Author Topic: Debt and property abroad  (Read 2520 times)

Ignoffo

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Debt and property abroad
« on: Mar 14, 2011, 04:40:43 PM »
Hello, I need clarification about a sticky situation I am in.
I am originally from an EU country and live in the UK.
I have an outstanding debt of almost £ 20,000 with a major UK Bank, which I am now struggling to repay.
I own 1/3 of a flat in my country, which me and my brothers inherited from our parents. For reasons too complicated to explain, we cannot sell the property at the moment, however we fully own it 1/3 each.
In case I was made bankrupt, or filed for it, or I died, could the bank repossess that property abroad ? If yes, in which amount of equity ?
Could they force the sale of the property to recover the debt ?
Thanks for any help you can give me.

pensions2cash

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Re: Debt and property abroad
« Reply #1 on: Mar 14, 2011, 10:51:36 PM »
Hello Ignoffo,
 
Been a while since I posted on this site. I used to head the bankruptcy division of bankruptcy.co.uk.
 
It seems to me that your current situation is as follows.
 
1) You live in the UK - and thus it is your main port of interest. I am assuming that you have been living here for more than 3 months and 1 day (this is the restriction that you must prove to be able to go bankrupt)
 
2) You have £20,000 of debt (or more maybe), mainly with 1 creditor, a major UK bank.
 
3) You own 1/3rd of a flat that you cannot sell. This property is based abroad.
 
4) The property is obviously in positive equity.
 
 
_______________________
 
Answers.
 
1) If there is any paper trail at all leading to that property abroad, then yes, they could force sale.
2) If you do not disclose the property abroad, and they find that you failed to disclose it, you could be placed into a bankruptcy restriction order.
3) You might be lucky, they might just place a charging order on the property instead of forcing sale. However... the effective outcome is the same, you would lose all of your positive equity in the house. (i.e 1/3rd).
4) If the house was sold, the remaining 2/3rds of positive equity after sale would be distributed to your other kin.
5) If you were forced into bankruptcy, this could indeed happen.
6) If you died... I doubt severely that the house would be repossessed, as the mortgage company in this instance has first charge, and they would probably not wish the house to be sold.
 
It seems to me, that bankruptcy is not the right option for you, as you have assets you need to protect.
 
Your options.
 
1) Debt Management - Work out an affordable monthly payment you can afford to pay them.
2) An IVA - This is like a serious Debt management plan. I advise against them as they very rarely have a happy ending. THOROUGHLY do your research before entering into one of these. However it is an option that you should consider.. but consider carefully.
3) Arrange a full and final settlement with your creditors. If you can get access to approx £7-8000 you could probably offer to pay the debt off at 30p in the pound. Your creditors would rather get something than nothing.
 
You may feel after I state my next statement, that this entire post was just a tout for business... but I am going to mention this as an option also as it IS an option you should consider.
 
Do some research into "Pension Backed Loans". These are loans you can take out for up to 50% of your pension.
 
In theory, if you did this... you could get the capital you needed to pay off your outstanding debtors on a debt settlement.
 
Do some research online (IF you have a private pension).
 
I hope this post was a) impartial and b) informative.
 
Best of luck.
 
Raphael Gilbert
Director
Pensions2Cash
 
 
Raphael Gilbert
Director Pensions2Cash

James Falla

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Re: Debt and property abroad
« Reply #2 on: Mar 15, 2011, 12:27:32 PM »
Hi Ignoffo
 
The problem you have is that the property is 100% owned by you and your brothers. I assume therefore that it is worth a reasonable sum and your third is worth more than the £20k you owe.
 
As Raphael has said, If you declare bankruptcy, option one is simply not mention that you have a property in your home country. Given there is no paper trail from you (ie payments from your UK bank account to anything to do with the house) it is very possible that the Official Receiver would never find it and you would get away with simply not telling anyone about it.
 
Having said that though, I would have to advise you to disclose the property. As such, option 2 is disclosing the property. However, because it is abroad, it will be costly and a big hassle for a receiver here to try to get their hands on it. At the very least they can expect a lenghty court battle from your brothers in a county where they do not understand the law and so would have to hire expensive local council, translators etc etc. There may not even be the option for a charging order in your country. Given this, depending on the value of your equity, it could be very possible that you could negotiate a deal for a  small amount of money with OR so that they do not pursue the property any furhter. This could well be far less than the £20k you owe perhaps even £5k...
 
Of course this is not guaranteed and all depends on the value of the house.
 
Alternatively you will need to discount bankruptcy and consider an alternative. My view is that if you have only one creditor you may note be able to agree an IVA. As such a debt management plan may be the way forward. An offer to settle later could then well be a possibility.
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shocksoc335

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Re: Debt and property abroad
« Reply #3 on: Mar 15, 2011, 05:33:03 PM »
You have had some great advice by Rapheal however they are right Do some research into "Pension Backed Loans". Although I think its an interesting concept?     
Supporting 'Practical Debt Advice' by Elizabeth Mc

Re: Debt and property abroad
« Reply #4 on: Jun 10, 2011, 11:25:14 AM »
Do some research into "Pension Backed Loans"...

At your suggestion I did, and found some very interesting results. (not able to post links here so you will need to put the http:// part in yourself)

Link 1: whocallsme.com/Phone-Number.aspx/02081331548

8 page long blog discussion on whocallsme.com, very interesting reading. Short version: Pension Backed Loans is product name of the Spanish property developers offering this, and they have a large number of websites promoting it passing on leads to them, all of them originating in the Bournemouth area, and the same people behind it previously found by the Office of Fair trading to have been running IVA scams had their licenses revoked. Indeed pensions2cash is also a website part of this Bournemouth network, and is mentioned in the blog.

Link 2: forums.moneysavingexpert.com/showthread.php?s=d6f41fa7b17e7198a46d43bb4817389c&t=3168094

Interesting thread on Money Saving Expert forums, where IFA's and financial experts explain why Pension Backed Loans are a bad idea.

Link 3: thisismoney.co.uk/credit-and-loans/article.html?in_article_id=534747&in_page_id=9

This is money article on how the City watchdog has issued a warning on Pension Backed Loans and investors should "avoid the scheme like the plague".


So thank you pensions2cash for asking me to research Pension Backed Loans. I shall definitely now not be getting ripped off by doing this, and would advise anyone else thinking of doing this also to first visit the above links I have provided or you could be losing a lot of money.

James Falla

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Re: Debt and property abroad
« Reply #5 on: Jun 10, 2011, 12:52:29 PM »
Interesting last post
 
I am personally not a fan of taking money out of a pension fund to pay off unsecured debt. Retirement may seem like a very long way off now (even if you are getting older like me). However by the time you are sixty plus, that £1000 per month paid to you from your pension will be very welcome I can tell you.
 
There was a study published by Scottish Widows this week (although slightly bias as they are indeed a pension company) which said that people feel they need an annual pension of c£24,000 ( ie £2000 per month). This does not sound a great deal but it is estimated that you would need a pension fund of c£400,000 to produce this kind of income. Most people are saving nowhere near enough to to get close to this.
 
All in all, if you can save into your pension, do so and do not be tempted to touch the money you have already saved particularly to pay off unsecured debt. The worse case scenario is you declare bankruptcy but if so, any money you have in your pension fund cannot be touched.
 
Debt Expert & Author
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