Situation

Lisa and Mathew are a married couple with 2 young children aged 11 and 13. Lisa is employed on a part-time basis and Mathew is working full- time. Their total household income is €3,180 inclusive of child benefit of €280. Lisa and Mathew are currently renting, and the monthly rent is €1,200.

Lisa and Mathew ran their own business but had to close it a few years ago. At the time the business closed both Lisa and Mathew were working full time in the business and had several unsecured debts. The debts were taxes and VAT payments outstanding with Revenue, unpaid suppliers’ invoices, commercial rates and personal guarantees. In total these debts amounted to €169,000.

Lisa and Mathew approached IMHO seeking assistance with this debt.

Finances

  • Income: €2,900
  • Income: €2,900
  • Household Income €3,180 (child benefit of €280 to be excluded from income calculations as it is not accounted in the bankruptcy process).
  • Monthly Rent €1,200
  • Total Expenditure: €3,227
  • Deficit - €327

Resolution

Lisa and Mathew sought advice from the IMHO Personal Insolvency Practitioner. Based on the above submitted information Lisa and Mathew are eligible for bankruptcy under the Bankruptcy Act 1998. They do not have sufficient disposable income to honour their debts. Bankruptcy will release Lisa and Mathew from their €169,000 liability. Bankruptcy is granted in the High Court and is monitored by the Insolvency Service of Ireland for the duration, usually 12 months

Please Note

Please note during the 12-month monitoring period, all adjudicated bankrupts must report to the Insolvency Service of Ireland (ISI) and must inform the ISI of any changes in their financial circumstances. A Bankruptcy Payment Order (max 3 years) may be granted where the income of a bankrupt exceeds reasonable living expenses during the 12 months bankruptcy term.

IMHO have an inhouse Personal Insolvency Practitioner who will assist debtors with bankruptcy applications and court representation.

Situation

Ariana (aged 59) and Patrick (aged 61) not married and have no children of their own. Ariana works as a childminder on a part-time basis and Patrick works in retail. Ariana ‘s hours were cut due to Ariana’s bad health. They have a combined Income of €3,350 per month. Ariana and Patrick have a mortgage on their family home of €345,000 and the house is presently worth €255,000. The full repayments are €2,300. Ariana and Patrick are currently paying €1,300 per month towards the mortgage and are €34,000 in arrears. A few years ago, Ariana took out a loan of €35,000 with her Credit Union, Patrick went guarantor on this loan. The monthly repayments on the loan are €150, no repayments are currently being made to the Credit Union. Ariana also has a credit card debt of €7,000, no repayments are being made against this debt either.

They approached IMHO seeking advice in Insolvency from a Personal Insolvency Practitioner.

Finances

  • Household Income €3,350
  • Reasonable Living Expenses €1,486 as per ISI guidelines 2 adults with cars and no children)
  • Available to pay debt €1,864
  • Monthly mortgage repayments due €2,300
  • Monthly repayments due on CU loan €150
  • Monthly minimum repayments on credit card €75
  • Total: €2,525
  • Deficit: €661

Resolution

Based on the submitted information, PIP recommended the most suitable formal solution which is a Personal Insolvency Arrangement.

Ariana and Patrick want to remain in the family home.

The PIP submitted a 5-year joint formal proposal to all Creditors seeking:

  • A write down on the mortgage debt to the current market value of €255,000 (a write down of €90,000).
  • A write down on the mortgage debt to the current market value of €255,000 (a write down of €90,000)
  • The proposed monthly mortgage repayments €1,700.
  • Monthly repayments of €100 payable to Credit Union over a 5-year arrangement. Remaining balance to be written off at end of 5-year arrangement.
  • Monthly repayments of €64 to the Credit Card Company over a 5-year arrangement. Remaining balance to be written off at end of 5-year arrangement.

The debtors will return to being solvent at the end of the 5-year arrangement and will continue to make repayments on the mortgage to the end of the term.

Please Note

Please note

in order for a PIA to come into effect it must be formulated by the PIP, agreed by the debtor, approved by a qualified majority of creditors voting at a creditors’ meeting, processed by the Insolvency Service of Ireland (ISI), approved by the appropriate Court and details of it registered in a public Register maintained by the ISI.

Where a proposal for a PIA is not approved at the creditor’ meeting the PIP where he/she considers that there are reasonable grounds and the debtor has instructed him/her in writing may seek a court review of the PIA (S115A).

Situation

Mary and Joe are married with 3 children aged 7, 9 & 14. Mary works full time in a well known retailer and Joe is a civil servant. They have a combined income of €4,000 per month and in addition receive child benefit of €420 per month. They have a tracker rate mortgage on their family home of €375,000 and the house is worth €310,000. Full repayments are €1,800. Due to wage cuts and additional taxes they are having difficulties paying their mortgage and are currently €11,000 in arrears.

They approached IMHO who obtained financial information from them and then met with them to discuss their circumstances.

Finances

  • Income: €4,420
  • Reasonable Living Expenses: €2,235.79 (based on ISI guidelines – without childcare)
  • Childcare Expenses: €400
  • Total: €3,400
  • Available to repay debt: €1,020

Resolution

Based on the above information, and following a submission to the bank a split mortgage was agreed, the repayment figure is based on what the couple can afford each month.

As part of the Split arrangement Mary and Joe will make monthly capital and interest repayments of €1,000 per month on 55% of the loan.

Under the split arrangement 45% of the loan will be warehoused/parked, there will be no interest charged on this portion for the lifetime of the loan

Situation

Susan and Andy are married with no children. Susan works part time as an administrator and Joe is a sales manager. They have a combined income of €2,900 per month. They have a mortgage on their family home of €300,000 and the house is worth €240,000. Full repayments are €1,750. Due to the loss of Susan’s full time job and additional taxes they are having difficulties paying their mortgage and are currently €17,400 in arrears. They have a variable rate mortgage on their mortgage of 3.95%.

They approached IMHO who obtained financial information from them and then met with them to discuss their circumstances

Finances

  • Income: €2,900
  • Reasonable Living Expenses: €1,712 (based on the guideline expenditure allowed by their bank)
  • Available to repay debt: €1,188

Resolution

While some lenders offer rate reductions, the rate reduction is not 0.5% across the board, also the period of rate reduction varies, it can be from 3 to 6 years, and very much depends on individual circumstances.

Situation

Simon and Anne are married with a boy and a girl aged 4 & 14. Anne lost her job previously and is unemployed and Simon works part time in manufacturing. Previously he was a full time employee of the company but his hours have been cut in recent years. His hours are unlikely to increase. Simon has an income of €1,750 per month and in addition receive child benefit of €280 per month. They have a mortgage on their 3 bedroom family home of €315,000 and the house is worth €295,000. Full repayments are €1,950. Due to wage cuts and the loss of Anne’s job they are having difficulties paying their mortgage and are currently €17,500 in arrears.

They approached IMHO who obtained financial information from them and then met with them to discuss their circumstances.

Finances

  • Income: €2,030
  • Reasonable Living Expenses: €2,500 (based on the guideline expenditure allowed by their bank)
  • Available to repay debt: €0

Resolution

The family want to remain in their home, their household income is within their Local Authority social housing scheme guidelines and the value of their home is less than €395k (designated higher threshold area – Meath address).

IMHO approached their lender and requested that they be considered for the Mortgage to Rent scheme. The Scheme allows for their home to be sold to an approved housing body and the family to remain in the property as social housing tenants.

In this circumstance the bank agreed that the price paid for the property by the approved housing body will be accepted in full and final settlement of the debt.

Situation

Tony and Oonagh are married with 1 child aged 3. Tony works full time in an insurance company and Oonagh works 3 days per week in a well-known retailer. They have a combined income of €3,900 per month (Tony €2,500 and Oonagh €1,400) and in addition receive child benefit of €140 per month. They have a mortgage on their family home of €290,000 and the house is worth €310,000. Full repayments are €1,350. Due to wage cuts and additional taxes they are having difficulties paying their mortgage and are currently €9,000 in arrears.

They approached IMHO who obtained financial information from them and then met with them to discuss their circumstances.

Finances

  • Income: €4,040
  • Reasonable Living Expenses: €2,000 (based on the guideline expenditure allowed by their bank)
  • Childcare Expenses: €600
  • Total: €2,600
  • Available to repay debt: €1,440

Resolution

As their mortgage is €1,350 per month the bank considered that the mortgage is affordable in full and refused to restructure it. However the issue of the arrears still required to be dealt with.

Following negotiation by IMHO the bank agreed to capitalise the arrears. This means that they are added back to the mortgage and repaid over the remaining lifetime of the loan. This means that the full mortgage repayment will increase. If the payment increased above would be affordable for the family i.e. above €1,403 a term extension of the loan would be required to make the monthly repayments affordable.

Situation

Maurice are Genny are married with 4 grown up children. Maurice previously worked in the construction sector and Genny is unemployed. Maurice has not been able to return to work and both himself and Genny rely on social welfare of €406 weekly. Maurice also does some casual work earning circa €400 per month. Their family home is a six bedroomed property in Cavan.

They have a mortgage on their family home of €325,000 and the house is worth €445,000. Full repayments are €1,650. They are having severe difficulties paying their mortgage and are currently €57,400 in arrears. The bank has commenced legal proceedings to have the house repossessed. The case has been adjourned on two occasions and is due before the court again in 6 weeks.

They approached IMHO who obtained financial information from them and then met with them to discuss their circumstances.

Finances

  • Income: €2,159.33
  • Reasonable Living Expenses: €3,000 (based on the guideline expenditure allowed by their bank)
  • Available to repay debt: €0

Resolution

In this circumstance there was no ability to make repayments to the mortgage and the mortgage was deemed unsustainable by the lender.

The family home did not qualify for inclusion in the Mortgage to Rent Scheme, 3 bedrooms in excess of family need, above valuation threshold of €305k (designated normal threshold area – Cavan address).  The value of the property also placed the couple in a positive equity position.

Following negotiation with IMHO the bank agreed that the property was to be sold. The bank agreed to allow 6 months for the sale to complete and in addition they agreed to waive legal fees incurred if loan was redeemed in full prior to expiration of the 6 month agreement. The bank also agreed that if the loan was redeemed in full within 4 months of the agreement they would also reduce arrears by 25% (a saving of €14,350 to the couple).

Please Note

The advice of the IMHO is never sell or surrender a property without a written agreement and confirmation as to what happens the residual balance (if applicable) after the property is sold.

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