Voluntary Sale for Loss - Unsecured Shortfall

Hi All,

To cut a long story short, I was in long term arrears on an unsustainable mortgage on my principal residence. The arrears were minor (circa €3-4k), but despite cutting back on everything, getting rid of my car etc, it wasn't working and my mortgage was the cheapest it was ever going to be with the low interest rates, so my long term outlook wasn't good. After struggling for 2 years, I opted for a Voluntary Sale for Loss with the EBS. The mortgage was about €205k and the property sold for €85k, leaving a shortfall of around €125k after selling costs were deducted. I'm single and was employed full-time, albeit on a modest salary of just over €20k p.a and a risky employment outlook. I had no other assets or savings other than the house.

Leading up to the sale, I was told that my methods of dealing with the shortfall were either going to be a FIXED monthly payment for 7 years or a lump sum settlement. There was never a firm offer prior to the sale, but it was indicated that in my circumstances it would be a monthly payment of around €150 a month for 7 years or else an upfront lump sum of around €10,000. None of these were concrete numbers and always "subject to approval" of the arrears team, but the fact that they would be FIXED costs was definite, so I got the house sale into contract. I also spoke with my family and credit union and gathered up the means to be able to borrow €10,000. On the advice of my EBS contact I then made an offer of €10,000. In the background I had made plans to move abroad (outside the EU)to make a new start, with a new job etc. A few days before completion, the bank moved the goal-posts on me, now refusing the €10,000 and telling me they wanted €300 a month for the next 12months, with a review after that, i.e. if my circumstances improved they would want more and I no longer had certainty, which was the whole reason i had done all this. I had already made plans to move abroad, bought a flight, quit my job here etc, so those plans were set.

I am now living abroad (outside EU) and will likely continue to do so for the foreseeable future. I didn't want to be in this situation and wanted to tidy everything up before I left. I have since written to the bank, again offering the €10,000, but haven't heard anything back and some 6 weeks have passed now. To be clear, this is €10,000 I don't have and I would still be borrowing and paying back.

My question is, what are my options if they say no? I can't see me going back to Ireland anytime soon and searches/forums etc suggest that they only have 6 years to chase this now "unsecured" debt. i.e. in 6 years time I could potentially be free of the debt anyway? I'd like to solve the problem, in as much as I can and have the freedom to return to Ireland if my circumstances change, but there's only so much I can do. I'll be 40 next year and I need some certainty in my life to plan for the future. If they say no, am I better to just ignore them and stay away for 6 years?

Yes you are better off ignoring them and staying away for 6 years.. Honestly this is riduculous getting someone who has lost their home to pay 10K by borrowing it. On an income of 20K.

You owe 125K and that will be increasing no doubt plus legal fees so it's about time the EBS put a CLOSED on your file. But never trust them unless you have it in writing. Do they know where you are. 125K is very good reason to stay away for 6 years. Best of luck in your new country, the first year is the hardest.

Hi Bronte,

thanks for the reply. I'm in Abu Dhabi, so not much chance of them being able to do much to me here, but if I could sort it I would for the sake of certainty and freedom. Is there anyway that they can extend their call on the residual debt after 6 years?

I've heard that contacting them or continuing corresponding with them can reset the 6 year clock on their ability to claim? But maybe that changed with the new Personal Insolvency Bill? e.g. if I contacted them in 5 years time, or answered a letter etc in 5 years time, that would reset the clock and they could extend their call on the debt by a further 6 years, i.e. 11 years in total?

You must not contact them for 6 years, or the clock resets. You can be sure that the banks are very aware of the statute of limitations, and they will be writing to people in year 5 month 11 if they think people are back on their feet. It happened in the UK after the eighties bubble and crash. You probably should have gone bankrupt or through insolvency before you left.

Thanks Bronte,

Given the indication I was given by my case officer at the EBS, I didn't think I would need to go bankrupt/insolvent. It was sold to me as very much a formality, so I went ahead with a plane ticket and got set up with a job etc. However, after they moved the goal posts on me, I had already handed in my notice at work, bought a ticket etc, so it was all very rushed in the end and I couldn't afford to support myself here (no dole when you quit!), so I decided to go anyway. The house didn't even actually close until after I left from some delays.

I'm aware they could seek judgements against me and stuff while I'm away, but there's not a lot I can do about that from here unfortunately. I'm presuming they won't want to incur the extra costs as there's nothing to get, knickers off a bare...

However, in saying that, I'd still much rather have certainty now, even if it means borrowing the money, rather than having this hanging over me. I'm enjoying the change here for now, but who knows what it will be like in a few years.

Thanks for your very helpful advice Bronte.

Any other advice, options, or experiences from others would also be much appreciated.

One other thing, I've told the EBS that if they accept my offer, I would need a letter from them sent to my Solicitor saying that they would accept the €10,000 in full and final settlement of etc, but I'm not sure this is enough security for me? If they were to say yes, i would intend to send the money to my Solicitor and who would then send it on to them, to ensure there's a proper record of the transaction and not just a lodgement of money. Should I be asking for more?

Yes you need a full and final settlement letter. Nothing less.

I'm not good with remembering all the dates, re the 6 years. But I'd be slow to put money into an Irish bank account until I was certain I was in the clear.

There are loads of previous posts from others that have gone abroad.

Thanks again Bronte and for the caveat on RoI bank accounts. I've been trawling through posts since last year, but it's hard to get a clear picture for my exact circumstances, as some post are pre the new insolvency bill and some are post, some are EU countries etc, leaving me more than a little confused!

Looks like my best option is to try to get a deal done now and put a time limit on it, so they don't keep dragging out/extending the 6 years on me

I'm very surprised that the Bank did not accept your offer of 10K. Unless you are proposing to return to Ireland fairly soon I would tend to let this offer sit. It's now in the hands of the bank to either accept or reject it. Ideally the letter should have been sent by registered post or through your solicitor so that you have some evidence of it being sent. As per Bronte's post statute of limitations will run for 6 years after the last acknowledgement of the debt. Eg. your recent letter to the Bank. Having sent that There is every probability that if you come home in 3/4 years time there will be no outcome from the Bank side. There is no ongoing trawls conducted by banks on historical bad debts and usually it is only if they find out by accident that a defaulter is back and is earning in the country that there is an risk of action being taken. Given the huge numbers of defaulters out there now the risk of anyone being pursued after a couple of years of no action is remote.
When we write off a debt it's generally forgotten and we move on to the next ones!!!

44brendan said:

I'm very surprised that the Bank did not accept your offer of 10K. Unless you are proposing to return to Ireland fairly soon I would tend to let this offer sit. It's now in the hands of the bank to either accept or reject it. Ideally the letter should have been sent by registered post or through your solicitor so that you have some evidence of it being sent. As per Bronte's post statute of limitations will run for 6 years after the last acknowledgement of the debt. Eg. your recent letter to the Bank. Having sent that There is every probability that if you come home in 3/4 years time there will be no outcome from the Bank side. There is no ongoing trawls conducted by banks on historical bad debts and usually it is only if they find out by accident that a defaulter is back and is earning in the country that there is an risk of action being taken. Given the huge numbers of defaulters out there now the risk of anyone being pursued after a couple of years of no action is remote.
When we write off a debt it's generally forgotten and we move on to the next ones!!!

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Hi Brendan,

thanks for the reply, good to know about the banks. They haven't formally responded to my offer, so it could be accepted, it's just been over a month, which maybe isn't long in banking terms, but it feels like a lifetime. I sent it by email to my case officer directly and I received an acknowledgement that it was received, so I have evidence of receipt. I requested that it to be sent to someone senior, i.e. pragmatic, because like you, I can't believe that someone pragmatic wouldn't accept it, as their alternative is to get nothing! Computer says no mentality, I think.

My fear is that if I leave the offer open and they come back in month or a year's time to say they accept, they may just trick me into extending their 6 years. For example, as it stand, by sending the offer I have already refreshed their 6 years once already and if I had ignored them I would already have used up 6 months of the 6 years by now! However, in saying that I'd still be happier paying if it drew a line under it all, even if I never come home.

Grant Thornton are now working on the PIAs for EBS shortfalls. EBS pay their fees and the lump sum PIA amount depends on the size of the shortfall and current / future earnings. The obvious advantages of using Grant Thornton are that it 's a free service and the arrangement will be formalised. I had a friend who messed up the lump sum arrangement which resulted in the bank saying 'thanks for the 10k, we'll take it off the shortfall. What are you proposing for the residual?' Might be worth your while contacting GT!!! I spoke with another friend in a similar position - 130,000 shortfall AIB and GT told him the bank would probably need to be offered 20k to 25k to be interested.

epicaricacy said:

Grant Thornton are now working on the PIAs for EBS shortfalls. EBS pay their fees and the lump sum PIA amount depends on the size of the shortfall and current / future earnings. The obvious advantages of using Grant Thornton are that it 's a free service and the arrangement will be formalised. I had a friend who messed up the lump sum arrangement which resulted in the bank saying 'thanks for the 10k, we'll take it off the shortfall. What are you proposing for the residual?' Might be worth your while contacting GT!!! I spoke with another friend in a similar position - 130,000 shortfall AIB and GT told him the bank would probably need to be offered 20k to 25k to be interested.

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Hi Epicaricacy, somehow I don't think giving all of my personal details, foreign contact address etc to someone who's being paid by the EBS would do me, in my circumstances, any favours. This might be suitable advice for someone still in the country, I'm not qualified to say, but as you can see from my posts, I am not in the country. You're either well intentioned with misguided advice, or this simply an advertisement for GT.

My opinion is that most organisations handling PIA's will need paid one way or the other. That is, unless they are philanthropically motivated/funded, so I would have thought that anyone entering a PIA will likely have to pay for it directly or indirectly, i.e. one way or another.

Grant Thornton are working in tandem with the IMHO. Grant Thornton work with lump sum PIAs. The only reason I know this is that a friend of mine is using them to organise a PIA on the shortfall of his house with AIB. Another friend of mine attempted an informal lump sum arrangement through her solicitor and the deal was a cock up - whereby she handed over a lump sum without securing the full and final settlement.
I was obviously under the misapprehension that you wanted a permanent solution to your problem that didn't involve hiding out for 6 to 12 years in a different continent. That level of uncertainty isn't good for anyone, regardless of what other posters write. After all, your assumption making seems to suggest some level of paranoia and defensiveness - which can be indicators of psychological distress.

I have a business degree and masters. However, I retrained a number of years ago in something completely different that has nothing to do with business.

Ultimately, it's your choice how you want to spend the next 12 years of your life. Furthermore, it's your choice re. how you respond to a post which doesn't exactly tally with your plans. It seems obvious that you are looking for reassurance that you are doing the right thing. If you can tolerate high levels of ambiguity in your life - maybe you are doing the right thing. Only you can tell.
From a business perspective it seems that EBS have made the correct decision - as your circumstances have improved. It's up to you how you choose to respond to their pragmatism. After all, if you pay 300 per month for the next 25 years - which presumably you can afford - EBS will recoup 90k. Why would they agree to 10k? The GT person dealing with my friend suggested 20 to 25k on a similar shortfall to you.
By the way - where does my previous post suggest that GT are altruistically motivated?

Hi Epi, thanks for the advice, but I won't be handing over anything until I get certainty on the full and final settlement.

There is a lot of fear of the unknown and plenty of fear-mongers out there too. I wasn't seeking assurances, I was seeking information and clarity, in order to allow me to make decisions without fear and ignorance. I've been a fully co-operating borrower right up until now and all it's gotten me is a slap in the face. I was led up the garden path during the sale process and have been left in a very difficult position, which I didn't want, or plan to be in and I'm still trying to solve it, as best I can. The bank changed the goal posts on me at the last minute, as they were in a position of strength to do so and I would like to put myself back into a position of strength, so that i can get some closure on this mess, without being bullied.

Just to clarify, my circumstances/SFS did not change between being given the initial indication of a fixed payment of €100-€150 per month and them changing their minds to a reviewable payment of €300 per month. They can say it's in line with whatever they want, the fact was, that I was on subsistence living, with the promise that if I was lucky enough for my circumstances to improve at all as I moved into my mid-40's, that I would still be on subsistence living again once they "reviewed my payment". Also, they would never recover the €90k you suggest, as there is no way they could ask for €300 a month for 25years, or anything like that, given this is now an unsecured debt.

In summary, if you were well intentioned, then thank you, but the information you presented is not for me. I can't see how getting into protracted negotiations at this distance and providing contact details to someone who's ultimately paying them, would help my position, as it would only extend their ability to claim. If they accept my offer, that's great, if they don't then I have to live with the uncertainty, as I wouldn't be able to afford a larger sum of €20-€25k, as you suggest. But at least the 6 year clock would be running. Albeit I note from your other post in this forum, under the posting "Voluntary sale with 200,000 plus unsecured residual" yesterday, that in the case of your friend and the AIB (I presume it's the same person/people with 130k debt to AIB), that they are a working couple, with 2 incomes and that's why Grant Thornton were of the opinion that the couple would need to pay the higher amount of €20-€25k. I'm single and was on a low salary, so I can't see how they could justify the sort of money they were asking for from me.

In answer to your final question. I wasn't referring to GT, nor was I suggesting that you were presenting them as altruistic, clearly you weren't, you very clearly stated they were getting paid by the bank. I was merely stating that all of these helpful people need paid, whether that's directly to an organisation by the borrower themselves, or rolled into a repayment schedule, or rolled into a lump sum settlement, i.e. the borrower still pays. By the way, if your post was not an advertisement for GT, then I would like to apologise.

Lost Decade, to a large extent you are holding the better hand here! You have offered AIB a settlement sum of 10k. As I said previously, ensure that the offer is either acknowledged or if not send it in by registered post or through a solicitor/financial intermediary. If they reject then the ball is in their court. Realistically they can go no further than taking out a judgment against you. If you intend staying abroad for a few years, this will have no real effect on you and also as I mentioned previously, even if you return within the next 6 years the risk of any further action is low.

Lost decade

My only motivation for passing on the info. was as a result of my friend's current negotiations and the similarity between your positions.
You're correct in that GT will want a contemporaneous SFS - which will need to include your current income and expenses when presenting your PIA. As this will compromise your 'position' re. EBS not having your current location, I understand your rationale.
You're in a very difficult position.
I wouldn't take advice from anyone who wouldn't personally partake in their own suggested course of action.
I wouldn't be able to tolerate the ongoing uncertainty.
Of course, there's still a chance that EBS might agree to the lump sum!!'

Thanks Brendan, my local case officer has acknowledged receipt and confirmed it was sent on to Dublin. I did put a time limit on it, but whether they reply to me, to accept, or reject, my offer is a different matter! As you say, if they don't accept, then the ball is in their court and there's not much else I can do in the meantime. Strange times....