Loan Renegotiate - Bank unhelpful

My income has been eroding fast over the last twelve months, from losing my annual bonus of €5k last December to the new levies and now being reduced to a 3 day week, all told I am down an average of € 1400 per month.

I was told on 25th August I would be on a 3 day week from 1st September so salary would be reducing from 42k to 25k.

I went to my BOI branch the following Monday and they got me to complete an income and expenditure form and were offering to merge my credit card, overdraft and loan into one loan over 7 years, at 11.6% (1.4% higher than when I enquired about doing this in March).
After looking over my income and expenditure it was clear I could not afford this so it was suggested that she pass the details to their recovery department who could arrange a loan over a longer term but it would mean my rating within the bank would be downgraded although my ICB rating would be untouched. I agreed to this and received a call from someone in that department who offered to do the exact same thing and said 7 years was also the max they could do. She said she would change the standing order on the existing loan but it would go into arrears which would affect my ICB rating.

I also contacted MBNA as I have a credit card with them, I already had tried for an interest review but to no avail, and have twice been promised to have the fees\interest frozen. They told me that banking regulations require a minimun payment of 1.67% and that if I could not pay this it would be passed to a 3rd party in 3\4 months for legal collection and would show as a default on my ICB record. I find the MBNA people the worst as they repeatedly say if you could just pay x even after their own income\expenditure sheet shows I cannot.

I am really disappointed with both responses as I am trying to do the right thing, I have a wife and three small children to support on my salary and have done a tight budget to enable me to pay the maximum I can afford to both of them.

I am planning on writing to both, just to put it on paper in case I need it, but is there any other advice on how to deal with this ?

How much do you owe on the overdraft, loan and credit card ?

€ 2,500 Overdraft / € 9,400 Credit Card / € 9,700 loan
MBNA € 11,000

Update 28/09/09

Just checked my account and BOI have charged me 12.70 unpaid fee for the standing order on the loan account. My salary was applied on 26th and standing order was due on 25th, this must be as a result of downgrading my account.
I am going to open a current account with Ulster Bank and write to BOI to let them know they have lost a customer forever.

Hi Cannonfodder,

I would be amazed if Ulster Bank or anyone other bank was interested in taking on your account because banks aren't interested in new customers if you have a lot of debt, so don't burn any bridges with BOI. If they are offering to help you I would take it, irrespective of any damage it might do to your credit rating in the short term.

My understanding of MBNA is that they will offer personal loans to existing clients to pay off credit cards, have you enquired about this option?

yes, MBNA said they do not do loans anymore, I am opening the UB account as I need to be in control of my money especially at the moment and I cannot trust BOI.
BOI have been very friendly about it but not particulary helpful. I just cannot see the advantage of contacting them in the first place if all that is going to happen is my accounts go into arrears. I even suggested a 2 year interest only on the 7 year loan which would allow me to make the repayments I can afford until I return to a full 5 days employment and they said it was impossible to do.

If my ICB report shows arrears on my loan and credit card for say 9 months I will be stuffed for getting finance in the future, won't I ?

If I just open a current account only with UB do they need to check my ICB file ? I am not looking for any credit, just a laser card. ????

You've got approx 33k of debt on an initial salary of 42k and are asking the bank to give you an unsecured loan for this amount (and asking them to take on an additional debt of €11k) at a time when your salary has been reduced to €25k.

You're potentially looking at having to make debt repayments of €600+ per month to the bank at a time when your monthly income will be less the €2k. The bank have refused you the loan because they simply don't believe you can afford it.

You might have some chance of getting the consolidation loan if you left the MBNA sum out of it. That way you are not asking BOI to take on any additional unsecured debt.

Why do you have such debts?, are there any assets you can sell (eg car) that would help you repay some of the outstanding debt?

Hi cannonfodder, would you consider speaking to MABS about your situation?

Hi cannonfodder,

I don't know whether they would do a credit check if you're just looking to open a current account with no overdraft but BOI might contact you when they see no income coming in anymore. What are you hoping to achieve in switching to UBL? You will have no history with them so they will be reluctant to help you out.

You are biting off your nose to spite your face.

Be realistic here. Ulster bank want cash not your debt!

I am not asking anyone to take on the MBNA debt, I have an arrangement in place with them for that, nor am I asking UB to take on this debt, I just want a current account where I am not going to get hit with additional fees at at time when I need every cent. All I was asking for was a bit of breathing space until my income increases.

I am married and have three kids under 4 years old, the debt has arisen as a result of building a new house which was completed last year.

Due to the property crash we were left short on the final stage payment due to the reduction in final valuation (final finish valued at less than cost to build to builders finish) and change in lending criteria.

As then house is in the middle of the countryside we need the car so selling same is not an option.

Neither my wife nor I drink or smoke, we do not go out regularly maybe a trip to the cinema every 2-3 months. I have been a customer of BOI for 10 years and in that time have never missed a payment on any loan or credit card.
We had an interest only option on our mortgage for 3 years and were using this period to clear down this debt by paying 750 per month. I know now we left ourselves exposed but are still paying as much as we can at the moment and will increase payments as soon as we are in a position to.

I am worried that BOI will cancel the overdraft and leave us in the sh*t, I do not relish going to the atm to find out I can't get cash for baby food and nappies, I just do not trust them.

I take my debt seriously and am not looking for a quick fix or a writedown, we make every euro count, every item on our expenditure sheet was less that what the bank allowed for it to be. My dissappointment is in the negative reaction they have to someone who is genuinely concerned about paying in full.

I think you need to go to MABS who will help you negotiate with the bank. Do not write the letter to BOI, you need them on your side now, even though they are not being helpful to say the least. You must grin and bear this for now. A proper meeting with a bank manager, not one of those juniors, is really what you need.

Can you switch the MBNA credit card to an interest free card. Do you have any savings? Do you have anything you can sell? There is no point selling a car in the current climate. Is there any way of increasing your income? Though I don't normally advise it do you have a family member you can borrow from and repay without interest because I imagine your repayments are crippling you?

Could you do the money makeover section with all the figures so that we get a clearer idea of your position.

UB system will do a credit check, however if everthing is up to date at the moment it shouldnt be a problem.

Found BOI deplorable when deling with them re a student loan for my son. When he took the loan he was told that after one year he could restructure the loan. When he went in to do this there was no problem, I was to go guarantor again and after approving the restructure they suddely said, for no reason, that the loan had to be cleared right away. Luckily, we were in a position to clear it but I never got a truthful explaination as to why they did this. Our account was healthy so I just ceased all dealings with them after that.

Go get advice from MABS, they will probably be more sympathetic to your problems.

hi again cannonfodder,

can you clarify if boi are willing to help or not? My understanding from your first e-mail is that they are willing to restructure your debt over 7 years. Are they including the overdraft and the cc as well? If so, you need to stay where you are. All of the banks are the same and if you have a history with boi it will help a bit. At least they have made an offer to help. I know people who they haven't been willing to help. Once you don't default on the loan and keep away from major credit requests for a few years, it shouldn't effect your rating too much.

cartman1 : BOI are willing to restructure the debt over 7 years including CC and overdraft which is great except the repayments are 438 which on my full salary would be no problem but I only come out with 1900 now and cannot afford same.
carpin taxt : We gave the bank the site & build costs and they agreed to lend us 90% of site cost and 100% of build cost pending valuations. Site was initially valued at 100k but we only paid 75k (family discount). Build costs were estimated to be €245 so we were looking for € 312,500 in total. We spent a total of € 345,000 with difference made up from equity in old house.
We had 5 stage payments agreed, and when it came to the last one they valued property at € 270,000 based on current selling value of other similar properties. I got a second valuation from an independent valuer who valued same at € 340,000 so in the end they gave us the balance of € 290,000 leaving us short on the originally agreed sum of € 312,500.

Hi cannonfodder

There are only 2 other options I can think of:
1. Go to your mortgage provider and get a payment holiday or ask to go interest only for a while. Accept BOI's offer and use the holiday/interest-only period to reduce any other debts.
2. Go to MABS or a debt management company and get them to look after you. They basically agree to stop the clock on all interest and charges and agree a schedule of repayments of the capital. I assume that your credit rating will be screwed though.

PS I presume you know you can claim social welfare when you're on a 3 day week

Hi cannonfodder
Like you I contacted BOI regarding my loans etc when my income was reduced last year and I'm now at the point where they closed my accounts and have passed on my file to a solicitor.
I contacted MABS as soon as I was unable to make my repayments for advice and I wrote to the bank asking them to reduce my payments until my financial situation improved but had no luck with them. I eventually just had to admit defeat and accept that the matter was going to a solicitor.
I'm now facing a judgment and court appearance despite having sent them financial statements and offers of affordable repayments.
I was a customer of BOI since college and had a perIect credit rating with them for loans I took out over the last 15 years but it meant nothing at the end of the day. As there legal department exyplained on the phone, I had agreed to make certain repayments and that as I was no longer in a position to keep to the repayments that they wanted they no longer could keep me as a customer and were closing my accounts and were looking to call in all of the monies owed.

As soon as they told me they were closing the account I opened a new account with another bank and transferred my wages etc to that account so that I would still have access to my wages and this was on the advice of a BOI staff member.