Personal insolvency, surely this can't be intended?

wexie

So.....now that I've managed to catch my breath, lets see if I can get some (decent serious) feedback on if I've understood this correctly....

I was talking to some friends that I hadn't seen in a while. They're currently both employed in well paid jobs out in the country. Paying all their debts and the mortgage, no missed payments, no problems whatsoever. Things are tight but they didnt overextend themselves in the good days and are being what the banks would call a good risk.

So....here comes the problem, they've both reached a point in their careers where, if they want to grow, they should really move to Dublin. They've found a house that they would be able to afford, however, (like so many of us) are in negative equity on their current property. They worked the numbers (willing to downscale) and worked the numbers out so that they could afford to service the negative equity and the new mortgage within what they currently are making (moving to Dublin would most likely increase their incomes).

The bank however (despite the mortgage calculators indicating they should be graaaand....are saying no to the sale and the move of the negative equity.

So far nothing unusual (I guess). However, after having spoken to a financial advisor, he told them that the way the personal insolvency bill will most likely work they might actually be better off for one of them to 'loose' their job, apply for insolvency, go abroad for 3 years and come back and start fresh....

Surely this cant be the intended effect of this legislation? (I doubt this is the best advice they could have gotten but if they really can't get a mortgage to move it would nearly make sense, especially if they can come back after three years, start fresh and possibly by a similar house to what they want without the added negative equity?