BANKS are doing secret deals to reduce the size of personal loans and credit card debt.
The Irish Independent has uncovered evidence of debt deals being done by a number of banks, although officially the lenders will not acknowledge any such thing.
Any deals being done are for those who have seen their incomes destroyed, or else are skilled at negotiating with their lender.
Bank of Scotland (Ireland)/ Halifax, which has now closed its operations in this market, still has a number of mortgage customers. Some of those have outstanding loans and credit card balances.
The lender insists it does not do deals with customers.
"Bank of Scotland policy remains unchanged; customers are required to repay their debt in full," it said in a statement.
But Kildare-based broker Bob Quinn of Moneyadviser.ie provided this newspaper with a letter from the bank showing that it had settled a credit card debt for less than the total amount that was owed.
The letter, from the Scottish bank, is in response to a complaint from the customer that despite settling the debt, information on the debt deal had not been updated on the records of the Irish Credit Bureau.
In the letter, signed by Hannah Caplin, complaints officer, it is stated: "An investigation has been completed into your complaint and I confirm that a final settlement payment of €5,000 was received from you on April 26, 2011."
Mr Quinn insists his client was not in financial difficulties, had not missed any direct debits or standing orders and was not in arrears on any other loans.
There was €8,100 outstanding on the credit card account, but the bank accepted €5,000, a deal Mr Quinn helped secure.
Mr Quinn said: "This is proof beyond doubt that Halifax/ BoS(I) is accepting writedowns on fully performing loans."
But despite being shown a copy of the letter, a spokeswoman for Bank of Scotland still insisted it was not doing deals with customers who are able to meet their commitments.
"Bank of Scotland will not comment on our banking relationships with customers.
"However, whenever our customers are experiencing genuine financial difficulty and unable to meet their contractual payments to the bank, then we work with them to find a suitable solution that is best for all parties, but this is done on a case-by-case basis."
And it is also emerging that AIB is willing to strike deals with customers on non-mortgage debt.
A person known to this reporter owes €50,000 to AIB which he borrowed to buy shares. Ironically, some of these shares were in AIB itself and like all the shares in domestic banks they are now virtually worthless. Initially, AIB wanted this money paid back over five years and was charging an interest rate of 9pc.
This would have proved too much of a financial burden for the borrower.
"I told them I was making a concrete and real effort but I told them there was no way I could manage to pay back the money over five years," he said.
A lot of correspondence, phone calls and meetings between the bank and the borrower ensued.
But there was one crucial difference in this case -- the borrower recorded in writing every single conversation with the bank and then emailed it to them to confirm what was discussed.
"I documented every conversation so there was a paper trail. They ended up with not a foot to stand on," he said.
Eventually, the bank buckled, and agreed to spread the repayments over 15 years as well as agreeing to halve the interest rate on the loan.
The state-owned bank will get its money back but over a longer period of time.
Inside the banks: Small businesses take them on. P38 & 39