Jill Kerby

Bank debt forgiveness will give me fresh start

CD writes from Dublin: I took out a €50,000 loan to start a business in 2005. I further extended this loan to €75,000 to keep the business going in 2007. My sister signed as a guarantor and deposited a sum of money in the bank on which there is a lien to cover my loan.

Unfortunately I had to close the business in 2008 and became unemployed. I was well received by the bank that allowed me a term of grace to pay interest only. I am now on my way back to work through an enterprise back to work scheme and have been managing to pay the bank €1,000 per month and the debt is currently at €57,000. This €1,000 euro is a huge drain on our family as you can imagine.

I have an opportunity to make a settlement with the bank through my sister. What kind of a settlement could I hope to achieve? It would be great if I could get it as close to €40,000 as possible.

You need to convince the bank that it is in their best interest to accept the €40,000 that your sister, as your loan guarantor, is willing to pay over as the full and final settlement of your debt, says financial advisor Karl Deeter of Irish Mortgage Brokers & Advisors.

“Your reader should write to the bank offering the €40,000 as a full and final settlement for this debt and wait for their response,” he says. If the bank declines, says Deeter it might be able to take the amount your sister put up as the guarantee if you defaulted on the €1,000 monthly payment but it would have to seek a court judgment against you for the €17,000 balance. Deeter suggests it would be unlikely to succeed “if it is shown that your reader had made every effort to repay them as much as she could” until your deteriorating personal circumstances forced you to seek a final settlement.

The fact that you have been able to repay €1,000 a month, a total of €18,000 so far, may not facilitate a deal if the bank is happy with this arrangement. Their first concern is to get all their money back, not to take a €17,000 loss.

In case your debt settlement offer is refused, you should prepare a detailed summary of your household finances to support your contention that the €1,000 a month payment is increasingly unsustainable. 

“The final move your reader has,” says Deeter “is to consider personal insolvency or bankruptcy next year when the new legislation is brought in”, though this may not prevent your sister’s guarantee from being called in by the bank.

A fair share

CL writes from Dublin: I am getting married in a few weeks but unfortunately have been made unemployed. I have about €2,000 worth of Elan shares which I bought nine years ago through a stockbroker – BCP – who are now gone out of business. I have the certificate but am told they need to converted into an electronic form. Another broker said I would have to sell them in the States and said, ‘best of luck with them’. Any suggestions?

Elan moved it’s primary stock market listing to the New York Stock Exchange late last year, where the bulk of the trading in its shares is conducted, but it continues to be listed on the Irish Stock Exchange.

There is a lot of paperwork involved in selling shares now and most brokers are not keen to deal with customers with such small stakes. However, Bloxham Stockborkers in Dublin have agreed to sell your Elan shares  - it might cost you €100-€150 in charges – and I have passed on the name of the broker to you who will complete the transaction.

Risk Management

SB writes from Dublin: In the event of Ireland having to write down its national debt in a restructuring deal in the future - would state savings be affected?

State savings products include An Post saving certificates and bonds, PrizeBonds and the national solidarity bonds. Before 2001 these were all denominated in Irish punts and were automatically converted, at a rate of £1 to €0.79 when the euro was introduced. If we leaves the euro, a new, Irish currency will replace it and while the conversion price may be one euro to one punt nua, once it floats on the international currency markets its value will likely devalue quite sharply. Euro denominated savings accounts and instruments like state saving products will all be re-denominated in the new Irish currency.

Healthy options

RP writes from Cork:  I am retiring shortly on my 65th birthday and my company will maintain my health insurance policy (for my wife as well) until the renewal date which is about three months after I leave. First question:  can I just renew this policy without any waiting periods – also, my wife has developed arthritis in recent years? (We have been covered by a VHI corporate plan called Company Plan Extra.) If it proves to be too expensive, can you recommend a good, affordable policy?

You can maintain your existing policy, if you choose, even if it is a corporate one. Under our community rates pricing system every health insurance plan must be available to consumers. In your case, the only thing that will change is who pays the premium.

As for waiting periods, so long as you renew your health insurance, either with your existing company or with Aviva Health or Laya Healthcare within 13 weeks, you will not have to fulfil any waiting periods for existing medical conditions.

The Health Insurance Authority website www.hia.ie has a comparison site for the hundreds of plans on the market, but I think it’s a very hard slog. By all means go onto it to check out various costs and benefits, but given how expensive your current policies are – at €1,160 each with 76 similar policies on the market according to the HIA comparison site – a better solution is to consult a good specialist health insurance broker who will charge you a fee for reviewing plans and recommend a suitable one for your needs and price range. Check out www.healthinsurancesavings.ie and www.lyonsfinancial.ie.