Escape the Negative Equity trap through Mediation

by Brendan Rogan

15:06 PM, 22nd January 2019
About 2 years ago

Escape the Negative Equity trap through Mediation

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Escape the Negative Equity trap through Mediation

If you are trapped in Negative equity and need to find a solution we advocate Mediation as we believe that this is the best option not only for the clients, but also for the banks as this process saves all parties time money and distress.

It is important to note that unlike Bankruptcy or IVA – Mediation has NO adverse impact on the Credit file of the borrower post Settlement. A CREDIT SEARCH reveals that the indebtedness of the borrowers is settled in full allowing the borrower to move on with their business with a clean Credit Score.

It is always our aim during our initial free consultation meeting to promote a step plan for the clients and to reassure them that individual solutions can be promoted and achieved to settle debt matters. This first step is simply to ASK FOR HELP and we tailor a specific plan to the needs of each client. There is no generic approach.

Post instruction we deal with the Lending Institution exclusively, guide and advise the clients providing a weekly or monthly update on progress. This allows the borrower client to rest assured that a professional team ARE WORKING ON THEIR BEHALF to resolve what sometimes seems to be an impossible problem. We are hands on and proactive from instruction to conclusion.

Case Approval Results:
Recently we have had some incredible results for our clients and we achieved the total debt write-off sum of £1,249,519.57 through direct mediation with the banks and Building Societies in the second half of 2018.

Below is just a few examples of the various case matters and solutions that we have achieved:

(1)  £45,393.68 of a Negative Equity Debt Write Down

Case Matter:
An Investment property that was in significant negative equity with a leading UK Bank. The value of the property was £15,000 with a mortgage outstanding of £62,617.14.

Our Solution:
With no repayment capacity for repaying the anticipated shortfall, we proposed a consensual sale to the bank, thus achieving the best sale price for the clients and for the bank.  In agreement with the bank, the property sold for £15,000. We then proposed a full and final settlement offer in respect of the outstanding debt. Our clients were in a position to offer a full and final settlement totalling £3,000 which was accepted.

Case Summary:

  • Creditor: Leading UK Bank owed £45,393.68 (unsecured debt after investment property sale)
  • Proposed Solution: Full and final settlement proposal
  • GDP Mediated Settlement: Creditors accepted £3,000 in full and final settlement (equating to 6.66p in the £)
  • Settled: November 2018

(2) £108,419 of a Negative Equity Debt Write Down

Case Matter:
A property that was in significant negative equity with a leading UK Bank. This property had a value of £65,000 with a mortgage outstanding of £174,932. After falling into arrears, the clients were then left with little option but to seek professional advice.

Our Solution:
Upon reviewing the clients’ financial information, our team proposed a consensual sale to the bank thus achieving the best sale price for the clients and for the bank. In agreement with the bank, the property sold for £68,000.

We then proposed a full and final settlement offer in respect of the outstanding debt. Having borrowed funds from friends and family, our clients were in a position to offer a full and final settlement totalling £7,000, which would go towards the total mortgage shortfall which was £108,419 after selling costs.

Case Summary:

  • Creditor: Leading UK Bank owed £108,419 (unsecured debt after property sale)
  • Proposed Solution: Full and final settlement proposal
  • GDP Mediated Settlement: Creditors accepted £7,000 in full and final settlement (equating to 6.46p in the £)
  • Settled: October 2018

(3) £240,797 of a Negative Equity Debt Write Off.

Case Matter:
A shortfall debt matter owed to a leading UK Bank from a commercial property that was voluntarily surrendered in 2014. This property was initially purchased with a commercial loan in 2006. However, in 2008, with the onset of the economic crash, our clients struggled to maintain the loan repayments.

As the net proceeds received by the Bank were less than the property sale price, our client was therefore then solely left with a shortfall liability totalling £247,797.

Our Solution:
Upon reviewing our client’s financial information, it was obvious from the start that she had no repayment capacity for repaying this shortfall debt. It was, therefore, time to mediate with the bank directly, in which they requested a monthly repayment proposal to pay back the amount in full. However, with little or no income, this was simply not an option.

We proposed a full and final settlement offer in respect of the outstanding debt. Having borrowed funds from friends and family, our client was in a position to offer a full and final settlement totalling £7,000, which would go towards the total shortfall debt. The bank accepted our offer.

Case Summary:

  • Creditor: Leading UK Bank owed £247,797 (unsecured debt after commercial property sale)
  • Proposed Solution: Full and final settlement proposal
  • GDP Mediated Settlement: Creditors accepted £7,000 in full and final settlement (equating to 2.82p in the £)
  • Settled: September 2018

(4) £61,857 of a Negative Equity Debt Write Off.

Case Study:
A property that was in significant negative equity with a value of £67,115 and a mortgage outstanding of £123,115.

Our Solution:
Upon reviewing the clients’ financial information, with our client’s having no repayment capacity for repaying the anticipated shortfall, we proposed a consensual sale to the bank and we appointed an agent to sell the property, thus achieving the best sale price for the clients and for the bank. In agreement with the bank, the property sold for £56,000.

Following the sale of the property, it was time to mediate with the bank directly, in which they requested a monthly repayment proposal to pay back the amount in full. However, with little or no income, this was simply not an option.

We proposed a full and final settlement offer in respect of the outstanding debt. Having borrowed funds from friends and family, our clients were in a position to offer a full and final settlement totalling £6,873, which would go towards the total shortfall which was £68,730 after selling costs. The bank accepted our offer.

Case Summary:

  • Creditor: Leading Irish Bank owed £68,730 (unsecured debt after property sale)
  • Proposed Solution: Full and final settlement proposal
  • GDP Mediated Settlement: Creditors accepted £6,873 in full and final settlement (equating to 10p in the £)
  • Settled: August 2018

(5) £232,977.34 of a Negative Equity Debt Write Down

Case Study
Two investment properties that were both in significant negative equity that had a combined value of £325,000 and a combined mortgages balance of £557,500. Our clients were unemployed and living on benefits due to an accident that they were involved in.

Our Solution
Upon reviewing the clients’ financial information, as they had no repayment capacity for repaying the anticipated shortfall, we proposed consensual sales to both banks and we appointed an agent to sell the properties, thus achieving the best sale price for the clients and for the banks.  In agreement with the banks, the properties sold for a combined total of £325,000 which was just over half of what was owed to the banks.

We proposed a full and final settlement offer in respect of the outstanding debt. Having borrowed funds from friends and family, our clients were in a position to offer a full and final settlement amount of £5,000, which would go towards the total shortfall of £237,500 and the bank accepted our offer

Case Summary

  • Creditor: Two leading banks owed £237,977.34 (unsecured debt after property sale)
  • Proposed Solution: Full and final settlement proposal
  • GDP Mediated Settlement: Creditors accepted £5,000 in full and final settlement (equating to 2.1p in the £)
  • Settled: July 2018

Fee Terms & Conditions:

In accordance with our FCA permission, we have a transparent cost structure and we endeavour to agree and clarify these with our clients from the outset. We will require an initial nominal payment on account to activate our PI Cover.

In order to assist our clients financially we offer the facility of an affordable monthly payment plan. We base our cost around the projected timescales involved with their case and also the value we would be adding to their position.

This monthly retainer structure enables our clients to manage the costs incurred for the service and they can cancel the agreement at any point with one month’s notice.

This payment structure is laid out in writing to the client and is wholly transparent from the outset.  Typically the fee for this service is £3000 to £5000 per loan – subject to particular needs of the client.

If you are in a negative equity trap and need assistance please complete the contact form below and we will discuss how we can help

Contact GDP Equity Experts

Specialists in Debt Write Off or Write Downs for clients in Negative Equity

 

 


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