Banks are losing millions of euro as more people are choosing to go bankrupt, it has emerged.
The number of people with mortgage debt they are unable to repay who chose bankruptcy doubled to 100 last year.
Banks lost two-thirds of the mortgage debt in these cases, as they are forced to write off most of the money they are owed.
New figures compiled by Waterford-based personal insolvency practitioner Mitchell O’Brien show that AIB was the biggest loser.
His analysis of the figures shows that banks would lose far less if they agreed to formal personal insolvency arrangement (PIA) deals that would keep people in their homes, but also see some of the debt written off.
Instead, heavily indebted mortgage holders were opting for bankruptcy where most of the debt ended up being written off.
Mr O’Brien said the number of people choosing bankruptcy is up.
“What is surprising is that banks continue to suffer losses of 66pc on mortgage loans in bankruptcy when there are alternatives that would lessen these losses and keep families in their homes,” he said.
Article Source: http://tinyurl.com/kbwqb42
