Case study Joint salary > €100,00 ; unsustainable mortgages

M

MaryM37

Guest
This was deleted and I am unsure why? Dr Debt thanks for your comments and having a third party attend the next meeting to assist in poaaible negiotation would be great anyone have a suggestion of a person used previously. My Spouse did mention that he was looking at bankruptcy and they (the bank) advised against this of course :) If anyone can PM with suggestions of someone to consult to attend the next meeting as my spouse has always met with them and engaged as he wants to solve this somehow
_______________________________
Age: 45
Spouse’s/Partner's age: 42

Annual gross income from employment or profession: 45,000
Annual gross income of spouse:60,000

Monthly take-home pay 5,300

Type of employment: e.g. Civil Servant, self-employed
1/ Civil Servant
2. Spouse works for private company


In general are you:
(a) spending more than you earn, or
(b) saving?
A
Rough estimate of value of home
Apt 1.Mine - 90,000
Apt 2. His - 110,000
Amount outstanding on your mortgage:
Apt 1. €140,000 - tracker
Apt 2. €325,000 - SVR 4.5% - Arrears: €59,000


What interest rate are you paying?
Apt 1. Tracker (Need to check)
Apt 2. 4.5%
Other borrowings – car loans/personal loans etc
Apt 1. Maintenance fee owed 4,000
Apt 2. Maintenance fee owed 1,000

Do you pay off your full credit card balance each month?
No
If not, what is the balance on your credit card?
€2000
Savings and investments:
No
Do you have a pension scheme?
Contribution pension for past 9 years
Spouse None
Do you own any investment or other property?
No
Ages of children:
2Years
Life insurance:
Death benefit from work for both of us


What specific question do you have or what issues are of concern to you?
More details:
My spouse’s dilemma. He was self employed (50% shareholding). Business not yet closed, still acting as a director, but earnings now at zero. Previous earnings since 2009 fell to €600 per month
Recently secured a six month PAYE employee contract working out at €60k per annum.
Spouse now owes 325K on a two bedroom apartment that is now worth €110k. 59K now in arrears. Payment per month for mortgage is €1,650, just rented it at €900 per month.

My Apt is about €1000 a month and rents for €800. Unfortunately, spouse’s apartment is totally unsuitable for raising family and not in the best area in Dublin. We are now living in a rented house at €1400 per month to be near an elderly mother in law.Cannot sustain this. No life savings, need to pay crèche €700 per month plus additional payments for childcare every 3-4 months of 200-300 euro as I travel for work and need care for after crèche while spouse commutes home. Spouse’s apartment is a disaster. No quality of life. May need to emigrate to raise family…
Bank is now asking to sell apartment or they will sell it. Only completed finance statement last month. Meeting after submitting statement only lasted 15 minutes. Only two options were given. Will he give the apartment up voluntary or did he want to sell it.

They say my spouse will owe balance. 210k. Spouse has no other assets , no other loans and apartment is only in his name. He says he may need now go to the UK to declare bankruptcy. He has no interest in the apartment and sees it as an impediment for us to grow as a family to support our child.

In addition his mother is elderly and spouse could inherit a home that we do not wish to lose as it could be a family home for us some day if we can afford the inheritance tax. Bank it seems is 100% immune from the economic downturn. The bank he deals with is not backed by the Irish government so Irish tax payer has zero exposure.

What should we/he do? Our properties are in our separate names (Apt one owend by myself and apt 2 by spouse) so we keep separate bank accounts and all elec and household bills are paid by spouse and all else by myself. It seems impossible to catch up and I don’t want to park the owed money to keep adding interest as it seems unsustainable and I would do anything to get rid of this debt to start again and hang onto my own apt so my child has something for their future.

I want to start a savings and have emergency money as my family live abroad and are elderly.
Please advise and realise we in the past just got by during the Celtic tiger and got into trouble when the business went down as it was not a huge money maker and we have the usual life issues we all have these days.
 
Last edited by a moderator:
If I understand you correctly, Apartment 1 belongs to you solely and Apartment 2 belongs to your husband solely, both separate from each other. Both of you are owners of one apartment only.Please confirm this as it is extremely relevant to the solution.

The critical issue here is the stance of your husband's mortgage holder.
They have given him a choice of either surrendering the apartment voluntarily,or selling.In either option he is still looking at a shortfall of c210K and it seems they want to keep him on the hook for all of this. Your objective now is to try to make the bank improve on its offer.

If I was in your shoes I would go back to that bank and ask them if they can agree that some of the shortfall, be written off.
Make it clear to the bank that your (husband's) realistic options are to either 1) go bankrupt) or 2) agree a settlement with the bank where he agrees to pay some of the shortfall in exchange for a certain amount being written off. Make it clear to them that unless they agree to some write off then he will be forced into bankruptcy, in which case the bank will get nothing. On the other hand if they agree to say 50% being written off, they will at least get 100K back over a long time frame. I think the bank will realise that retrieving something is better than nothing and they may agree to some write off in this type of context.

If the bank stands firm, then I would start looking seriously at the bankruptcy option for your husband. In your own case I might start looking at selling your own apartment but I doubt that your own particular circumstances are serious enough to warrant bankruptcy.

It might be worth while for your husband to get a third party to negotiate with the bank on his behalf if hes not experienced in dealing with these kinds of matters. Depending on the skill of the 3rd party,you might get a better result.

I wish you the best of luck with it
 
Unfortunately, spouse’s apartment is totally unsuitable for raising family and not in the best area in Dublin.
...
We are now living in a rented house at €1400 per month to be near an elderly mother in law.
...
Bank it seems is 100% immune from the economic downturn.

...

He has no interest in the apartment and sees it as an impediment for us to grow as a family
...
I would do anything to get rid of this debt to start again and hang onto my own apt so my child has something for their future.
...
I want to start a savings and have emergency money
Click to expand...
It seems very odd to me that you are paying €1,400 per month when you could be living in your spouse's apartment. Of course, it's not ideal. Maybe it is "not in the best area" but you can be sure that there are many other families living there raising children.

It seems to me that you want everything.

You want to live in a nice area
You want to be rid of your debts
You want to inherit the family home
You want to grow your family
You want to hang onto your apartment for your 2 year old daughter

The area in which the apartment was in a good enough area when your husband chose it.

You both have well paying jobs - what proportion of couples have incomes over €100k pa?

You have to adapt to your changed economic circumstances. You need to move back into the apartment and start clearing the arrears.

I don't see why any bank, whether it is state owned or not, should simply write off the shortfall because a couple with an income of €100,000 per annum wants to live in a better area.

There are far more deserving cases for agreed sale and shortfall write-off.
 
Well to be fair Brendan, its not a joint salary of 105K per year. The OP's spouse has a contract position for six months which pays at the rate of 60K per year.

In the event that the OPs husband is able to get regular work in the future at the same salary level, then I agree with you that it should be possible to manage the debt if they are committed to doing so.

If you approach the issue by asking the question what will leave the couple better off financially within our legal framework, then the issue of bankruptcy is certainly a strong option / consideration.

If you approach this issue from the moral high ground and argue that the couple contracted for this debt and should therefore pay it back to the detriment of their lifestyle and well being for many years to come, then you will get a different outcome.

The personal insolvency bill attempts to introduce a half way house approach between these two extremes whereby you take the pain for five or six years after which the debt is eradicated. Surely this is the fairest approach. Only time will tell what the banks will do with this curved ball. Early indications seem to indicate that they are intent on screwing it up.
 
If you approach the issue by asking the question what will leave the couple better off financially within our legal framework, then the issue of bankruptcy is certainly a strong option / consideration.

If you approach this issue from the moral high ground
Click to expand...

Hi Dr Debt

The "moral high ground" seems to be used in a disparaging manner when people are asked to take responsibility for their actions. We live in a society. People who participate in that society should take personal responsibility and should repay the debts that they incurred, when they are well capable of doing so.

I have been trying to encourage the banks and the politicians to face up to the reality of unsustainable mortgages. That people with them should be able to sell their home in an orderly manner and have the shortfall written off over a very short period - maybe one to three years.

It is always thrown back at me that if they allow this, the flood gates will open, and people who can pay will use it to evade their debts. I argue that these will be in the minority, but then along comes MaryM37 to give them ammunition with which to destroy my argument.

If you look at the husband on his own. He has an income of €60,000 and a mortgage of €325k. The interest is €15,000 per annum. He can afford to pay this.

But he has chosen to have a child. He has chosen to move to a house from an apartment. But he doesn't seem to have considered the economic implications of these and now thinks that the banks should just facilitate him.

If you look at it jointly, they have an income of €100,000. Many readers of this thread would love to have that level of income. The legislation is not designed to facilitate and finance their lifestyle choices retrospectively.

Brendan
 
Hi Mary,
The situation sounds very stressful. I have a couple of suggestions; firstly, you need to separate your husband's debts and liabilities from your own. He should probably consider bankruptcy or the Personal Insolvency arrangement due from the legislation soon. Secondly, you should move into your own apartment, saving you €600 pm. Your own negative equity is a more modest €50k. By the way, taking home €5,300 from gross of €8,750 is no mean feat. Family, no matter how beloved, must take second place to keeping your own family on the straight and narrow. Your husband should contact MABS for advice. Best of luck.
 
This was deleted and I am unsure why?
Click to expand...

Hi Mary

Sorry. I edited your post to make the information more easy to read. Before doing so, I took a copy of the post. But instead of deleting the copy afterwards, I deleted the thread by accident. It's now restored.
 
Thank you all for responding positive and and even the neg. I did not expect a positive response from everyone and I wanted to provide some further info as I feel the title of the post which was changed from my original one gives a different impression and instanly people get their backs up.

The mortgages are separate. Apartment 1 is my name and apartment 2 in my spouses name.
I included my own mortgage information for completion sake as to give the full family picture. Just to be clear, I do see my apartment as sustainable and will be paying off all arrears and the principle.

As for moral issues, my family comes first and certainly ahead of the profits of a foreign bank. The situations is what is is and I am trying to deal with it and pritect my family. Moving to my own 1 bed apt with my daughter is not an option as we are happliy married and for security reasons I am not moving into my husbands apt I dont want to go into details and no I am not a snob and lived in the city centre of Dublin for many years when no one wanted to.

What is the issue is my spouses situation. From a legal perspective, I am completely removed from his debt situation.
For the past number of years, he was self employed and due to the fall in the economy, earned basically the same rate as unemployment benefit. He was always waiting for the next big tender to come through, but the tenders were pulled even after his company won them. He has faced reality and was lucky enough within the last month to secure a six month PAYE contract for 30k. So for clarity, its not the magical 100k on the subject header.

The reality is it is only for six months. He is specialised and will more than likely have to emigrate to secure a permanent job. He has always engaged with the bank and it was he who continuously sought meetings with them.
In November, he completed a statement of earnings and included the six month contract. What is worrying, after going in to see them early December that they did not even discuss or open the statement of earnings document he had sent in previously, but was give one of two choices. Voluntary give up the apartment or they will sell it.

Please advise. I take your point if the contract was permanent, he could pay the interest only. But the contract is only for six months, and by paying the interest only is only kicking the can down the road. He already has done that for a number of years with zero advantage. I don’t see the benefit of that. What do we do in six months time?

He is tackling this and he needs to do it head on with the bank. If bankruptcy will make him debt free in two years, I see that as a positive outcome.

The math for continuing to pay for his apartment does not add up as the principle is gone beyond the tipping point for it to be paid in full in a realistic time frame (30 years). I don't think he is now being given this opportunity now anyway.
What are the implications of him being declared bankrupt in the UK and how does it affect him here in Ireland.

Maybe some legal eagles can contribute. Within the legal framework what can/should we or more bluntly he do.

Thank you for your input.
 
Last edited by a moderator:
Well the first thing is to agree with the bank for the sale or surrender to your husbands apartment. Getting this off your mind is a priority. As long as they do not intend to chase your property then this would be a start. The remainder of the mortgage on his loan is the only contentious point. Negotiate, negotiate, negotiate.
Would you be willing to let them have a charge on your apartment so that in some time down the line it could be of value ?
 
Hi Mary

Let's look at this then from just your husband's point of view

Annual salary: €60,000 ( currently on a contract)

Apartment worth: €110,000
Mortgage €325,000 @ 4.5% SVR
Arrears: €59,000
Rent: €900 per month

This is a sustainable mortgage if he chooses to pay it.

Interest: €14,600
Rent: €10,800

From a salary of €60,000 a year, he has to make up around €6,000 a year.

But he is choosing to rent a property at € 1,400 per month.

You and he have made a choice that his apartment is not good enough for you and you want the bank to pick up the tab for that. As I have already said, there are far more deserving cases e.g. Here is a couple, both of whom are unemployed, who have a mortgage of €243,000 on their home. Their combined net income is €21,000 - yours is €63,000.

I think that they need a solution far more than a business person with an investment property.

Brendan
 
First of all, You have done very well to keep your husbands debt and your own debt separated. Keep it that way !!!! Some banks might be anxious to get you on the hook as well for your Spouse's debt, with cross charges on your own property. Quite simply, dont do it.

I think you know your Spouse's choices quite well :

1) Go bankrupt in Ireland or UK
2) Try to battle with the complete debt for the next 30 years
3) Negotiate a settlement with the bank to part-repay the debt

If he goes bankrupt in the UK, he will be discharged from his debts in one year.
The bankruptcy will remain on his credit file in the UK for six years and his credit
file in Ireland will probably haunt him for the rest of his days. Bankruptcy is not something to be taken lightly but it is a way out........

Paying back the full amount of the debt will be very difficult and in my oppinion is the 3rd best option.

My preferred option for you as I think Ive said before is to negotiate a certain level of write off with the bank and endeavor to repay the rest over a long term period.
This option avoids bankruptcy and gives a certain satisfaction of paying back a certain amount without having to repay all.

If the bank isnt listening, you might consider approaching them via the Personal Insolvency bill. You will need to present a forceful argument to the bank. Let the bank know that your husband is considering going abroad for work, repeat again and agian the bankruptcy option. You'll get there in the end.
 
MaryM37 said:
....The reality is it is only for six months. He is specialised and will more than likely have to emigrate to secure a permanent job....
Click to expand...

If Emigration (for him) is going to happen anyway, won't he turn into a long distance commuter anyway. So the your own apartment might be viable for a two years, while he goes Bankrupt away, and lose his Apartment.

Of course if he can get the debt reduced and kicked further down the road, is there a possibility that combined income will increase to make paying off his apartment viable.
 
You must log in or register to reply here.
Back
Top