Deeper & Deeper in debt

LegacyUser

I'm not sure if I'm just ranting, but I'll let it out & maybe it'll make sense.

Before I start, I know how lucky we are in comparison with others, but I still seeing no way out.

Five years ago, I was self employed & was advised to buy a property as a pension scheme for myself, this I did & got a PTSB (spit) mortgage for 300k. We got a tenant & although the rent didn't quite cover the mortgage, We subsidised it & it was all good. That tenant moved on after a couple of years & we got another, rental prices had dropped slightly, but we were doing OK & just upped our subsidy. She was was a nightmare & we got her out after about six months, luckilly with not too much damage to the place (plate glass window & a table & chairs that were thrown through it). We got it fixed up & incredibly luckily, got another tenant almost immediately who is an absolute dream, he's the nicest guy, no hassle at all. Unfortunately, by the time he was moving in, rents had dropped to their current level & he's paying €900 a month against a mortgage of nearly €2,200 a month. In actual fact SW pays €780 of his rent & he pays the rest.

I later had to cease my business due to illness & (again luckily) became employed in PAYE. Unluckily the pay was a lot less than I was used to & we began subsidizing the rent on this place with our savings, which ran out a while ago. After to-ing & fro-ing with the bank, we told them that we could only afford to pay them the €900 rent being received.

They weren't happy & in actual fact put a moratorium on our house mortgage, to (as they said cheerily on the phone the following day) "free up some cash for you so you can pay off the bigger loan". I told them to re-instate the home mortgage, as this was the family home which we can manage right now & there may be a time when I need them to do something with this, but right now I need to protect it as our family's home. They begrudgingly did this. They then suggested that we sell the apartment for "whatever we could get" & transfer the balance to our existing mortgage - I asked them how much this would add & the answer was another €1000 or so a month. So I told her, if I can't affor to pay more than the rent being received, where am I supposed to find another €1000 a month ?

Fast forward to today. Unfortunately the PAYE job didn't last & like so many others I'm unemployed. I get €180 on the dole (which is due to end in October). My bank account is €90 in the red. I had to borrow €75 from my daughter's savings account to make the minimum payment on my CC (this will go back), I've been using the CC to do the shopping or pay bills when I had no cash. I've sold everything I'm legally allowed to that I don't need & used this month to prop up our mortgage.

My wife works & earns €500 a year too much (pre tax) for us to qualify for medical cards or FIS. She's expecting & will soon go on maternity leave. I was hoping to be working by that time but after 50-60 applications per month since last October, I've only had two interviews.

So that's it. I know we're lucky (right now) to still have a roof over our heads, but come October it's game over for us.

I'm lucky in terms of my beautiful wife & daughter (& close & extended family) who love me no matter what, but what's our future ? I've learned as best I can to get away with not spending anything, but we actually have no viable future.

Deeper & deeper in debt.

mud

I can't offer you much advice but my heart goes out to you and your family.

I really hope that something positive happens for you soon as you are coming across as a very good guy.

Try not to get too bogged down in depression, this stage of your life will pass.

Congrats on your lovely daughter and best of luck to your missus with the next wee one.

All the very best.

p.s. I'm up to my tonsils in debt also but am single with no kids so I muddle through. If you can at all stop with the credit card, they really do jump so quickly when they are being maintained rather than paid off. I have paid thousands in interest at this stage and am nowhere near paying it off.

Staplor

Lads get onto MABS, if you cancel your CC they can get the interest stopped and can help negotiate with the lenders about Mortgages etc. If the interest is stopped on your CC you can clear it a few quid every week. At the end of the day it's only money, people rarely if not never go to jail for not paying debts when they can't and the family home is never touched.

krattapopov

I'm very sorry to hear about your circumstances, it looks like you're doing everything you can to get through this. Keep at it and you will.

Protect your family home first and foremost. Get onto MABS.

Go here for more detailed information and to see how other people are coping who are in a similar situation to yourself.

Remember your not alone in this, good luck.

iguana

Staplor wrote: »

the family home is never touched.

Sorry, but this is incorrect. It's not usual in Ireland and repossessions of family homes are avoided as much as possible due to our country's history but they can and do happen. ( http://tiny.cc/il11y ) Another very big factor in why these were so rare historically is because there has never been a prolonged period of unsustainable borrowing, like there was from the late 90s until the last few years. At the moment the state is implementing an ostrich style "solution" to the issue, eventually that will have to change and when that happens it won't be surprising if the rates of repossessions skyrocket.

I know it's the last thing you need to hear, OP, but it's best to be aware that it can happen and either do everything you can to avoid it, or if impossible be prepared and able to make it happen on the best possible terms. Hoping it won't happen because "it never happens" won't help you.

As it currently stands in Ireland both your mortgages are going to be recourse. This means you as an individual are liable for the debt, rather than the property. So if you sell either/both properties and there is a shortfall, you are responsible for it. So for example, if the investment house gets repossessed you will be liable for whatever is owing after the sale and the court costs. This money that you would be left owing could eventually bankrupt you, regardless of whether it is attached to your house or not. And Irish bankruptcy laws are extremely harsh. Unless/until they are updated you must avoid Irish bankruptcy at all costs.

If you are determined to save the family home. You will need to do what has been advised with regards to the credit cards. Get rid of them and have the interest frozen so you can pay off that debt without it continually rising. Then you need to sell the second property for the best price you can get for it, as soon as you possibly can. There are rumours that the bank will cut you a deal with regards to the shortfall, though I'm not sure that it happens as often has been suggested, if at all, but it's worth trying to come to some such agreement. Even if they won't reduce the amount you owe, perhaps they could agree to it being rolled into your mortgage at a favourable, fixed, interest rate? But do this asap as house prices have an awful lot further to fall and you are losing money by the week.

The other option you have is not one to be taken lightly and will probably seem abhorrent, but is honestly worth considering. You will need to research it carefully and seek proper advice on the intricacies but a very real option is to move to the UK, (it would have to be a genuine mid-term move) rent a home, get work and establish residency. After 6 months of established residency it's possible to file for bankruptcy. The UK has some of the most liberal bankruptcy law in the world, but at present, it will remove all EU debt. It doesn't last long and once it's over you can move on with saving for a new house that you can buy at a future date at a much lower price than your current debts would be by then if you continue as you are now.

I don't advocate walking away from money which you borrowed but at the same time spending the best years of your life paying down loans that you may never actually pay-off is a very difficult way to live.

Joey the lips

My only advice i can give is contact MABS and SVP. Contact mabs regardless because there is a long list to wait.