Father in Debt

LegacyUser

About 11 years ago (when I was still in secondary school) my father bought a house in the UK for my sister and her boyfriend as they were unable to get a mortgage. To get around this my father put up another house he owns as collateral and he bought the house for them. At this stage my father has the family home, a house in his hometown (mortgage collateral), he had a 50% in another house his parents left to him and the house in the UK.

So my sister breaks up with her boyfriend and moves back to Ireland but the crash has just happened, pound weakens against the euro and now my father is in massively in the red. My father finally end up selling the house taking a €100k+ loss. He doesn't do a big switch back to euro instead he just uses the money to make the monthly repayments + insurance (which is very high due to my fathers age) we are talking about a repayment of €3k a month all in. So after a while the money runs out. So my father sells the other house he owned 50% in but despite this he is still in the red.

He has €50k in his bank account but he owes the bank €75k. All would be okay except for the fact the bank don't want to extend the mortgage past my fathers next birthday. My father told me they will have to sell the other house (which the mortgage is against) to pay off the debts but he'll lose 33% of the sale due to Capital Gains Tax. Or sell the family home but then they'll have move back to my fathers hometown which is a four hour drive which neither of my parents want.

He is trying to get a job (in Education) but while he is being successful in the interviews once the school try and get him a contract the state dept won't give him one because of his age. Apparently state depts can be ageist but private companies cannot.

He has asked me if I would be able to get a loan out and he'll cover the repayments. I told him no as I don't want to repeat the same mistakes as he did. Thing is I have saved up enough money to actually nearly wipe out all of the mortgage but as selfish as it sounds I want to use that money for myself as I want to go travelling with it and have a good safety net.

My two older sisters won't help as they both now have families of their own and this somehow makes them ineligible to help out. I feel likes it up to me to help out because I'm the youngest and because I'm single I can afford to lose my savings that I've worked hard to build up.

I hate to see my father in this mess and I would love to help out but if I've learned anything from his mistakes is that never lend money to a family member.

I've told him to get in contact with MABS but as of yet he hasn't.

Is there anything I can do to help him out?

Another day

Post on askaboutmoney you will good advice there. Tough times.

witchgirl26

OP I feel for you as you want to help your family but I would completely advise against you taking out a loan for anyone else. I don't know what age your father is but there is a state retirement age and most state agencies won't hire someone coming up to this as it is counterproductive for them at this point.

I think you've done the level you can by telling him to contact MABS. Maybe try talking to your older sisters - they may not have been approached but if a large portion of the debt is because of one of them, it definitely should not be you sorting it out.

You've worked hard for the money you've saved up and I would keep that. It's your safety net and gives you a start so you don't have to rely on others. If you did use it to clear the mortgage amounts, you wouldn't have any right over the properties and no savings which honestly sounds like a lose-lose for you. I know he doesn't want to pay the Capital Gains tax but it looks like that is the most viable option for him to sell the other house. He has an asset and a debt - it's a simple equation to use the asset to clear the debt.

It's a horrible messy situation but don't get yourself further involved in a monetary sense.

Hollister11

Where is your sister who the house was bought for in all this?

Tenigate

Your father can't have it every way. Sounds like he'd stop losing sleep if he just sold the house, paid the CGT liability, cleared the loan and increased his savings.

It wouldn't be a bad idea for him to contact a solicitor who specialises in wills & inheritance in order to reduce both his CGT and inheritance tax liabilities. But it doesn't sound like he's ready to do this. He just wants to clear a hump and avoid CGT, possibly leaving his own €50k savings untouched (am I right to assume that?).

Kerry25x

Surely your sister who he initially bought the house in England for feels the need to try and help him out now?

groovyg

Hollister11 wrote: »

Where is your sister who the house was bought for in all this?

Exactly since she is the one that he bought the house for why is she not worrying about the debts incurred instead of you. I think MABS is the best route for your dad. Just because you are young and have savings doesn't mean you should throw them all away, will you not want to buy a house yourself at some point?

I think he should get some professional advice, probably from a solicitor.

You are right to not get involved. It might sound harsh but this is a mess of his making.

There is no painless solution - if this is causing stress he will have to either get a job that can pay his debts or sell the house, pay the tax and clear the loan.

Your sisters are looking out for themselves and their families - you should too.

Aspadeaspade

op under no circumstances should you take out a loan in this situation. at the risk of sounding harsh you didn't create this situation and you certainly don't have to bail your family out. my brother did this. he gave his savings to one of our parents under the pretence that everyone was to pay him back. needless to say, no one is paying him back and he's been left out of pocket ever since having to start from zero. no doubt at some point you will want your own home and family etc and this would greatly impact your future and chance of a mortgage later on should you do it now. don't get involved OP. it's not your responsibility. if you wish to help it should be a joint effort between you all or no one at all..

Mr. Incognito

Get professional advice.

If he sold two properties at a loss the losses will be offset against the CGT

retro:electro

TBH I feel sorry for your father. He sounds like he did his best to provide for all of you and made some mistakes along the way, and now when he's no longer eligible for a loan or desirable enough for work, he has reached out to his family to help him only to be told no. I can't tell you what to do with your money but I know what I would do. I've seen how financial stress can ruin people, physically and mentally. I think you all as a family need to sort something out and help the man.

seamus

FatherinDebt wrote: »

My father told me they will have to sell the other house (which the mortgage is against) to pay off the debts but he'll lose 33% of the sale due to Capital Gains Tax.

So?

It'll get him out of debt, right? If that's the case then he's just being pig ignorant refusing to sell it because he doesn't want to pay tax on it. Instead trying to lump the debt onto you.

As Mr. Incognito says he should sell that house and get professional tax advice to minimise his tax bill.

woodchuck

This is a horrible situation to be in OP and it sounds like there is no clear cut right or wrong answer. Generally speaking I always think it's a bad idea to loan money to family or friends, but I think parents are a little different when you consider the amount of time, money and energy they've sacrificed for you over the years. Not that anyone owes their parents, but I'd be much more inclined to give/loan money to my parents than to siblings for example.

I don't think my father would ever ask me for money unless he was extremely desperate though. It doesn't sound like your father is quite there yet despite having asked you? As highlighted above, he does still have the option of selling another property.

What is your relationship like with him in general?
Does he have any sort of plan for how/when he could pay you back? I think if you do go ahead with the "loan" though, you'd have to accept the risk that you may never see that money again.

What is he doing with this house now?
Is it rented out, kept for holidays, empty, used by family?
Would it be missed if it were gone or is this a matter of pride?

yosser hughes

If it was my Father I'd do whatever I can to help.

Tenigate

yosser hughes wrote: »

If it was my Father I'd do whatever I can to help.

You'd take out a 75k loan at 10% interest, deprive yourself of taking out a mortgage, and possibly lose your life savings of 75k..

Or.. advise the father to seek financial advise (incl tax advice), and sell the second property if it's causing so much hassle?

I know what I'd do.

goldenhoarde

Do what you can do to help but the best help in this case is advice.


As he has savings of 50000 could he see if the local credit union would loan him 25000 or whatever. He might be a member already and lodging 10000 might give him the potential of a loan for 30000 leaving a five k shortfall that the family might consider funding


Mabs and tax advice would be a good start as the cgt will have to be paid at some point

As others have said selling up the house with the mortgage is probably the best plan and with proper advice the tax bill might not be as big and avoids a move/upheaval.

You going into debt will cause you problems when you need a mortgage etc in the future even if its being serviced by your parents.

If they God forbid die during the term of the loan will it be written into the will that the loan is the first thing paid off. If you go down this loan route you will need to cover yourself fully -> legal advice and a contract -> which don't go down well in family circles usually

woodchuck

Tenigate wrote: »

You'd take out a 75k loan at 10% interest, deprive yourself of taking out a mortgage, and possibly lose your life savings of 75k..

Or.. advise the father to seek financial advise (incl tax advice), and sell the second property if it's causing so much hassle?

I know what I'd do.

I think she said that her Dad has 50k, so needs 25k. Which the OP has in savings, so wouldn't have to take out a loan herself? I'm not saying she should give him the money, but just want to try and get the facts straight.

It is a huge ask though and I don't think I could do it unless my parents were absolutely desperate (e.g. at risk of losing the family home) which it doesn't sound like they are.

yosser hughes

Tenigate wrote: »

You'd take out a 75k loan at 10% interest, deprive yourself of taking out a mortgage, and possibly lose your life savings of 75k..

Or.. advise the father to seek financial advise (incl tax advice), and sell the second property if it's causing so much hassle?

I know what I'd do.

That's fine. I'm just stating what I would do. I'm not sure where you're getting the 75k figure? At least I read the thing.
I would do anything to help my Father. The OP actually has the money but wants it for travelling.

goldenhoarde

yosser hughes wrote: »

That's fine. I'm just stating what I would do. I'm not sure where you're getting the 75k figure? At least I read the thing.
I would do anything to help my Father. The OP actually has the money but wants it for travelling.

Which is the OP,'s choice. Helping sort the issue out will be better for all in the long run, rather than causing issues relationship wise later down the road

Based on the posts its a cashflow issue which can be sorted with proper advise

minikin

Three kids should cough up €8k a piece to get your parents out of trouble. How much do you think they spent raising and educating the three of ye? Won’t you get it back in inheritance in the end? Time to pay a bit back to the folks that gave you everything...

Fol20

anna080 wrote: »

TBH I feel sorry for your father. He sounds like he did his best to provide for all of you and made some mistakes along the way, and now when he's no longer eligible for a loan or desirable enough for work, he has reached out to his family to help him only to be told no. I can't tell you what to do with your money but I know what I would do. I've seen how financial stress can ruin people, physically and mentally. I think you all as a family need to sort something out and help the man.

I have to say, although you didn’t create the mess. Your dad is in trouble not because of gambling debt or anything bad like that but because he tried to help out his family when he didn’t have to. Yes, it should be the daughter that should be helping out but if she can’t I think I would. As the poster above mentioned. The mental and physical stress can change people and he made an honest mistake trying to help his family. You could always come to some compromise where instead of it all being put on you maybe you could half whatever he is asking for combined with you talking to the other sisters privately to see if they can help out also

Fol20

Tenigate wrote: »

You'd take out a 75k loan at 10% interest, deprive yourself of taking out a mortgage, and possibly lose your life savings of 75k..

Or.. advise the father to seek financial advise (incl tax advice), and sell the second property if it's causing so much hassle?

I know what I'd do.

I would look at it from an unemotional objective point of view. Maybe he is holding onto this second house so he can pass it onto children later on in life. If it makes financial sense I would have no problem taking out a loan as your parents would have done so much for you for your entire life. It’s time to give back a little.

GingerLily

Fol20 wrote: »

I would look at it from an unemotional objective point of view. Maybe he is holding onto this second house so he can pass it onto children later on in life. If it makes financial sense I would have no problem taking out a loan as your parents would have done so much for you for your entire life. It’s time to give back a little.

Ye but who will get that house. Lots of children have been burned before investing in a family home that's been solely left to just one child.

I wouldn't risk my safety net, not when there is an actual solution.

Hitman3000

Nice family! If I were your father, I would sell all my assets except my principal residence to clear the debt. Then in my last will and testament leave my estate to the local dog or cat home.

Toots

OP, can you clarify the figures involved? Are you saying he owes 75k to the bank? How much of a loan does he want you to take out?

Tenigate

yosser hughes wrote: »

That's fine. I'm just stating what I would do. I'm not sure where you're getting the 75k figure? At least I read the thing.

I read the thing, too.. and I'm assuming op's father has no income and is relying on his savings for living expenses and the 75k mortgage repayments. If he forks over 50k to the bank and op forks over another 25k, how would the father make repayments to op?

Maybe a wrong assumption and most likely op's father would not require a full 75k, but likewise he'd need a lot more than 25k.

Tenigate

Hitman3000 wrote: »

Nice family! If I were your father, I would sell all my assets except my principal residence to clear the debt. Then in my last will and testament leave my estate to the local dog or cat home.

This is the crux of it, really.. inheritance planning.

The op's father is at the age where he should be getting his affairs in order. Op is at the age where he(?) Is essentially setting himself up.. bit of travel, some savings, thinking about buying a home.

While the father seems to understand the need to avoid cgt, presumably so he can leave assets to his family.. there's no communication to say that's his intention.

This is stubborn at best and selfish at worst. Because the risk to the op of lending a large sum of money to a family member is higher than simply an arms-length transaction.

I guess it would be fair if the father did everything above board, such as agree repayment terms, secure the house on the loan, all done through separate solicitors.. but what if the father defaulted? It wouldn't be nice to have to take him to court.

fishy_fishy

So he bought a house for the OP's sister and is in debt as a result. But it's the OP expected to bail him out?

No way. If anyone should help here it's the sister.

OP, I think you need to insist that your dad talks to MABS before anyone agrees to anything. And you need to remind him that if he's trying to get you to bail him out, not wanting to approach your siblings because they have families, what he's actually doing is denying you the chance to have your own home and family. In effect, he'd be making you pay for your sister's failed trip to the UK.

Hitman3000

Tenigate wrote:

This is stubborn at best and selfish at worst. Because the risk to the op of lending a large sum of money to a family member is higher than simply an arms-length transaction.

The OP's father has been described as selfish. Yet he put himself in debt to help his daughter, he has asked the OP for help also the rest of his children know the score but the OP wants to travel. Definitely the Dad who is the selfish one.....

GingerLily

Hitman3000 wrote: »

The OP's father has been described as selfish. Yet he put himself in debt to help his daughter, he has asked the OP for help also the rest of his children know the score but the OP wants to travel. Definitely the Dad who is the selfish one.....

Yes he is selfish the ways he's treating the OP, he was generous with the OPs sister and even went into debt for her but wants the OP to give up their life savings. Why can't the father just give up the extra house, what's the difference?