Primary and BTL with brother

N

notsure

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Sorry...amended post:
Income details
Net monthly (i.e. after tax) Income self: 2400 PAYE
Income history: working since teenager
Net monthly income partner/spouse: single n/a

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 - single...no kids
Do you need a car for work or do you use public transport? - no company car




Home loan
Lender: KBC
Amount outstanding: 272000
Value of home: 175000
Interest rate: specify whether tracker or SVR or fixed rate: variable rate about 5.2
Monthly repayment 1425
Amount in arrears 0


Investment property - with brother
Lender: KBC
Amount outstanding: 210000
Value of home: 95000
Interest rate: standard non resident rate-think about 5.4
Monthly repayment 1320
Amount in arrears 0
Monthly rent received 750




Other savings and investments

Do you expect any lump sums in the medium term future?
Redundancy, inheritances, injuries awards. - no


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

I don't care about keeping the family home.

Any other relevant information:
Used a PIP to see if bank would do deal on BTL (take it back along with 30k)...no joy...problem is the brother has a good salary.

What is your preferred realistic outcome?
Don't mind but preferably best solution for brother also who will be stuck with BTL....if I go bankruptcy - its over quicker but will the OA come in and take half the rental income but contribute nothing to the outgoings of the property?

Any advice/recommendations....thanks in advance
 
This is going to be a very difficult one to solve as are all of these joint ownership issues. KBC seems to be particularly inflexible in dealing with people in arrears which makes it even more difficult.


As a single person who does not need a car, your Reasonable Living Expenses are €933.

With a net income of €2,400, this leaves you with around €1467 to pay your creditors.

So you can just about meet your home loan repayments - assuming you had no investment property shortfall to pay.

I don't think you can be expected to live on the minimum Reasonable Living Expenses forever, so you will need to restructure your home loan and get rid of the investment property.

This means that your brother will become fully responsible for the mortgage.
 
I suggest the following:
Step 1 - Your brother takes over the property and mortgage in full. He is liable anyway. You do not want the Official Assignee to take over the property as his approach to rent in a jointly owned property is completly unrealistic.
Step 2 - you go bankrupt.

Your brother will be left with the full property and mortgage, so he goes from €60k negative equity to €120k negative equity. There really isn't very much he can do about it.

You will be bankrupt and after three years, you may be able to contribute towards the shortfall on the investment property.

Problems
KBC may refuse to allow you to take your name off the mortgage. You will have to explain to them that you are going bankrupt anyway, so it's easier and cheaper to do it before the bankruptcy.

If they refuse, just go bankrupt and your brother will be able to buy your share from the OA.

Alternatives
You could try for a Personal Insolvency Arrangement, but KBC has the right to veto it.
If they agree to your brother taking over the investment mortgage in full, they might then agree to a split mortgage or a PIA.
 
How to approach KBC

As you have no arrears at present and as their investment mortgage is safe, there is no incentive on KBC to talk to you.
You need to get your brother's agreement to take over the full mortgage. He might not like it, but that is the way it goes. He is effectively a creditor of yours like KBC.

You will have to pay a PIP and/or the costs of bankruptcy, so you notify KBC that you will be stopping paying your home mortgage to build up the funds for this. Don't stop paying the investment property as this just makes it worse for your brother. After you have built up a fund of €5,000, resume paying your mortgage on an interest only basis which should be around €1,100 a month.

At that stage, I think that KBC will see sense and will agree to your brother taking over the mortgage. They should also agree to some form of split mortgage in which case you will happily release back to them the €5,000 pot you have built up.

Alternative solution
If you are willing to give up your home, and you should be, then you seek KBC's permission to sell your home as well.
After that you apply for a 3 year Debt Settlement Arrangement for the shortfall.
If they veto it, go bankrupt.

Where will you live if you sell your home?
Is your brother's investment property suitable for you to rent? This could solve almost all the problems.
 
Thanks for your reply Brendan.

1. Suppose it makes sense to see if the brother can take over the investment property - as you say he will get it anyway.
2. Those living expenses you said (933) are they before renting,etc....is bankruptcy different to PIA in so far as the PIA gives you living expenses+rent, does the bankruptcy only give you living expenses....or am I getting it all wrong.
3. On the primary residence that I own...should I let the bank now that I can't afford the repayments and stop paying the mortgage, or just stop paying the mortgage and let them chase me (suspect its the fromer but just making sure).

I reckon the best plan is:
1. Get KBC to allow the brother the investment property in full, when that's signed and sealed go bankrupt.......what do you think?

Thanks
 
Have a read of some of the Key Posts on the topic as you will have to get up to speed on all these issues. Come back with questions if there is something you don't understand.

http://www.askaboutmoney.com/showthread.php?t=181865

I think you should be upfront with KBC and tell them what you are doing. YOu have struggled for too long and can't do so anymore. Tell them that your mortgage is unsustainable and that you will agree to sell the house if they write off the shortfall. They won't take you seriously until you are in arrears. Write to them telling them that you will be going into arrears, with a view to going into bankruptcy in time. But cooperate with them at all times. Return calls; meet with them if they invite you to do so; Continuously repeat your offer to sell your home by agreement, if they agree in advance to write off the shortfall. They won't agree, so let them take legal action to repossess it.
 
Hi Brendan,

Again thanks for you reply...I had a look through the links you posted but just need clarification on:

1. Whether you go bankruptcy or PIA the living expenses are the same (933 in my case for either).

2. These living expenses do not include rent....this would be agreed on the settlement (if I can afford the mortgage repayment I stay in the property over the time of the PIA/bankruptcy, if I can't afford the mortgage I get an allowance for rent in the area ie from my monthly salary so it would be 933+reasonable rent)......

are these 2 points correct?

thanks
 
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