This is seen as the main reason for a sharp fall in the number of official personal insolvency settlements being approved.
The banks have been accused of a “culture of contempt” for their customers because they are using legal loopholes to block debt settlement deals.
The latest figures show the number of personal insolvency arrangements (PIAs) fell by 33pc in the July-to-September period this year, when compared with the same period in 2016.
Some 433 cases are being challenged in the courts by the main lenders and vulture funds that have bought up debts.
Banks and other lenders are reluctant to agree PIAs because they mostly involve them writing off mortgage debt, despite accusations that banks over-lent during the boom. Co…