Case study jointly owned home ok; big arrears with KBC buy to let in my own name

U

unstacked

Registered User
Messages
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Income details
Net monthly € 2400
Income history: Employed
Net monthly N/A as this house with arrears is my house in my name
Personal circumstances so we can calculate your reasonable living expenses
The Insolvency Service has published Guidelines for reasonable living expenses based on the family size, whether or not you need a car for work, childcare costs and other exceptional circumstances. By filling in this information, we (or you ) can calculate what your reasonable monthly living expenses should be.
One adult family or two adult family - 2
Do you need a car for work or do you use public transport? - yes
Number of children 0- 2 years old: -0
Number of 3 years old children: -0
Number of 4 - 11 years old:-0
Number of 12 - 18 years old: -0
Monthly childcare costs: - 0
Montly spend on special circumstances: e.g. exceptional healthcare costs - insurance approx 80pm



Home loan
Lender: UB
Amount outstanding:400k
Value of home: 230k
Interest rate: specify whether tracker or SVR or fixed rate - tracker
Monthly repayment - 1187
Amount in arrears - arrears were capitalises and we are on track pm - making the proper payment of 1187

Investment property - this is the problem
Lender: KBC
Amount outstanding: 225k inc arrears of 30k = 255K
Value of home: 130 approx
Interest rate: 5.1%
Monthly repayment = 944 is the interest only - about 1300pm otherwise


Amount in arrears
Monthly rent received = 570pm or 650 without the estate agent

Credit Union
Amount of shares - 1500
Amount of loan outstanding - 14000 for car
Monthly repayment - 344
Term left -


Other loans and creditors -
Other savings and investments - have 2 sites c total 1 acre

Do you expect any lump sums in the medium term future?
inheritances and sale of these two sites


How important is retaining the buy to let home to you?
Which of the following best describes your situation?

This is my pension - its all I have


Any other relevant information

What is your preferred realistic outcome?
I would ditch the estate agent, talk to the CU and reduce those payments - that would get me some of the way to paying the 944 interest only on the buy to let

BUT KBC are getting ext nasty and want me to make full repayments of 1300 pm - they are offering no other option to me..

They want me to sell. This would leave me with an unsecured loan of over 100,000 - worse off than ever - no idea what to do

I will be getting an inheritance possibly in the next 10 years and have two sites to off - load also

Am I better off selling the buy to let and going broke ? then using the inheritance to get planning on the sites and sell them then of what ?

No idea what to do
Ive contacted IMHA and NEW Begs but it being xmas period they are slow coming back




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You have a considerable level of borrowings and are in negative equity on both PDH and BTL. You appear to be a 2 adult family with total monthly earnings of 2.4K. PDH loan repayments appear to be well below level required to meet a mortgage of 400K. You are well over borrowed and realistically should look at insolvency options. Forget retaining the BTL. This is not your pension. It is currently a burden and given your financial position you need to get rid of it. Given your income, you have no realistic alternatives at present. I think you should seriously consider getting rid of both properties. You may be able to use the sale of the sites in negotiating a settlement with the lenders. You will need independent advice, so continue with efforts to contact external advisors. First port of call is to accept that you don'y have the capacity to exit this scenario without selling at least one of the properties!
 
Hi Brendan
Thanks for replying. Both my husband and I are both working and paying off the full mortgage on the PPR - Ulster Bank have agreed to re- capitalise our arrears and this has added 2.5 years on to the term of the mort PPR. For two years husband was in and out of work and that is why the arrears happened on the PPR. But we are back on track and are able to make the full repayments on our own house..Ubank are satisfied also.
The problem is the BTL -it does not affect my husband as he is not on the deeds - it was always mine. Arrears are on the BTL as a result of the two - three bad years etc....Im very lucky to still be in work and count myself lucky every day - and the fact we are on a good tracker with our PPR
If the BTL sells - the shortfall is huge....I feel no matter what I do Im going to have a HUGE debt on my head
 
You are a model for the new Personal Insolvency legislation.

Who owns the sites? You, your husband or jointly? What value are they?
In whose name is the CU loan?

If you go bankrupt...

The €100k shortfall on your buy to let gets written off.
Your personal obligation on the family home will be written off, but your husband will be left with the mortgage and house in his own name. This will have no practical impact.
The two sites will be sold and the proceeds given to your creditors.
After three years, you will be debt free.
Your husband will own the house with the cheap tracker mortgage.
He can then add you back, if that is what you want to do.
When you get your inheritance in ten years, you will keep it.

If you struggle on without bankruptcy, KBC will have a claim on the sites and will get your inheritance.

So first agree to the sale of the buy to let.
(Well first, offer to sell the buy to let and one site in exchange for writing off the shortfall - they probably won't agree to this prior to the sale, but try it anyway.)
Sign whatever paperwork KBC asks.
When they are sold, propose a deal to KBC outside insolvency. You will sell the sites in exchange for writing off any shortfall. They should grab the deal.
If they don't grab the deal, apply for a Personal Insolvency Arrangement along these lines:


A Personal Insolvency Arrangement does not have to be for 6 years!

A site was sold after 6 months, and the PIA was terminated.

If they veto the PIA, which is very unlikely, then go bankrupt.
 
Hi Brendan

Maybe a bit too simplistic there on what happens the family home after bankruptcy.

Once the OP goes bankrupt the OP's share of the family home is then vested in the Official Receiver. As there is no equity in the house the OR can either surrender his ownership to the bank that holds the mortgage in which case the bank will own half the property or he can seek to sell the 50% to the OPs spouse for a nominal amount. There is nothing certain or sure about this process and I wouldn't take it for granted. Its a very very tricky area and as a minimum a court order is needed before change of ownership of the family home can take place. Don't underestimate the banks in all of this.
 
Hi Dr Debt

In all the bankruptcy case studies from the Insolvency Service, the original owner stayed living in the home.

You are right in that there is a very small bit of uncertainty here, but the OP will continue living in the home and will no longer have a mortgage.

As there is no equity in the house the OR can either surrender his ownership to the bank that holds the mortgage
Click to expand...

I have not heard of this before. The husband would still be a joint owner. If UB becomes the joint owner and becomes jointly responsible for the mortgage, that would be fine.

The OR has indicated that they will "sell" their interest in the house for €5,000 to the remaining partner. In this case, the remaining partner might refuse to buy it and the OR would continue to retain it. This would be messy but not the end of the world.

The only risk which I see is that UB might try to use the bankruptcy to terminate the mortgage and escape the tracker. But if the husband continues to make the repayments, I think that this is very unlikely to happen.
 
Hi Brendan
The sites are in my mothers name ( I checked ..until such time of her passing ) they have no planning on them at present so would be treeated as agricultural land which has barely value at moment.
IMHA have come back to me and want to see the SFS I sent to KBC in Aug - luckilly I kept a copy and posting it today to them.
I understand now that this house is a danger to me. Magic wand waved - I want to come out of this with as little stress as possible, I dont want huge debt hanging over me for 40 years and I want our own PPR safe.
If I go into a deal : it sounds silly but will I have money of my own? Will I be able to save money ? Am I going to be a hermit ? Does it go public ?

Reason Im asking - as we just got ourselves back on track with the PPR and husband is working away, I started to be able to save money again - minimal, but enough to cover things like wear and tear on car, motor tax etc - rainy day money...
Im scared Ill be made live to the cent and that all this will be public....

I will send off the SFS and see how / what IMHA come back with...
 
The logical approach here is to try to complete a deal with KBC, without having to go bankrupt. This would probably suit both the OP and KBC. However, Banks do act uniformally nor logically in their approaches to specific clients and it is generally better where an informed 3rd party is used as an advisor in approaching the Bank. You do have some cards to play, if the sites can be used as an incentive to doing a deal with KBC. Particularly if you threaten bankruptcy as an alternative. Going public is probably not a major concern to you, as this will only happen if you go bankrupt and currently that option is somewhat unlikely unless KBC are totally opposed to doing a deal. Keep us posted on what IMHA advise and be assured that the deal will not leave you penniless!!
 
Thanks 44brendan.
Keep telling myself that this has happened to others before and Im not the only one - but it does scare the life out of me tbh....
Im really happy that we have got our PPR on track now and are on month 7 with no missed payments etc and this has knocked me for six.
I will of course keep you posted about IMHA advise etc
Thanks again for assistance - it has helped alot
 
Months on.
KBC have appointed receiver to BTL.
IMHO are checking with Grant Thornton re possible PIA.
I dont want this....I can pay my loans. ..just not the 100,000 residual
after the BTL is sold.
Id rather get prop sold and tell KBC what I can pay per week...and if they
agree...wait it out while paying x per month...who knows what deals
will come down the road.
I certainly do not want to live to a budget for 6 years.
I have one loan..CU for car..this will be paid in under three years...so its just
a matter of the 100,000....
 
Can you use your savings against your loan with the credit union to get rid of the car loan faster?
 
I can pay my loans. ..just not the 100,000 residual
after the BTL is sold.
Click to expand...

If you can't pay kbc, then you can't pay your loans. You can't just wish them away.

You obviously rejected the advice given earlier in this thread.

Why did you not sell the property under your own steam and try to do a deal with KBC on the shortfall?

Why are you paying the Credit Union ahead of KBC? You should be paying both in proportion.

A PIA may be appropriate. It will write down the Credit Union and KBC proportionately. But you might have been able to do that yourself, without the cost and hassle of a PIA.

I certainly do not want to live to a budget for 6 years.
Click to expand...

But you don't want to pay your debts either!
 
I had my file with the IMHO since Feb and honestly thought they were liaising with KBC on my behalf. They did not get to work on my file until June /July. ..at which point KBC...sent in a rent receiver. So I didn't ignore previous advice....just thought it was happening through IMHO...and was under the impression that they were in constant contact with KBC on my behalf all along
 
Apparently nothing by IMHO. I received letters from KBC and I scanned and emailed these to IMHO when they came in.
Thought that they had taken over and were liasing with them all along.
The house is still in a vol sale process, just a rent receiver appointed.
KBC will not do any deal on residuals until houses are sold.
 
unstacked said:
Apparently nothing by IMHO. I received letters from KBC and I scanned and emailed these to IMHO when they came in.
.
Click to expand...

Did IMHO agree to act for you, did you actually talk to anybody there from Feb to June?

Did you sign a contract or anything similar with IMHO?
 
Yes Bronte - signed a contract with them, met with them in February, spoke on the phone but mostly emails. Its neither here nor there now anyway.
 
Locks Changed?

The result is the same ( receiver or vol sale route ) KBC will deal with the case in the same way anyway...and will not deal with residual until after sale.
House is going on market in late Jan / Feb by a local estate agent.
The house will not be rented again.
Deloitte are overlooking this. They are going to change the locks - is this normal ?
 
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