Repo cases ‘won’t lead to evictions’
A NEW study shows that the majority of the 8,000 repossession cases before the courts will not lead to people losing their homes.
A preliminary draft of the report, by Karl Deeter of Irish Mortgage Brokers, UCC economist Séamus Coffey and Brendan Burgess of Askaboutmoney.com, has just been completed based on 300 cases documented since the start of February.
Their opinion is that most of the 8,000 repossession cases currently before the courts will not end up with people being evicted.
For example, of 66 cases before the Cork County Registrar reported on by Mr Coffey, a repossession order was granted in less than than one quarter of them.
According to the report, evictions will only happen after a lengthy process in which borrowers will be given every chance to get loans back on track.
Q During the Celtic Tiger years, my friend and I borrowed over €500,000 to buy a development site. I provided expertise and my friend, a businessman, looked after the financial arrangements. My friend, despite his best efforts, can’t service the loan and the site is now worth about €100,000. The bank wants a resolution. I was never in a position to service this loan and I am still not. However, the family home has positive equity of €300/€400,000. It is owned jointly with my wife, who was not party to the loan. Can the bank pursue my home? A I’m afraid the bank could potentially try to recoup part of the debt from your equity in the family home. But it is a long and expensive process that usually doesn’t end in repossession.
Firstly, the bank probably has security over the site, which it can sell, leaving an outstanding debt of €400,000.
To pursue that, the bank can issue proceedings against you and your friend seeking an order for summary judgment. You are probably each liable for the full amount of the remaining debt (€400k).
This can take anything from three months to two years or more and it’s relatively easy to put forward a defence, says Ronan McGoldrick, a partner in Leman Solicitors who specialises in this area.
If the court decides that this defence deserves a full hearing, another three or four years of legal proceedings are added on. If the bank eventually gets a judgment, it can seek to enforce it against your equity in the family home. (See My View)
‘In theory, they can sell the family home but it is a very long and very costly process. It is generally done only in exceptional circumstances where the borrower is non-cooperative,’ advises Mr McGoldrick.
Instead, a judgment may remain on the property for 12 years to be paid if and when it is sold.
‘I wouldn’t recommend hanging tough in those circumstances. It’s a long and difficult road. Our advice is for borrowers to always stay in contact and to seek a resolution with the bank,’ he said.
He also advises borrowers to always seek a copy of their personal file from the bank under the Data Protection Acts. It costs €6.35 and the bank has to deliver it within 40 days.
What sort of resolution you might get depends on the bank and the circumstances of the loan.
Banks have become a bit tougher on debt. There also may be internal protocols that don’t allow officials much wriggle-room for write-offs, especially when there is an asset involved such as your house.
At the same time, they won’t want the legal expense, hassle and publicity involved in a repossession. Both you and the bank have leverage over each other. It’s up to both of you to come to some sort of resolution, on your part with the help of professional legal advice.
In the meantime, your family home is safe for many years at least. Q My health insurance is not up for renewal until August. Can I switch to a better plan now? I have a preexisting condition (psoriasis). A Your benefits for any preexisting conditions will be restricted to what you would have received on your previous plan.
From May 1 (when new rules kick in) this restriction will last for two years. But it could be up to five, if you’re over 65 and upgrade before that date.
‘All insurers, except VHI, will allow you to claim on the new plan for any new conditions that arise on or after the date of change. ‘VHI applies a short waiting pe- riod even for new conditions,’ says expert Dermot Goode of totalhealthcover.ie.
One other point to note is that VHI will not allow you to amend your cover mid-term.
‘Some of the others will permit mid-term upgrades but they will not allow you cancel your policy mid-term without paying a cancellation fee,’ Mr Goode adds.
Note: it costs €86 (not €101 as stated last week) to upgrade from the GloHealth Base Plan (€409) to the Net One Plan (€495). This upgrade cost is also pro-rata, so if you upgrade half way during your year of cover, you will only pay half of the €86 – or €43.