Need some advice on UK reach to Ireland.

Blub2k4

Hi guys I need some advice for a friend who came to me recently quite distressed about their finances. They have a relatively minor amount (25k€ish) of money borrowed in the UK and some of the loans are in default, they do intend to pay them off but what is killing them is the exchange rate and the fact that there is no easy way to transfer money to the UK and it takes ages and is not on direct debit.
In any case I was trying to reassure them and say that in any case they live in Ireland and the UK company would not yet have a system in place to cause them a lot of problems in Ireland.
Does anyone know if this is correct and in how far the credit agencies etc have integrated their systems EU wide and what legal recourse would they have in Ireland considering they are an english company and the account address is in Ireland?

Thanks to anyone who can help on this one as the person is very upset and I just want to be able to reassure them and lighten the doomsday scenario they have dreamed up for themselves.

Genghis

I would say they need to contact the lender in the fiorst instance (though they sound scared, so maybe the equivalent of MABS in UK, or even MABS here).

The bank / lender will be more understanding if they say 'lokk, I've moved to Ireland, I acknowledge the debt and I intend to pay you back this way ...'. Then agree an amount to pay back (which might be less than the original repayment, but obviously over a longer period of time), and set up the direct debits.

Re: Direct debits taking longer - of course they do. But if you set them up to go on a particular day of the month, then the money will always hit the UK account on the same day - thats all banks want - regular payments.

A final option is to roll-over the debt with an Irish loan if their move here is permanent.

Blub2k4

Genghis wrote:

I would say they need to contact the lender in the fiorst instance (though they sound scared, so maybe the equivalent of MABS in UK, or even MABS here).

The bank / lender will be more understanding if they say 'lokk, I've moved to Ireland, I acknowledge the debt and I intend to pay you back this way ...'. Then agree an amount to pay back (which might be less than the original repayment, but obviously over a longer period of time), and set up the direct debits.

Re: Direct debits taking longer - of course they do. But if you set them up to go on a particular day of the month, then the money will always hit the UK account on the same day - thats all banks want - regular payments.

A final option is to roll-over the debt with an Irish loan if their move here is permanent.

The logistics question is definitely the difficult part, but do you know what they can do here, what reach does the UK credit bureau have here and what is their integration with the Irish system? It is interesting as a roll-over loan would not be possibly if the ICB does a credit check and finds UK defaults. They said they are contacting them today, this is a recent situation so they are not yet "up to the neck in it".

Genghis

Credit checks are performed, as I understand it, to catch you out if you are lying to get a loan. If your friend is upfront and says "I have moved back to Ireland; there are some loans in the UK which I would like to repay. Unfortunately, due to the upheaval associated with the move, and repayment delays between here and there, some of these are in default."

If the bank agree to back your friend, they can't very well not issue the loan when they find they are in default in that instance - of course, if there is more of a history, then it could be different.

In all cases, any bank wants their money back and will be reasonable if you show them that you will do that.

I take it the debt is with a financial institution, is it?

Genghis

To answer your question, I am not sure what reach the UK have here - probably fairly little in terms of reposession action, etc. However, £25k is not that small an amount - we are not talking a speeding fine here, and there is an extradition agreement between the countries. There may be little the bank can do alone except threaten action, but if the bank decide to pass the case on to the UK Police, then a criminal case with extradition order could happen.

Besides anything else, the UK is our nearest neighbour - would your friend really be able to live out the rest of their life not visiting the UK for fear of arrest on landing?

Victor

I think a criminal case is unlikely, but they could sue your friend in the Irish courts.

Keep in touch with the bank, give them some money, even if its €50 a week its paying the interest. If the UK bank has an Irish operation, this may make things easier.

I get the impression a lot of debt collectors in the Irish markets are originally British, so they might have seamless operations, although the Data Protection Acts and their UK equivalents may hinder operation of international credit scoring, you sign away many of these rights when you apply for the loan / bank account.

Are these government sponsored student loans?

JB64

Hi guys I need some advice for a friend who came to me recently quite distressed about their finances. They have a relatively minor amount (25k€ish) of money borrowed in the UK and some of the loans are in default, they do intend to pay them off but what is killing them is the exchange rate and the fact that there is no easy way to transfer money to the UK and it takes ages and is not on direct debit.

I don't think your friend will do much better on the exchange rate. Its very good at the moment for changing Euro into Sterling, about 68.8 this morning which in old money equates to around 88p. It has been much worse over the last few years, even down to 59p \ 60p at one stage.

dramaqueen

I know how your friend feels. When I moved back home I left student loans behind me in the UK and I really felt like I was throwing money down the drain because of the exchange rate.
Irish banks do not allow direct debits or standing orders into international accounts so it's not a matter of not knowing how to set one up (for whoever felt the need to patronise!).
That's what the AIB told me so I was having to do a transfer once a month, which cost me even more money!
It's a catch twenty two situation.
In the end I went to my credit union and explained my situation. They did make me go see MABS as I had no credit record here, they checked all my details and made a recommendation to the credit union. I took out a massive loan and paid everything off over there. My repayments are half as much as I am not throwing €300 a month down the drain in fees - as I was.
That's what I would advise your friend to do.
It's all very fine to hope that they won't get you because you're in a different country, but they will eventually come looking. The longer you leave it the worse it will be. Phone the banks in the UK and tell them what your plan is so at least they know you are trying.
Good luck. It's a great feeling when you get control back again so go for it!

Blub2k4

Thanks for that dramaqueen, it is a ****ty situation, and the money down the drain feeling is there alright.
She will be interested to see the ideas here and the intention is not to not pay but paying is getting her down as there seems no end to it and it is extremely awkward.

Mucco

It's not the exchange rate that's the problem, it's the commision charged by the banks.
You can transfer money intra-EU for the cost of a local transfer if you quote the IBAN and BIC numbers, should be on the statement. There will still be an exchange commision, so maybe try to go through a bank with UK connections - Ulster Bank/NatWest etc
xe.com supposedly does good rates, but I've never used them.

As Victor said, I doubt it'll go beyond a civil case, but there's nothing to stop the bank persuing your friend in the Irish courts.

M

LegacyUser

I've owed the bank money for a few years. It was really difficult to get arround to it. By paying of a bit at a time, I've managed to pay off a third in the space of a few months.

Our man in Havana

You might be able to settle it for pennies on the pound.

bandraoi

Tell her to set it up on direct debit on an English Bank Account. She should still have one. She should carefully note the date of the direct debit each month.

Then she should transfer money from her Irish account into her English account using the IBAN system. She should keep an eye on the exchange rate and try to transfer money when it's good. Anywhere over about 67.5 has been quite good for the last year.

About a week before the direct debit is due she should check to make sure there is enough money to cover it and if there isn't then she should just transfer enough to cover the loan unless the exchange rate is good.

Genghis

Bond-007 wrote:

You might be able to settle it for pennies on the pound.

I can't see any grounds to suggest that this will ever happen. False hope. Deal with the issue, sooner the better.

Blub2k4

It is being dealt with, she contacted them yesterday evening and a deal has been struck which lowers the repayments and spreads the term. It makes it a little more palatable and easier to deal with for her.

It is not possible to set up a DD to the UK from here at least not with BOI, so she may look to one of the banks closer aligned to the UK to see if they will do it.

<edit> it turns out that they were not yet in default, which is why they were willing to change the terms, I think they are aware that there are hard times ahead for the UK with a lot of people defaulting since interest rates are rising to offset Brownes false economy, it had to come back and bite them sometime.
Thanks for any advice given.

The Sweeper

I was going to say; the chances are your friend doesn't have a direct debit set up to the UK at all. You cannot set up a DD from a euro account into a sterling account, because a direct debit is an electronic transaction and cannot be programmed to perform a currency conversion in transit. You could try to set up a sterling account in Ireland and lodge money into it in person in the branch, so that the teller could perform the conversion at the counter, then set up an international money transfer - those take about 5 days to clear though...

Otherwise you can transfer money electronically at the foreign exchange desk. There are forms to fill though... If your friend has moved permanently to Ireland, can they take out a euro loan to clear their sterling debts and keep their debt in the same country they're living in?

Blub2k4

Minesajackdaniels wrote:

I was going to say; the chances are your friend doesn't have a direct debit set up to the UK at all. You cannot set up a DD from a euro account into a sterling account, because a direct debit is an electronic transaction and cannot be programmed to perform a currency conversion in transit. You could try to set up a sterling account in Ireland and lodge money into it in person in the branch, so that the teller could perform the conversion at the counter, then set up an international money transfer - those take about 5 days to clear though...

Otherwise you can transfer money electronically at the foreign exchange desk. There are forms to fill though... If your friend has moved permanently to Ireland, can they take out a euro loan to clear their sterling debts and keep their debt in the same country they're living in?

Some interesting options there MAJD, the euro loan option is also being considered, in fact it was the first thing I had suggested.
I think things are not looking as serious now as the new agreement makes the terms possible and changes the capital being sent over from over 600 a month to 200 which is a lot easier for her to do and leaves her some money to live on. I will tell her to check into the sterling account option, cheers.

A Dub in Glasgo

I have generally found that the APR on personal loans in the UK are a lot lower that loans in Ireland even though the ECB interest rate is lower than the BoE interest rate. How come she took out loans that see could not afford to pay in the original terms? She will obviously pay a lot more with the new arrangement.

bandraoi

If she's paying it over a longer term it makes even more sense to move the loan to Ireland, assuming this is where she plans on staying.

Blub2k4

A Dub in Glasgo wrote:

How come she took out loans that see could not afford to pay in the original terms?

It is not at all relevant to the advice or the thread, thanks for your concern anyway.

A Dub in Glasgo

This is

She will obviously pay a lot more with the new arrangement.

and this one

I have generally found that the APR on personal loans in the UK are a lot lower that loans in Ireland even though the ECB interest rate is lower than the BoE interest rate.

is relevant to the following

I think they are aware that there are hard times ahead for the UK with a lot of people defaulting since interest rates are rising to offset Brownes false economy, it had to come back and bite them sometime

but not necessarily relevant to the advice or thread either

nlgbbbblth

Doing an electronic transfer to the UK every month is not cost effective.
The 51c charge for electronic payments only applies to the eurozone.

Far cheaper to purchase a sterling bank draft every month (€3.81 commission) and post it over.

lostinsuperfunk

Your friend's situation is difficult. The easy approach (in terms of managing the repayments) is to take out a euro loan here at Irish interest rates for the full amount of the UK debt, if any Irish institution will advance such a large amount for this purpose. Also, I don't know how Irish interest rates compare to UK rates at the moment, and this is worth considering.

It may be cheaper to maintain the loan in the UK and transfer money from here. Once your friend has some cash built up here, she could investigate using a currency broker to transfer the money (see here), to a sterling a/c. Brokers usually offer better rates and more flexible terms than banks for large amounts (e.g. more than a couple of hundred euro). Something to keep in mind with this approach is that she will be exposed to exchange rate fluctuations. If the euro falls against sterling, then her repayments will go up.

Approach #1 is more easily managed, and immune to exchange rate fluctuations. Approach #2 may be cheaper but carries a risk in the longer term.