Posts Tagged ‘Debt Resolution’

Tips on how to deal with your creditors.

April 20, 2015

Creditors

A lot of the time I get involved in cases at a late stage where the relationship between the borrower (debtor) and their creditors has broken down and unfortunately the creditors are in the process or have issued legal proceedings against the debtor.

Having unsustainable debt is a very difficult and stressful position to be in as it involves constant phone calls, letters and communication from the creditor as they try to get the case resolved. Thankfully with some hard work and straight talking we can get to a point that in most cases there is a solution that both parties can be agreeable to.

The single biggest flaw in the relationship between the debtor and their creditor is a lack of trust and poor communication on both sides.

In most cases the debtor knows that there is a problem but they don’t know what the solution is and are not confident to deal with the bank themselves so they stop talking and communicating their current financial position to their creditor. This only leads to the creditor becoming more aggressive in chasing the debtor which only makes the situation worse.

It is likely that the debtor has been dealing with the problem for the last 7/8 years since the economic collapse of the Irish economy and the free line of credit from the banks stopped.

My role in these cases whether as a PIP (Personal Insolvency Practitioner) or as part of a debt restructuring arrangement for my client is to act as a mediator or ‘referee’ between the parties. As I have said in most cases there is a middle ground that can be agreed on in the short term, which will then allow us over time to on a medium term plan to bring stability to the situation and take the heat out of what can have become a very fraught relationship.

The following would be a few of the tips I would recommend on how to deal with your creditors:

  1. Communicate – with your creditors at all times,
  2. Mediate – if you are unsure what to do ask a friend, parent, family member or business associate assist you in your discussions with the bank,
  3. Co-operate – this is simply understanding and following the banks protocols and providing them with the information that they have requested,
  4. Calculate – work out what you can afford to pay and spread this among your creditors,
  5. Prioritise your secured creditors, especially your family home,
  6. Be honest – if you are struggling (e.g. Out of work, sick etc) tell the bank and keep them up to date on your situation,
  7. Take notes – keep a copy of all correspondence and note what was discussed in your phone call as you may need this information at some stage in the future,
  8. Understand the ground rules – the bank want to be paid what they are owed but will work with you if they can,
  9. Educate yourself on the new personal insolvency and bankruptcy legislation – this is very important if you find that you cannot meet all of your debts as they fall due or you have unsustainable debt,
  10. Know your rights – you have rights and the bank know this so make sure you understand how you should be treated fairly by your creditor,
  11. Don’t fear the problem face up to it – be proactive rather than reactive with your financial situation,
  12. Look after your mental health – this is very important as if your health deteriorates your financial position could get worse,
  13. Don’t give up – they are plenty of solutions and options open that could solve your financial problems,
  14. Get good advice – It is critical to have the right person working on your behalf as signing up to the wrong deal will only make the situation worse,
  15. Be patient – as it can take sometime to get an agreement in place,
  16. You are not alone – unfortunately no one has been left untouched after the economic crash and there are many people in a similar position to you. One of the main reasons the new personal insolvency legislation was put in place was to ensure that anyone with unsustainable debt would have a chance at a fresh start in 5/6 years once their DSA/PIA had been completed.

Quintas are currently running open information evenings on debt resolution and if you would like to avail of a FREE 1:1 appointment with Mark Ryan the Quintas is a Personal Insolvency Practitioner (PIP) contact 021 4641400 or email info@quintas.ie

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What happens to the family home if you become insolvent?

March 10, 2015

Family Home

This is probably the 1st question I get asked in my initial meeting with a client. The answer isn’t that simple as there are various options depending on the client and the debt involved.

There are a number of methods of dealing with debt on the family home but the main ways would be informal restructure through discussions with your bank under the MARP (Mortgage Arrears Resolution Programme), formal agreement under the new personal insolvency legislation or the final act which is bankruptcy. The banks must apply the conditions of MARP in all cases involving the family home.

None of the above options are to be feared but if you are unsure of your own position I would suggest that you contact someone to find out as you might find that it may not be as bad as you think.

Sometimes finding out what is the worst case scenario and then leaving it to a professional to negotiate on your behalf can instantly take the stress out of the situation.

Prior to the enacting of the new personal insolvency legislation there were only 2 options to manage the debt with a family home either you could reach an informal agreement with the bank or you couldn’t and the property was repossessed or sold and you still remained liable for any net residual debt that remained after the property

A core protection of the new personal insolvency legislation is that a PIP’s (Personal Insolvency Practitioner) role is to where possible keep a family in their home. This is one of the key protections of the legislation and there are a number of options involved which would include a write-down on the debt to a more sustainable level under a PIA (Personal Insolvency Arrangement). Any proposed write-down would be subject to agreement by the creditors at a creditors meeting.

The main disadvantage in bankruptcy as regards the family home is that all assets of the bankrupt are transferred to the OA (Official Assignee) who in turn can sell same to pay off some of the debts due to the creditors.

It is important to understand that all is not lost if you or you partner are bankrupt. Under the legislation there are a number of options where only one of the parties to the home loan is bankrupt. For example if there was positive equity in the family home the OA would look to realise their share (50%) of this equity. If the home loan is in negative equity the OA may not be interested in the loan and may accept a nominal fee to transfer their interest in the property to the spouse/partner of the bankrupt.

If both parties to the mortgage are bankrupt it becomes a little more difficult but there are still options available to the individuals. It is important to note that the OA cannot sell the family home without first obtaining permission from the High Court.

I would suggest that if you are concerned at anytime about your personal debts you should contact a PIP to see what your options are and you may find out that these options are not as bad as you though. This could result in some light at the end of the tunnel after what can only be considered as a very difficult dark period over the last 5/6 years as the economy was hammered during the economic crisis.

As the economy in Ireland starts to improve it is well time that those in personal debt get the opportunity to get themselves back on their feet and on the road to solvency.

Mark Ryan, Quintas PIP

Quintas are currently running FREE Debt Resolution Open Evenings on Wednesdays.  If you would like to make an enquiry or find out more contact us on info@quintas.ie or call 021 4641400.

Mark Ryan is authorised by the Insolvency Service of Ireland to carry on practice as a personal insolvency practitioner.