I want to hand my home back to the bank

We've discussed exactly this scenario in the Property and Accommodation forum. In the US there is a practice known as "Jingle Mail"- whereby someone simply hands back the keys to their property to the bank and walks away from their obligations.

Irish law, and in particular Irish bankruptcy law, is still fashioned on Victorian laws, and favours the creditor in all cases. If you try to hand back your keys- you are returning the asset to the bank- but you are still culpable for any interest, charges or difference between the eventual sale price of the property and the amount outstanding on the mortgage. You are restricted from holding a credit card or procuring credit from any official source- and your salary and/or pension may be purloined until such time as the outstanding balance is satisfied.

There are proposals to revisit Irish personal bankruptcy law every few years- the most recent proposals were put forward by Accountancy Ireland in 2006. Unfortunately they have, as yet, not been updated.

I would also be highly dubious about an assumption that there would be a balance over after the sale of the property- its perfectly normal to accept 30-40k below the asking price (or even more) these days. In some areas of Dublin- property is already back at late 2001 prices (and even at these levels its still considered likely that it has further to fall).

Totally aside from the banks refusal to give you a mortgage payment holiday (which is entirely normal), you need to sit down with your partner and work out your total monthly income, and your total monthly expenditure. Which items are necessities (food, electricity, heating) and which items can be foregone (everything else). You need to precisely document your income and expenditure. In conjunction with MABS- once you have precise details of your income and expenditure- you should approach your creditors with an offer to pay them "x" amount on a monthly basis- being the maximum you can afford without driving yourself into destitution. Do not expect any creditor (the bank or anyone else) to accept a payment holiday, or to write off the debt- but also do not offer to pay more than you can afford. Make sure your offer is conditional on your income remaining at a similar level- and conditional on neither of you loosing your jobs etc.

What assets do you have that you could possibly divest yourself of? Cars are incredibly expensive to run- can you do without? Do you have memberships of sports clubs, gyms, sky tv etc- that could be cancelled? Do you have any means of raising additional income (e.g. would you be willing to rent a room in your house, or provide student accommodation?) You need to recognise that this is a retrenchment- it will be painful- but you will be able to see light at the end of the tunnel.

There is a social welfare payment designed to assist people who are having difficulty in making mortgage interest payments. It may be worth your while exploring this option. To qualify- you have to be able to prove that when you originally took out the mortgage that it took below a certain amount (think its 30%) of your net after tax income to satisfy the interest component of the mortgage. Ask about this payment IMMEDIATELY.

I'm not trying to drive you into a panic- but it is imperative that you address this immediately- not wait until you've missed a few mortgage payments- at which stage your creditors will be far less likely to take a sympathetic line with you.

MABS will advise you of the best course of action- but don't put off seeking an appointment- they are incredibly busy these days......

You need to deal with this now- not after you've missed a few mortgage payments and have arrears on top of everything else to contend with. Take as proactive an approach as possible- ask questions, make an appointment with MABS, find out exactly what your options are- and do it now- not in January, when you'll have dug yourself into a deeper hole.

Regards,

SMcCarrick