Property & Mortgages

Wednesday 20 August 2014

Home Economics: Answering your property questions

Sinead Ryan

Published 04/07/2014 | 02:30

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Many struggling debtors feel guilty. Photo: Getty Images.
Many struggling debtors feel guilty. Photo: Getty Images.

It looks likely that I will be entering a personal insolvency arrangement. I have mortgage, credit card and Credit Union debt and, having read up on it, it seems that the bank will get most of what I can afford over the next six years. As the CU staff are all neighbours and friends, I'm embarrassed and wonder if I can prioritise payment to them instead?

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Sinead replies: In any Personal Insolvency Arrangement a middle-ground is sought between creditors, none of whom are likely to see all their money returned. Credit unions join the queue and I'm not trying to sound glib when I tell you it's "not personal".

Maurice Lenihan, Personal Insolvency Practitioner with Moore Stephens Debt Solutions, says: "Many struggling debtors feel guilty, embarrassed and anxious that they cannot pay local creditors.

"In my experience creditors have recognised these difficulties and will have taken steps to address the arrears, including providing for a potential bad debt. The starting point for a PIP is to assess the extent to which secured (mortgage) debt needs to be restructured and to find an appropriate solution for the remaining unsecured debt. Every proposal devised by a PIP must show that it provides a better outcome to creditors than bankruptcy.

"Credit unions adopt the same commercial rationale as other creditors – it is the debt and not the debtor that they focus on. Credit union staff and volunteers are trained to deal with customers professionally and discreetly.

"A favourable outcome benefits both debtor and creditor in the long run, and while feelings of guilt or embarrassment are inevitable, it should always be remembered that the process is democratic and the outcome of arrangements is agreed entirely by creditors during the voting process."

Getting remarried

I am getting re-married after being widowed several years ago. My new husband will be moving into my home while we rent out his. However, my (adult) children have expressed a concern that he could automatically inherit it if I were to die before him. I want to leave the family home to my children – does the law prevent this?

Congratulations! Firstly have you made a will? If not, then 66.6pc of your estate could indeed automatically pass to your new husband, with the remaining 33.3pc being divided among your children in the event of your death, so if you want a different split, that's where you should start.

Susan Cosgrove of Cosgrove Gaynard Solicitors adds: "In a will, you can decide to leave the entire house to your children, but bear in mind that there is a minimum 'legal right share' of a spouse under the Succession Act 1965. This means that regardless of what is contained in a will, a spouse is entitled to claim his 'legal right share' which in this case would be 33pc (as you have children) of your entire estate with a right to appropriate the house in which s/he was resident at the time of death towards, or in satisfaction of, their legal right share.

However, S. 113 of the Succession Act allows for this 'legal right share' of a spouse to be renounced in an anti-nuptial agreement (after the marriage has taken place) and during the lifetime of you both. This is something you might wish to discuss with your new husband."

The Ryan Review

Permanent TSB and ICS mortgage holders shouldn't be feeling too bad about their lenders' decisions to offload some home loans to so-called 'Vulture' funds.

These guys get a bad rap. Although their prime (only!) motivation is buying low and selling high, it's not all bad news for the new clients of Lone Star, Dilosk, Oaktree or any other distressed loan buyers.

In fact, if you're a bit distressed yourself it's no harm. These companies buy at a price which is very easy to turn a buck on – sometimes just 30-40c in the euro. As a result, when it comes to getting rid of non-performing second-hand loans, they only need to make money on the price they paid. So, while they might cock a snook at the notion of our petty Consumer Code legislation – which only applies to finance houses regulated by our Central Bank, they are more likely to take a pragmatic approach to writing off debt, rather than the emotionally charged one our own banks seem to seek.

When Pepper, the Oz-based lender, bought out the disastrous loans of sub-prime GE Money, suddenly borrowers in heavy arrears found a voice to listen to them – rather than a rake of legal letters telling them to take a hike.

Yes, they may lose their house, but they would have anyway. The daft repossession moratorium has only lengthened the finger, not cut it off.

PTSB and ICS customers – stay strong. Hold your nerve and ask the hard questions. You may find an accommodating foreign ear.

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