Financial woes of an Irish emigrant

emigrant voice

I left Ireland a year and a half ago and have been working on and off within the EU, usually earning less than the dole payment in Ireland. Much of my work has been cash-in-hand. I have a 2 bed apartment in Ireland rented out and am struggling to cover the mortgage. The negative equity on the property is about 150k. I have engaged with the bank who moved me onto an interest-only mortgage for a year and then recently granted me another year on interest-only. My financial position is somewhat precarious and should I lose my tenants then I wouldn't be able to continue paying even the interest-only amount.

My questions are:
1. As I am no longer living in Ireland, am I even eligible for bankruptcy in Ireland or must I pursue it in the member state where I am domiciled?
2. I don't have the means to repay the negative equity should the bank repossess my apartment - where does that leave me, does it mean I can never return to Ireland?
3. My mother is a guarantor on the mortgage. She has since retired and has only a state pension. She lives in an old 2 bed townhouse in a working class area. She doesn't contribute to the mortgage but helps find tenants etc.


Just wondering if anyone has any thoughts on the above. I can't help but think the bank are just kicking the can down the road and sooner or later the situation will come to a head. The mortgage is a 35yr term and was given to me in 2005.

themoneyguy

Hi.
1. I cant comment on this. Maybe another member might give you a steer.
2. If you agreed to voluntary surrender or if you agreed to sell your property at a loss you may be able to agree a repayment on the 150K. Eg interest only or fixed repayment.
3. The Bank will pursue letters of guarantee. They will expect your Mother to be able to pay the debt if you cant. If she cant they can enforce judgements on you both.

emigrant voice

themoneyguy wrote: »

Hi.
1. I cant comment on this. Maybe another member might give you a steer.
2. If you agreed to voluntary surrender or if you agreed to sell your property at a loss you may be able to agree a repayment on the 150K. Eg interest only or fixed repayment.
3. The Bank will pursue letters of guarantee. They will expect your Mother to be able to pay the debt if you cant. If she cant they can enforce judgements on you both.

Just wondering how a a judgement like this would work. I can't seem them going after a pensioner with no means, and they can't get blood from a stone, as in I am as broke as broke can be. I wouldn't put anything past the banks but when you've got nothing (as I have), all the judgements in the world can't change that.

cookie1977

If your mother is guarantor then they'll persue her for the loss. You need to speak to your bank about the situation. And as suggested earlier, FLAC and MABS before you start to stop paying.

emigrant voice

cookie1977 wrote: »

If your mother is guarantor then they'll persue her for the loss. You need to speak to your bank about the situation. And as suggested earlier, FLAC and MABS before you start to stop paying.

Believe me, pal, I have spoken to all of these guys and the bank. I "engaged with my lender" from day 1. It's just "we'll do another term on interest only" and see where we are in a year, telling me not to panic. The lads in the bank haven't a clue what's going on no more than you do.

I don't know if the banks are just kicking the can down the road until the government provide some sort of direction with the personal insolvency bill.

I wouldn't put anything past the bank, but would they actually go after a pensioner with no means? What would she do?

Does anyone have any anecdotal evidence of how a similar situation was resolved?
Thanks

chris85

But the bank will go after her if you don't sort something out. they could secure the judgment against her home and potentially force the sale of it it they wished to. You shouldn't put her through that so you should try not let it get to that.

BuffyBot

Please don't post duplicates. If folks have answers, I'm sure they'll post. Merged.

cookie1977

To be honest the point of being guarantor is that you were obviously not in a position to fund the purchase alone so the bank accepted your mother as gaurantor. They did this so that if you did not pay they could persue her assets to recoup their losses on you. Therefore if you cant/wont pay they have legal documents which you and she agreed to saying they can do this. I you need to speak to the bank again once the existing interest only period is expired and see what they say.

amber2

Agree with the other replies the bank will say when your mother signed as a guarantor and she knew what she was getting herself into for the duration of the mortgage i.e. she is fully liable for the outstanding mortgage and legally obligated to pay. Also totally agree with the poster who advised you to speak with MABS who will give you the best advise in this situation.

Wish you the best of luck hope this is of some help, post back on how you get on.

Also there is a Code of Conduct on Mortgage Arrears regulated by the Central Bank which each bank must comply with and should you feel that you are not getting a fair hearing from your bank you can go further about it, also your bank should not contact you by phone call about your mortgage without your prior consent but are allowed 3 unsolicited phone calls per month in relation to arrears.

cookie1977

http://www.independent.ie/business/personal-finance/property-mortgages/banks-target-parent-guarantors-on-debts-2174949.html

...17 per cent of clients had become guarantors for their children.

http://www.irishtimes.com/newspaper/ireland/2012/0305/1224312793590.html

Only as recently as March 15th they were speaking of guarantors in the dail.

  8.  Deputy Simon Harris      asked the Minister for Finance      his plans to introduce measures to assist persons who acted in good faith in becoming guarantors for mortgages at the height of the boom and now find themselves being pursued by the financial institutions in question; and if he will make a statement on the matter. [14767/12]

  9.  Deputy Simon Harris      asked the Minister for Finance      if he will outline any rights mortgage guarantors might have in their dealings with financial institutions; and if he will make a statement on the matter. [14768/12]

Minister for Finance (Deputy Michael Noonan):    I propose to take Questions Nos. 8 and 9 together.

There are measures in place to assist guarantors of mortgages. I have no plans to introduce additional measures.

The Central Bank has in place a Consumer Protection Code. The Code contains a number of provisions that are relevant to the guarantors of loans to private consumers. For example, provision 4.26 of the Code states that where credit is being offered to a personal consumer, subject to a guarantee, the guarantee documentation must outline the obligations of the guarantor and must contain the following warning statement:


“Warning: As a guarantor of this credit, you will have to pay off the debt amount, the interest and all associated charges up to the level of your guarantee if the borrower(s) do(es) not. Before you sign this guarantee you should get independent legal advice”.
Provision 6.8 requires that ”where a regulated entity has advanced credit to a personal consumer subject to a guarantee, the regulated entity must notify the guarantor on paper or on another durable medium, if the terms of the credit agreement change“. Provision 8.6 requires that ”where an account remains in arrears 31 calendar days after the arrears first arose, a regulated entity must, within three business days, inform the personal consumer and any guarantor of the loan, on paper or on another durable medium, of the status of the account. Provision 8.6 goes on to list information that has to be provided to the personal consumer and guarantor under this provision. A copy of the central Bank’s Consumer Protection Code is available on the Central Bank’s website www.centralbank.ie.

So on one point yes they (the banks) are absolutely pursing guarantors of mortgages for the debt of, in many cases, their children.

But on another point the bank clearly is working with you so I don't see the need to panic as of yet. See what they say after the next round of interest only and continue doing what you're doing. The worst you could do is stop talking or panicing.

What do you want to happen? Are you hoping if you just ignore it and never come back that the banks won't go after your mother? I'm afraid no one can tell you that but on the evidence thus far it seems they would.

emigrant voice

BuffyBot wrote: »

Please don't post duplicates. If folks have answers, I'm sure they'll post. Merged.

I had made some other points and that thread was relevant to the discussion, with lots of posters with similar experience to my own so I'd have prefered to continue it in there. Can it be unmerged? Can I contribute in the other thread without you deleting it?

emigrant voice

Thanks for all replies. I need to know the facts.

chris85 wrote: »

But the bank will go after her if you don't sort something out. they could secure the judgment against her home and potentially force the sale of it it they wished to. You shouldn't put her through that so you should try not let it get to that.

This is not true. The bank cannot make a pensioner homeless. She is safe in the knowledge that they can't turn her out on the streets. "You should try and not let it get to that" - I've been working my hole off and doing everything I can to prevent this.

cookie1977 wrote: »

To be honest the point of being guarantor is that you were obviously not in a position to fund the purchase alone so the bank accepted your mother as gaurantor. They did this so that if you did not pay they could persue her assets to recoup their losses on you. Therefore if you cant/wont pay they have legal documents which you and she agreed to saying they can do this. I you need to speak to the bank again once the existing interest only period is expired and see what they say.

Cookie - of course I realise that. Give me a break will you. The point is she would be homeless. The code of conduct doesn't allow for that kind of treatment.

I want to and badly need to pursue bankruptcy. Do you honestly think I've another option?


And just remember: she shouldn't have been given a 35yr mortgage at the age of 63. Malpractice on the part of the bank. That is a fact.

cookie1977 wrote: »

What do you want to happen? Are you hoping if you just ignore it and never come back that the banks won't go after your mother? I'm afraid no one can tell you that but on the evidence thus far it seems they would.

Cookie - I am hoping to declare myself bankrupt. It's easy for you to belittle me like this but you must know that the bank cannot make my mother homeless. She is 69yrs old and has no savings, no assets other than a modest terraced house.

Even in the bank they speak off the record and tell me to sit tight and await the insolvency legislation. The banks are waiting for direction from the government, but in reality the bank seem to be kicking the can down the road.

Does anyone genuinely think that I have options other than bankruptcy?:
1. I earn less money than the Irish dole.
2. My savings are wiped out.
3. I'm only paying interest on the mortgage and can only meet this because I have tenants. One month without tenants would mean I couldn't pay anything that month.
4. A forced sale would leave a 150k shortfall approx. I would struggle to pay back €150 let alone €150,000

daltonmd

emigrant voice wrote: »

Thanks for all replies. I need to know the facts.


This is not true. The bank cannot make a pensioner homeless. She is safe in the knowledge that they can't turn her out on the streets. "You should try and not let it get to that" - I've been working my hole off and doing everything I can to prevent this.



Cookie - of course I realise that. Give me a break will you. The point is she would be homeless. The code of conduct doesn't allow for that kind of treatment.

I want to and badly need to pursue bankruptcy. Do you honestly think I've another option?


And just remember: she shouldn't have been given a 35yr mortgage at the age of 63. Malpractice on the part of the bank. That is a fact.




Cookie - I am hoping to declare myself bankrupt. It's easy for you to belittle me like this but you must know that the bank cannot make my mother homeless. She is 69yrs old and has no savings, no assets other than a modest terraced house.

Even in the bank they speak off the record and tell me to sit tight and await the insolvency legislation. The banks are waiting for direction from the government, but in reality the bank seem to be kicking the can down the road.

Does anyone genuinely think that I have options other than bankruptcy?:
1. I earn less money than the Irish dole.
2. My savings are wiped out.
3. I'm only paying interest on the mortgage and can only meet this because I have tenants. One month without tenants would mean I couldn't pay anything that month.
4. A forced sale would leave a 150k shortfall approx. I would struggle to pay back €150 let alone €150,000

Would you consider heading to the UK?
http://irishbankruptcyuk.com/news/tag/bankruptcy/feed/

Lots of information there.

cookie1977

emigrant voice wrote: »

Thanks for all replies. I need to know the facts.


This is not true. The bank cannot make a pensioner homeless. She is safe in the knowledge that they can't turn her out on the streets. "You should try and not let it get to that" - I've been working my hole off and doing everything I can to prevent this.



Cookie - of course I realise that. Give me a break will you. The point is she would be homeless. The code of conduct doesn't allow for that kind of treatment.

I want to and badly need to pursue bankruptcy. Do you honestly think I've another option?


And just remember: she shouldn't have been given a 35yr mortgage at the age of 63. Malpractice on the part of the bank. That is a fact.




Cookie - I am hoping to declare myself bankrupt. It's easy for you to belittle me like this but you must know that the bank cannot make my mother homeless. She is 69yrs old and has no savings, no assets other than a modest terraced house.

Even in the bank they speak off the record and tell me to sit tight and await the insolvency legislation. The banks are waiting for direction from the government, but in reality the bank seem to be kicking the can down the road.

Does anyone genuinely think that I have options other than bankruptcy?:
1. I earn less money than the Irish dole.
2. My savings are wiped out.
3. I'm only paying interest on the mortgage and can only meet this because I have tenants. One month without tenants would mean I couldn't pay anything that month.
4. A forced sale would leave a 150k shortfall approx. I would struggle to pay back €150 let alone €150,000

The code of conduct requires people to cooperate with the bank and that you could for up to 5 years defer all capital repayments and up to 33% of interest repayments reducing your monthly repayment to just 66% of your current interest repayments. If you pursue bankruptcy they can still go after your mother who is guarantor and is not filing for bankruptcy per your original agreement with the bank.

http://www.morganmcmanus.com/pdfs/The_Dangers_of_Personal_Guarantees.pdf

PS I'm not trying to belittle you in anyway. I'm asking honest questions. I understand and feel sorry for your predicament and I doubt you are alone in Ireland. But unfortunately it seems that many people took at loans with their parents as guarantors. Being a guarantor is a serious business as I;m sure you now understand. You should try to speak with FLAC and explain in detail your situation. They may be able to help you and point you in the right direction. Another option is http://www.newbeginning.ie/ but as expected they are extremely busy. Before you consider bankruptcy you need to fully understand the consequences of this and therefore should seek professional help.

emigrant voice

daltonmd wrote: »

Would you consider heading to the UK?
http://irishbankruptcyuk.com/news/tag/bankruptcy/feed/

Lots of information there.

That's a great resource. It could be an option for me. Running out of options unfortunately. Thanks

cookie1977 wrote: »

The code of conduct requires people to cooperate with the bank and that you could for up to 5 years defer all capital repayments and up to 33% of interest repayments reducing your monthly repayment to just 66% of your current interest repayments. If you pursue bankruptcy they can still go after your mother who is guarantor and is not filing for bankruptcy per your original agreement with the bank.

http://www.morganmcmanus.com/pdfs/The_Dangers_of_Personal_Guarantees.pdf

We're taking the position that granting a 35yr mortgage to a 63yr old was malpractice on the part of the bank. Do you have any thoughts on this cookie, keeping in mind her financial position as outlined above? We're not talking about "going after" someone with money squirrelled away here and there, but a pensioner with no savings.

cookie1977

I'm presuming here but if she had assets that the bank could sell to get back your loan this is what they are after. They dont care so much about her earnings, it's her assets at the time she was guarantor.

emigrant voice

Cookie, should she also be pursuing bankruptcy in your opinion?

GSF

cookie1977 wrote: »

I'm presuming here but if she had assets that the bank could sell to get back your loan this is what they are after. They dont care so much about her earnings, it's her assets at the time she was guarantor.

could the bank in this case take possession of the mothers house for ultimate sale but allow her right of residency for the rest of her life?

cookie1977

emigrant voice wrote: »

Cookie, should she also be pursuing bankruptcy in your opinion?

Again I cant really answer that. I cannot emphasis the seriousness of bankruptcy in Ireland at present. Would you not go speak with a solicitor in FLAC for instance?

cookie1977

GSF wrote: »

could the bank in this case take possession of the mothers house for ultimate sale but allow her right of residency for the rest of her life?

This would depend on the bank.

tsoparno

I went looking for the research for what follows, but couldn't find it and can't remember where I heard or read it, but I heard/read somewhere lately that the course of action of going after the gaurantor's won't be successful as they didn't sign as a partner in the mortgage. So they're not fully liable, and its possibly scare tactics as normal from the banks.
Hope you get sorted and I think other posters have mentioned England as a better option to file for bankruptcy.

Del2005

emigrant voice wrote: »

Cookie, should she also be pursuing bankruptcy in your opinion?

Is she bankrupt? I'm assuming that the family home is mortgage free and the only other debts she has is your guarantee. If she's no debts she can't be declared bankrupt.

If you declared bankruptcy, then your mortgage company would go after her. She could then declare bankruptcy. Put she would have to sell the house and all her other assets and somehow managed to hide all the cash as a bankrupt by definition has no assets.

She didn't take out a 35 year mortgage you did, you should have considered the potential stress on an elderly lady if you stopped making payments. Isn't it great to have 20 20 hindsight, we all got caught up in bubble unfortunately now the pain is starting and it's only going to get worse.

cookie1977

Look, while the banks may not be perfect they aren't fools either. Getting a guarantor on the mortgage is a sign that they felt there was a risk with the mortgagee. Banks aren't going to leave gaping holes in their legal documents so hoping for miracles isn't necessarily your best option. Head this off by getting legal advice and not forum advice.

emigrant voice

cookie1977 wrote: »

Head this off by getting legal advice and not forum advice.

Thanks for all the input here everybody. I'm just on a fact-finding mission cookie, but you're right, it's legal advice that I need to ultimately get. I'd like to respond to a couple of the above points tomorrow when I get a chance. Cheers

chris85

tsoparno wrote: »

I went looking for the research for what follows, but couldn't find it and can't remember where I heard or read it, but I heard/read somewhere lately that the course of action of going after the gaurantor's won't be successful as they didn't sign as a partner in the mortgage. So they're not fully liable, and its possibly scare tactics as normal from the banks.
Hope you get sorted and I think other posters have mentioned England as a better option to file for bankruptcy.

Any info to back up your suggestion that guarantors arent liable. The bank will have a legal document stating they are. A lot more would need to be researched to have a sweeping statement to say they wouldnt be successfuly in their efforts.

cookie1977

emigrant voice wrote: »

Thanks for all the input here everybody. I'm just on a fact-finding mission cookie, but you're right, it's legal advice that I need to ultimately get. I'd like to respond to a couple of the above points tomorrow when I get a chance. Cheers

Really wish you the best of luck. Also if you can share any advice you get do post back.

tsoparno

chris85 wrote: »

Any info to back up your suggestion that guarantors arent liable. The bank will have a legal document stating they are. A lot more would need to be researched to have a sweeping statement to say they wouldnt be successfuly in their efforts.

I know, I'll keep looking just can't remember, Matt Coopers show is now coming to mind. If i find anything I'll post.

daltonmd

emigrant voice wrote: »

Thanks for all the input here everybody. I'm just on a fact-finding mission cookie, but you're right, it's legal advice that I need to ultimately get. I'd like to respond to a couple of the above points tomorrow when I get a chance. Cheers

Have a look at the mortgage contract - but afaik a guarantor is liable to repay a debt in the event that you cannot pay, the bank come after you and your assets first - however, if you enter into bankruptcy then the debt no longer exists. If you are discharged from the debt then the bank cannot come after your mum.