Cheval’s ‘Rehabilitation Bridge’ product is designed to provide short-term finance to those wanting to halt court proceedings and to clear borrower debt.
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The interest is charged at 1.45 per cent per month, retained by Cheval, and is available with a one-month minimum term. The firm will lend up to 70 per cent loan-to- value against an owner occupied property, with the maximum loan set at £350,000.
If bankruptcy proceedings have already begun against the borrower, Cheval confirmed the product would prevent the damaging ongoing consequences of being declared bankrupt, which would include loss of assets, poor credit rating and difficulty in obtaining future prime mortgage finance. The product could also be used by bankrupts to settle with creditors and annul an existing bankruptcy order.
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Mark Posniak, director of sales and marketing at Cheval, said: “There has been a relaxation of attitudes towards bankruptcy in recent years, but the fact remains that it is an extreme step to take. Many people do not realise that assets seized because of bankruptcy are not returned and mortgage lenders are entitled to enforce their security even when the bankruptcy is discharged.”
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Adam Stuttle, director of the Debt Advice Portal, said: “It is difficult to decide whether this is good or bad as it all depends on personal circumstances. Some may see a windfall as beneficial, while others won’t want to take on more debt.”
