wierdbeard65

Hi,

I'm new to the forum, but have been in the USA for 30 months. I found you all while Googling for some advice about money. Threads I found on the subject mostly say "get an expert". I understand this, but where from? I will explain my situation below then if anyone knows about this stuff, please tell me. Please don't just say "get an expert". I want one!! Trouble is, where can I find someone with the relevant expertise in US / US (and, as you will see) Dutch financial law... So, a link to a good advisor would be welcome!

Ok, I am a British citizen. My wife (also British) and I own a home in the UK. In January 2008, I started to work for the Dutch subsidiary of a US company. I opened a Dutch bank account and was paid there (and paid tax there). In the Summer of 2008, we re-mortgaged our house to take advantage of a 3-year fixed interest rate that was, at the time, very attractive. This is an interest-only mortgage. I also took out a personal loan in The Netherlands.

In July 2010, I was relocated to Indiana with my family. I am on an L1 visa and hoping to get a Green Card. Following the property price crash, we have found ourselves in negative equity. At the time, it was about 30% of the outstanding debt (Mortgage just over 150,000 value then about 100,000-110,000. As a result, we placed the house with a letting agent, however even following the interest rate drop when we went variable (yep, WORST time for a fixed rate ever!!!) we are still losing at least 133 per month and the property is not going up in value at the same rate. Added to this, the tenants have started to become difficult and not look after the property. We have given them notice to quit and will need to redecorate before getting anyone else in. We are worried about the house being empty for any length of time. We are also worried that we won't be able to get the same rent again, so our loss may go up. We are also worried that, as it is an older property, we may suddenly get repair bills which we are not in a position to cover. Ideally, we want rid of it.

The Dutch Bank didn't like my move and decided they wanted their money back. After a lot of messing around, it ended up with a US law firm who have frozen interest and I am paying them under an arrangement. The debt does not show up on my US credit score.

We are now beginning to struggle financially. We under-estimated medical bills and a few other things (the story is complicated enough already!) so we are taking stock.

We need (good) advice.

We are thinking of going bankrupt in the UK and / or The Netherlands. Can we do this selectively? If we do, can the creditors pursue us in the US? Are they realistically likely to?

What about just handing the keys back to the Halifax? Our letting agent (who is also an estate agent) says the house could go on the market for as much as 140,000 which, if we got near that much for it, would only leave less than 20,000 outstanding. Are they likely to just give us an unsecured loan for that amount? How about freezing interest and letting us make some kind of arrangement to pay?

Does the fact that the Dutch bank has placed the debt with a US law firm (and we are paying it over here) mean that it is now "in" the US?

It's complicated. I need help. Anyone else been through this? What did you do? Can you recommend a good advisor?

Thanks all!

Duncan Roberts

I don't think you need a person who is familiar with UK, US and Dutch law, you need three people who know details of each one and hopefully get them to either work with each other or you will have to be the middleman. You need to know the ins and outs of each countries laws and each individual should know enough about how international issues will play into their countries law, even if they don't know the details of the foreign law.

It's probably not what you want to hear but stuff like this is way too complicated and potentially damaging to get solid advice from a forum.

wierdbeard65

Thanks, Duncan!

You are right, not what I had hoped I'd hear, but it is what I figured - I didn't expect to get advice here on my situation, but had hoped that someone could recommend specific advisors. Even if I end up with 2 (one who knows UK/US and one who knows Dutch/US) that would help.

I hear what you say, but who? Got any names / Numbers / Links?

Michael

What is the purpose of the US law firm? What are they doing to get money from you? Are they just threating you (if that is the case, just tell them to f**k off) since most states would require them to first file a lawsuit in Superior Court (can't do small claims since the amount is too large) for them to get any money and the court may take jurisdiction unless you claim that they don't have jurisdiction (normally the court doesn't have jurisdiction but may take it unless questioned by the defendant in the lawsuit). Even if the court takes jurisdiction and awards damages, the bank still can't get any money from you unless you voluntarily pay. Then the law firm would need to find your employer and bank accounts and file for garnishment and each state has different garnishment laws allowing only so much of your income to be garnished.

Also since it is a home, that is handled differently than other debts in US courts (different laws between states and is normally expensive and complicated with time restrictions for banks) so I doubt any US court would take jurisdiction. Therefore it is very difficult (if not impossible) for foreign debts especially on a home to be collected while someone is residing in the US. You could just let them foreclose and then try to collect from you in US courts but collecting is unlikely. Also since it is a foreign debt, it is unlikely to appear on your US credit reports.

Unfortunately the home is not in the US since many states are non recourse states which means you can turn in the keys at any time and just walk away and not owe the bank anything. Most recourse states also don't come after the homeowner unless they have loads of money sitting in the bank and are walking away only because the home is under water. So even in recourse states, the banks seldom go through the expense and time to collect on a shortage since even if they are awarded the judgment, people then file bankruptcy.

Cook_County

The income losses - including depreciation based on the lower of cost or market value - should be 100% deductible for Federal and State tax purposes and therefore giving you a tidy US refund each year. If you sell you'll only get $3,000 of capital losses each year to offset.

The obvious answer must be to speak with the lender first and if need be sell the place at auction to limit your losses.