Possible reposession in Latvia

O

Oso

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Hi, Can anybody offer advice on some difficult issues I have with a property in Riga. Purchased in 2006 but due to the crisis it has fallen in price by about 25K since. Monthly mortgage is 720 euros, am being advised rental is now 300Euros. So I am well out of pocket.

It will probably take 2-3 years at least for the market to recover. And I don't want to be paying 5-6k euros per year from my own pocket. If I were to walk away from the property, stop mortgage payments, accepting that it will be reposessed which is very distressing, how likely is it that the latvian bank will come after me?

I would be losing the initial 12K deposit on the property. What are the repercussions. Wil their arm extend to seizing assets over here? Know of anybody who has been in this situation.

Thanks for your input.
 
It's unlikely they will come after you if the loan has been secured on the property in Riga, but I stress the word "unlikely."

In the UK during the crash in the late 1980s I knew a few people who walked away from houses and posted the keys back to the lenders, and they subsequently got mortgages in Ireland no problem and were not pursued for outstanding arrears in the UK. Banks won't waste time chasing after someone unless they think there is a strong chance of getting their money, and they also take into account the legal costs involved in pursuing cases. So on balance I'd say your chances are good of making a clean break, but there's always a risk that they will do otherwise.

Personally, although I never walked away on a debt, even in bad times, I might be tempted in your case if I was under pressure.

Again, take my comments with a serious health warning -- it's just my opinion, one man's view.
 
There is no way a Latvian bank can pursue you for your Irish assets. The only option open to try and recover the debt would be to request extradition to face trial in Latvia. This would almost never happen.

I'm sure you're aware that if you default on your mortgage payments, you probably won't be able to receive credit in Latvia again.
 
Raskolnikov said:
There is no way a Latvian bank can pursue you for your Irish assets. The only option open to try and recover the debt would be to request extradition to face trial in Latvia. This would almost never happen.

I'm sure you're aware that if you default on your mortgage payments, you probably won't be able to receive credit in Latvia again.
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I can think of several ways in which a Latvian bank could enforce a judgement here. Have you considered trying to do a deal with them?
 
Raskolnikov said:
There is no way a Latvian bank can pursue you for your Irish assets. The only option open to try and recover the debt would be to request extradition to face trial in Latvia. This would almost never happen.

I'm sure you're aware that if you default on your mortgage payments, you probably won't be able to receive credit in Latvia again.
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Can you explain why the Bank would not just simply issue proceedings here in Ireland against the OP and then attach his assets here for any losses they incurred?

mf
 
Hi,

I think mf1 is right the banks can issue proceedings here in Ireland if they so wish they can also employ an Irish debt collecting agency to try and collect the outstanding balance.
 
Murrisk said:
I can think of several ways in which a Latvian bank could enforce a judgement here. Have you considered trying to do a deal with them?
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Murrisk. Please explain what you mean by doing a deal? Thanks.
 
I don't mind not getting credit in Latvia. Who needs it now. However what has occurred to me is that Latvia is fully in the EU. There is a lot of talk about inter bank cooperation EU-wide on issues like this. I owe about 80K. For this sort of sum it's difficult to see how they can forget about it. (It's a swedish owned bank, operating in Latvia so they will be organised)
 
It's a tough situation to be in. If it was only 5k or even 10k i doubt they would put huge efforts into trying to enforce a judgement over here, But 80k is a lot of money.

What do you have to lose if they did try and do this? Do you own any other property that has 80k equity? It's a big risk to take if you do. It could be a family home. Were all part of the EU, if there isn't already then it wont be long before there will be something in place for international banking customers.

I think the other person meant by doing a deal that you approach them and try to come to an agreement. They could be willing to make a reduction on the 80k. If you just post the keys back you will have interest added and the solicitor fees added which could make it much more than the original 80k.

I wouldn't like to be in your situation having to pay back 80k and get nothing from it. Is there any way that you can keep paying for the next few years, Better to pay 20k and then get rid of the house than a judgement being made against you and having to pay 80k maybe even more.
 
OP be careful; I know that proposals and Green Papers regarding EU cross-border attachment of debtor's bank accounts have been flying around for the last few years so I would not be too sanguine about the possibility of action against your Irish assets. This is a very real possibility.

At the very least, I would research this further and take professional advice on it.

edit: did some research myself! google European Enforcement Orders and European Payment Orders - looks very much as though they can come after you here.
 
Although 80K is a lot they are likely to sell the property in an auction for say half it's original value. So I would owe 45K. Question is will they ignore this. I have equity in my home to cover this sort of amount so I could be forced to give up my home to pay back.
 
Oso said:
Although 80K is a lot they are likely to sell the property in an auction for say half it's original value. So I would owe 45K. Question is will they ignore this. I have equity in my home to cover this sort of amount so I could be forced to give up my home to pay back.
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I don't really get this, it strikes me as wishful thinking

why would they ignore it? If the debt is enforceable, why would they write it off when you have other assets that can be utilised?
 
Kemo_Sabe said:
I don't really get this, it strikes me as wishful thinking

why would they ignore it? If the debt is enforceable, why would they write it off when you have other assets that can be utilised?
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I never told them I have equity. In easy credit time in Latvia back in 2006 when I applied to borrow they never wanted to see any existing equity. Only bank statements showing income.

So in the event of the bank seeking to recover this debt can they identify my assets here? If they think I have nothing then 45K may not be worth it for them. Or in these circumstances can debt collectors pipoint personal assets such as home/bank balance/investments (in which case I am stuffed)
 
Oso said:
I never told them I have equity. In easy credit time in Latvia back in 2006 when I applied to borrow they never wanted to see any existing equity. Only bank statements showing income.

So in the event of the bank seeking to recover this debt can they identify my assets here? If they think I have nothing then 45K may not be worth it for them. Or in these circumstances can debt collectors pipoint personal assets such as home/bank balance/investments (in which case I am stuffed)
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unfortunately (speaking as a banker), yes - this is quite easy. They know who you are, they know where you live, they know who you bank with, they know who you work for, they know your credit history, they can find out what existing loans\mortgages etc you have in place.

no-one knows what course the Latvian bank will take on this; your best bet is to speak to them upfront and be open and honest with them. Sticking your head in the sand and hoping they will go away is not a good choice of action.
 
Firstly it's been a useful discussion and I'll see how I can manage the difficult situation I am in. Speaking with banks sounds like a plausible way forward so thanks for the tip.

Secondly before people start gloating because I was looking for distressed sales in other locations they should understand that a distressed seller may actually be quite happy with an offer if it helps them get rid of a property they are losing money on and one somebody else wants.

In short I may want to get rid of a property at a loss just as I may want to buy one at a discounted price. Wasn't looking for symapthy clever clogs. Sorry to spoil your gleeful comments.
 
Oso said:
Secondly before people start gloating because I was looking for distressed sales in other locations they should understand that a distressed seller may actually be quite happy with an offer if it helps them get rid of a property they are losing money on and one somebody else wants.
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there's no gloating Oso but take a look at how the overall picture looks:

you made a bad investment in Latvia and you are now hoping to escape the consequences of this while at the very same time you're hoping to make a vulture investment elsewhere at the expense of someone else

or "I shouldn't have to take responsibility for my own mistakes but I'm quite happy to be the beneficiary of other peoples"

seriously, take a look at yourself
 
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