LAWLINK: Debt debacle

Q: In my 20s, I purchased a home and an apartment. The home was initially financed by a mortgage, the apartment was bought a few years later with some inheritance from my then wife, some small personal loans, and by re-mortgaging our family home. I experienced a period in and out of work. My wife moved into the house and began paying the mortgage, and I took control of the apartment and was making some contributions to the loans. Eventually we sold the apartment, paid off a chunk of the mortgage, and my now ex-wife has taken over the mortgage entirely. We did not have a solicitor involved except in relation to the sale. I still have some loans and arrears outstanding. I have been turned down by banks for credit cards, loans, etc. A mortgage is entirely out of the picture. How can I get myself back on a decent footing?

A:This can be complicated and is very much dependent on your situation.

It would be worthwhile to discuss the matter with the Money Advice and Budgeting Service (MABS). You should ascertain what the total level of your debts are. You should ensure that whatever sums the bank obtained from the sale of the apartment were correctly applied to the mortgage and that your name has been taken off the mortgage. It is likely that you would have been asked to sign formal documents transferring the home to your ex-wife. It is of utmost importance that you see to this at once.

If the bank had to go to court to secure their debts, there may well be legal costs added to the debt. Interest will also have accrued. Personal loans tend to have higher interest rates than mortgages, and it is possible there is a higher figure owed for interest.

There will be a mark against you with the Irish Credit Bureau, which all Irish banks have access to. It generally takes five years after a loan account has been closed for this to be removed. Financial institutions tend not to remove such notes unless a mistake has been made on their end.

Sign up for the weekly Limerick Post newsletter

If your loans are still outstanding, and there are arrears due, it is highly likely that this will show on your credit report and therefore banks would be unwilling to lend further funds – notwithstanding the large payment made to the mortgage.

If the level of indebtedness is such that there is no realistic prospect of you being able to deal with matters as they stand, you might need to think about applying for bankruptcy, or for a Personal Insolvency Plan. MABS can give you information regarding this.

It would be important that you now take all steps to try and regularise the situation.