Bankruptcy threat ‘forcing banks to offer mortgage-holders writedowns’

Mortgage lobby group New Beginning has said that the only reason Permanent TSB has decided to offer writedowns on mortgage debt is to discourage people from entering the insolvency process.

Permanent TSB is testing a new scheme which would allow debtors to clear their mortgage debts if they sell their properties and pay off what they can of the outstanding balance. The bank will then write off the remaining debt allowing homeowners to avoid bankruptcy.

Ross Maguire of New Beginning said that the banks are terrified of people taking the insolvency route and have been forced into offering deals to homeowners.