debt (due to interest accruing)?
2. Fine, but how is this relevant to your current opposition? I.e. you cannot afford to rent a similar house, so until your own house is repossessed you will be living rent free!
3. The bank will never offer a plan. It is up to the client to propose a plan and the bank to accept or reject it. Having said that see my next response.
4. The bank applied poor logic in refusing to accept the surrender of the property. BoI appear to have a very one dimensional approach to any settlement agreement. I.e. They decline everything that means an ultimate write-off. This appears to be a Ritchie Boucher led "we will write off nothing" attitude which is totally unrealistic.
5. reasonable point, but nothing to do with your current position. I.e you cannot afford to rent a property but that has no relevance to your insolvency position. If you surrendered the property would you not be in the same predicament?
6. Not really likely. Best option for the bank at this time would be to accept the voluntary sale of your property and move on. You are not earning and unlikely to be earning for a number of years. potential to earn in the future is at this stage only that!
7. When you leave bankruptcy you will not have a mortgage as your house will be sold as part of the process or perhaps outside the process. In line with Brendan's earlier discussion this process is likely to take a couple of years.

I'm not quite sure why you choose the bankruptcy route!!! You have no earnings so the only disposable asset appears to be your PDH. Why not just let repossession take its course. By the time you commence earning again and are back on your feet the bank will likely have forgotten about you!!

Hi Brendan,

Thank you for such a comprehensive response. I would like to clarify a few points.

• I work part time while studying full time.

• I have no desire to live rent free. We pay what we can afford and requested interest only for three years to allow me complete college. It was refused.
• As can be seen from this post, its far from certain what will happen to the family home in bankruptcy, especially when there is high NE. http://www.askaboutmoney.com/threads/the-family-home-in-bankruptcy.186863/
• I don't think your advice to deal with debt by hoping "the bank...have forgotten about you" is sound. I chose bankruptcy because it was the best option. Our income was not sufficient enough to allow us enter a PIA or DSA. I also have about €300k of business related debt.

 

[breakonthru]

Hi Pat,
Presuming you are on a low income (full time student) do you think -

A) the 'Official Assignee' (OA) will want an Attachment / Payment order in place for any surplus over and above allowed income?

B) At what point in process will OA make this order (or not)?

C) If no order is made due to no surplus - will OA be back in 6 months post court appearance to investigate if you're earning more?

Thanks in advance and best of luck in front of the judge!

Mike.

 

[Matthew Moore]

Hi pat2

Could you explain what you mean by the following:



Surely you won't have any mortgage payments (or house for that matter) after the bankruptcy process has been completed?

I'm not entirely sure what will happen to my home in the bankruptcy. I believe the borrower and lender may agree to maintain a level of payments that the OA finds acceptable. Once all the unsecured debt is dealt with in bankruptcy a mortgage, possibly reduced, may be affordable. My lender being amenable to this is another matter completely.

It is discussed in more detail here http://www.askaboutmoney.com/threads/the-family-home-in-bankruptcy.186863/

And also here by Jim Stafford http://www.frielstafford.ie/personal-insolvency/what-happens-the-family-home-in-a-bankruptcy/

 

[Matthew Moore]

Thanks Brendan
Is this only a very recent change ? I was informed last year that they would close your account, then a few months ago by the IMHO that they would freeze your account and remove anything over 1000 euros ?

I may be wrong but I think they will only be interested in accounts which have money in them or have large overdraft facilities etc.

 

[Matthew Moore]

Hi Pat,
Presuming you are on a low income (full time student) do you think -

A) the 'Official Assignee' (OA) will want an Attachment / Payment order in place for any surplus over and above allowed income?

B) At what point in process will OA make this order (or not)?

C) If no order is made due to no surplus - will OA be back in 6 months post court appearance to investigate if you're earning more?

Thanks in advance and best of luck in front of the judge!

Mike.

Thanks Mike,

A) As its stands my income is not high enough to warrant an IPO. It is worth noting that the reasonable living expenses are divided between both adults if it is a two adult household. I'm not sure what the position would be with a 2 adult 1 income household.
B) I presume they will make the order as soon as possible in the process if applicable. The OA is on record as stating that he will only seek orders that last 5 years from date of adjudication if the bankrupt has acted in a fair way. For example, you get a good paying job a week before you are discharged; he will seek an IPO for 2 years and 1 week. Misbehave in his eyes and he has the ability to stick a 5 year IPO on you at any point in the process.
C) Yes, I believe it is 6-monthly intervals.

 

[Sarenco]

I'm not entirely sure what will happen to my home in the bankruptcy. I believe the borrower and lender may agree to maintain a level of payments that the OA finds acceptable. Once all the unsecured debt is dealt with in bankruptcy a mortgage, possibly reduced, may be affordable. My lender being amenable to this is another matter completely.

It is discussed in more detail here http://www.askaboutmoney.com/threads/the-family-home-in-bankruptcy.186863/

And also here by Jim Stafford http://www.frielstafford.ie/personal-insolvency/what-happens-the-family-home-in-a-bankruptcy/

Surely in going bankrupt you would want to be discharged from your mortgage obligations?

In any event, you don't have an agreement with your mortgage provider to modify the terms of your mortgage (or from what I gather any real prospect of reaching such an agreement) so it seems pretty clear that your mortgage provider will be proceeding to enforce their security.

If the threat of declaring yourself bankrupt did not persuade your mortgage provider to modify the terms of your mortgage, I fail to see why they would do so once you are actually declared bankrupt as at that point you will have no leverage to negotiate with your creditors.

 

[Matthew Moore]

Surely in going bankrupt you would want to be discharged from your mortgage obligations?

In any event, you don't have an agreement with your mortgage provider to modify the terms of your mortgage (or from what I gather any real prospect of reaching such an agreement) so it seems pretty clear that your mortgage provider will be proceeding to enforce their security.

If the threat of declaring yourself bankrupt did not persuade your mortgage provider to modify the terms of your mortgage, I fail to see why they would do so once you are actually declared bankrupt as at that point you will have no leverage to negotiate with your creditors.

To be honest I will play it by ear. I like the community, the house, our neighbours etc.. There is a temptation to wash your hands of the mortgage but if an agreement was possible I would happily resume making full repayments as soon as I'm able.

 

[Stuboy]

Good Luck Pat,

I just passed my statutory sitting this week.
I handled everything myself and both court visits were dealt with by one sentence from the judge: all in order. If your papers were not in order you would not have been given a court date. After your first court date make sure you get your advertising dates right for ISI and Iris Offiguil. there is a 10 day window or thereabouts for your ads to be published. A number of people got it wrong at the statuory hearings I witnessed and had to come back for their statutory sitting a number of weeks later.

 

[Stuboy]

re the account. Your account will be frozen by the bank within 2 days of being adjudicated a bankrupt. I was able to go into the branch and take out money with the assistance of a manager, but it took a few days. Take out any money in your account and open an alternative account in another bank. In my case My mortgage bank (who my current account was with) informed me that the account was to be closed within a week.

 

[44brendan]

I don't think your advice to deal with debt by hoping "the bank...have forgotten about you" is sound. I chose bankruptcy because it was the best option. Our income was not sufficient enough to allow us enter a PIA or DSA. I also have about €300k of business related debt.

In your case I agree! Given your level of income now your best strategy is to plan on exiting bankruptcy at time of completion of your studies and when your income is low. IPO if any is likely to be low. That gives you an ability to seek employment without the risk that a bank could still take proceedings against you for any residual debt. Same strategy would not necessary be appropriate for someone in a different earning position than yourself!

While you are hopeful of retaining the family home, all indications are that the Bank will take independent action on this outside of the bankruptcy. This is the standard approach of our bank. However, all of this should become more clear as time progresses and in the interim you are effectively living in rent free accommodation!

 

[Matthew Moore]

Good Luck Pat,

I just passed my statutory sitting this week.
I handled everything myself and both court visits were dealt with by one sentence from the judge: all in order. If your papers were not in order you would not have been given a court date. After your first court date make sure you get your advertising dates right for ISI and Iris Offiguil. there is a 10 day window or thereabouts for your ads to be published. A number of people got it wrong at the statuory hearings I witnessed and had to come back for their statutory sitting a number of weeks later.

Thanks Stuboy. Glad to hear things are moving along for you too. Great tips, thank you. I have some questions if you have a moment. At what point do you need to advertise and do the ISI provide you with this information?
Also, in relation to the bank account, I have nothing in mine bar a few cent, will the OA freeze this too and does he unfreeze it on discharge?

Thanks

 

[Matthew Moore]

In your case I agree! Given your level of income now your best strategy is to plan on exiting bankruptcy at time of completion of your studies and when your income is low. IPO if any is likely to be low. That gives you an ability to seek employment without the risk that a bank could still take proceedings against you for any residual debt. Same strategy would not necessary be appropriate for someone in a different earning position than yourself!

While you are hopeful of retaining the family home, all indications are that the Bank will take independent action on this outside of the bankruptcy. This is the standard approach of our bank. However, all of this should become more clear as time progresses and in the interim you are effectively living in rent free accommodation!

That is my plan, it is a prime opportunity to invest in my human capital.

In relation to "living in rent free accommodation", as mentioned above in my earlier reply to you, we do not live rent free and contribute as much as possible.

 

[Stuboy]

Thanks Stuboy. Glad to hear things are moving along for you too. Great tips, thank you. I have some questions if you have a moment. At what point do you need to advertise and do the ISI provide you with this information?
Also, in relation to the bank account, I have nothing in mine bar a few cent, will the OA freeze this too and does he unfreeze it on discharge?

Thanks

Hi Pat,

it's not the OA that freezes the bank account, it was the bank that did that when they got the notice form the court that I was adjudicated Bankrupt. It's a procedural thing apparently. the manager was helpful in getting money out for me; had only been paid for the month and had very little cash on hand. anyway it was a prelude to them closing the account, which was an automatic thing once I was made bankrupt. It took me about 3 weeks to get the BOI account open as there are a number of sign offs required to open a bank account for a bankrupt, so open an account in another bank before you are adjudicated bankrupt.
Re advertising: as soo as you are out of court number 7 (if in dublin) look for the OA's official, s/he should be waiting outside. but here are the details he e-mailed me re advertising:

"Please see steps below for advertising the Statutory Sitting. Please note you must advertise a maximum of 21 Days before and minimum of 10 days before the Statutory Sitting takes place in both ISI and Iris Oifigiul. You must then provide proof to the Examiners Office that this was done at least 2 clear days which will be the Wednesday before the Statutory Sitting.

The Process of Advertising the Notice of Statutory Sitting on the ISI website and Iris Oifigiuil is as follows:

The Assistant Examiner will issue the Notice of Adjudication and Statutory Sitting to you (or in the Case of the PIP your client). This is normally
issued around 4-6 weeks before the Statutory Sitting. To see a copy of
what the notice looks like and to see some instructions on how to advertise on the ISI website please go to:
[broken link removed] and click on any of the .pdf icons on the table.

Advertising on ISI Website

Email the ISI the scanned original "Notice of Adjudication and Statutory Sitting" (Form 19) to bankruptcy@isi.gov.ie and we will publish on our website. We will then issue you a Proof/Receipt by email. The proof email we send must then be forwarded by you to the Examiners office by email:
examinersmail@courts.ie. There is no cost to advertising on the ISI website.

Advertising on Iris Oifigiuil

Iris Oifigiuil use a different format for advertising on their website for which there is a fee (up to €75). You do not need to send us anything for signing just add the details from the Notice into the word document (template below) and send to them at the contact details below. Please note that as far as we are aware - Iris Oifigiuil do not accept Credit or Laser Card transactions.
Communications relating to Iris Oifigiúil should be addressed to the Editor, Iris Oifigiúil, Government Publications, 52 St. Stephen's Green, Dublin 2 Tel.: (01) 6476636. Fax: (01) 6476843 E-mail:
info@irisoifigiuil.ie
To vouch Iris Oifigiuil publication - you will receive by post (possibly registered) proof that your ad was published. Send this by registered post back to the Examiners Office."

STUBOY NOTE: I received confirmation by e-mail (and post) and forwarded it on to the court's email address in both cases. I also rang the court to confirm receipt of my ad confirmations.
Good Luck!

 

[Matthew Moore]

Hi Pat,

it's not the OA that freezes the bank account, it was the bank that did that when they got the notice form the court that I was adjudicated Bankrupt. It's a procedural thing apparently. the manager was helpful in getting money out for me; had only been paid for the month and had very little cash on hand. anyway it was a prelude to them closing the account, which was an automatic thing once I was made bankrupt. It took me about 3 weeks to get the BOI account open as there are a number of sign offs required to open a bank account for a bankrupt, so open an account in another bank before you are adjudicated bankrupt.
Re advertising: as soo as you are out of court number 7 (if in dublin) look for the OA's official, s/he should be waiting outside. but here are the details he e-mailed me re advertising:

"Please see steps below for advertising the Statutory Sitting. Please note you must advertise a maximum of 21 Days before and minimum of 10 days before the Statutory Sitting takes place in both ISI and Iris Oifigiul. You must then provide proof to the Examiners Office that this was done at least 2 clear days which will be the Wednesday before the Statutory Sitting.

The Process of Advertising the Notice of Statutory Sitting on the ISI website and Iris Oifigiuil is as follows:

The Assistant Examiner will issue the Notice of Adjudication and Statutory Sitting to you (or in the Case of the PIP your client). This is normally
issued around 4-6 weeks before the Statutory Sitting. To see a copy of
what the notice looks like and to see some instructions on how to advertise on the ISI website please go to:
[broken link removed] and click on any of the .pdf icons on the table.

Advertising on ISI Website

Email the ISI the scanned original "Notice of Adjudication and Statutory Sitting" (Form 19) to bankruptcy@isi.gov.ie and we will publish on our website. We will then issue you a Proof/Receipt by email. The proof email we send must then be forwarded by you to the Examiners office by email:
examinersmail@courts.ie. There is no cost to advertising on the ISI website.

Advertising on Iris Oifigiuil

Iris Oifigiuil use a different format for advertising on their website for which there is a fee (up to €75). You do not need to send us anything for signing just add the details from the Notice into the word document (template below) and send to them at the contact details below. Please note that as far as we are aware - Iris Oifigiuil do not accept Credit or Laser Card transactions.
Communications relating to Iris Oifigiúil should be addressed to the Editor, Iris Oifigiúil, Government Publications, 52 St. Stephen's Green, Dublin 2 Tel.: (01) 6476636. Fax: (01) 6476843 E-mail:
info@irisoifigiuil.ie
To vouch Iris Oifigiuil publication - you will receive by post (possibly registered) proof that your ad was published. Send this by registered post back to the Examiners Office."

STUBOY NOTE: I received confirmation by e-mail (and post) and forwarded it on to the court's email address in both cases. I also rang the court to confirm receipt of my ad confirmations.
Good Luck!

Hi Stuboy,

Thanks for the information. I was adjudicated bankrupt today, out of the court ten minutes after it started and my part took all of 40 seconds. I met with the ISI people afterwards, very friendly people; they said they will be in contact in the coming days.
I hadn't realised it is the bank who required the accounts to be closed, that's interesting.

Thanks again for the tips and information!

 

[breakonthru]

The UK/English Bankruptcy Law

Hi Nick, you should look at [broken link removed] and see the blog of one man's experience of Scottish bankruptcy which is a lot more forgiving than English bankruptcy law.

I mean all you need is a UK bank account, some mate to employ ye on basic wage for 3/4 months, bank transactions in Scotland (hand mate bank card!) Etc.

(Above IS NOT advocated at Irishbankrupt.com. com)

Too simple?

 

[michaelg]

Thanks so much Stuboy for your posts ,Its so helpful and assuring.
Regarding opening another bank account before being adjudicated , Is that what you did ? I would have imagined that every bank account opened prior to the day of adjudication would have to be closed ?

 

[Stuboy]

Thanks so much Stuboy for your posts ,Its so helpful and assuring.
Regarding opening another bank account before being adjudicated , Is that what you did ? I would have imagined that every bank account opened prior to the day of adjudication would have to be closed ?

No, opened new account after aib account was frozen. Took weeks as multiple people had to sign it off and nearly missed my wage payment which is by transfer. Only accounts with institutions that you owe money to will be informed by the oa of your bankruptcy.