Banks are ‘duping customers over their mortgage debts' - insolvency expert
Callous banks who seize homes are waiting until their customers get back on their feet then hitting them for more debts, it has been warned. Lenders have six years to issue recovery proceedings but the delay leads people to believe they no longer owe any money and don’t need to declare bankruptcy.
Ryan Stewart, director at insolvency practice Stewart Brown Limited, said: “This kind of tactic appears to be designed to dupe customers into believing they need not entertain the difficult decision of declaring bankruptcy in order to get on with their lives.
"It seems the banks are being very clever in that they are not initially pursuing shortfalls on mortgage debt from customers.
“This is a common theme in a number of the cases I have come across and is questionable behaviour to say the least.
“While I am in no way encouraging banks to pursue customers, the write-off of debt is necessary to boost the economy and debt forgiveness is a step in the right direction.
“Banks are not clearly showing their intentions to distressed borrowers."
The insolvency company director said many debtors feel the surrender of their property is enough for the bank to “conclude their business with them” despite an outstanding shortfall existing.
Mr Stewart added: “The banks’ inaction is giving the impression they are writing off the debt shortfalls by simply not pursuing the debts further.”
He said the banks stating that they engage reasonably with customers on a ‘case-by-case’ basis means they can examine the situation today but re-engage in the future if a person’s circumstances improve.
Mr Stewart added: “When many people who have debts hanging over them manage to get back on their feet in the next few years they could very well find themselves facing legal action over something they thought was behind them.”
“Those who take the difficult decision to declare bankruptcy now will not have that threat hanging over them, as they will be debt free and discharged after only 12 months.”