We are often dealing with people who have problems with banks and in the past we used to try to reason with the lenders and often our clients would be told ‘no’ to what we thought were reasonable and realistic plans.
With insolvency legislation now going through you can expect this to change, but the big change might not be that banks become ‘nicer’ it may be that they fight harder to have their debts honoured above other creditors, this will happen via section 63 of the new legislation where instead of going insolvent a person instead deals with unsecured debt (non-mortgage) and is allowed to keep ‘reasonable living expenses’, these ‘reasonable expenses’ can, and should include a mortgage payment, by cramming down on the credit card, credit union and money-lender debts it will give people a greater opportunity to prioritize their debts correctly.
The end result meaning many people who might stand a chance if their ‘total repayments’ were re-jigged rather than just their mortgage payments will not have to use insolvency and can opt for the lower down solution of Debt Settlement Arrangements. Just how many people will use the option of personal insolvency is unknown, but the good news is that at last we’ll have a legislative framework that gives people choices because up until now the answer was ‘extend and pretend’ – pretend it might just work out all by itself, but I can think of about 100,000 households that wouldn’t agree!
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