Thanks for the clarification Importer. Here are the relevant sections from the Act's Explanatory Memorandum.
It shows how stupid the Act really is. If I was owed money by a creditor who owned their family home outright, I would expect them to sell the home to pay their debts. If 65% of the creditors don't agree with me, I could be forced to take a debt write-off.
I would also reject any proposal which involved the creditor paying his mortgage in full while stuffing me.
I presume that in most cases, the unsecured creditors will veto any such proposal.
Section 68 makes provision for the treatment of secured creditors in a Debt Settlement Arrangement. Subsection (2) provides that a secured creditor of the debtor may not participate in a Debt Settlement Arrangement with respect to a secured debt. Subsection (3) makes clear that the provisions of subsection (2) shall not prevent the debtor or personal insolvency practitioner from liaising or sharing information with a secured creditor in connection with a proposed or existing Debt Settlement Arrangement.
Section 69 provides for the treatment of a principal private residence in a Debt Settlement Arrangement. Subsection (1) provides that a personal insolvency practitioner shall, insofar as is reasonably practicable, formulate the proposal on terms which will not require the debtor to dispose of an interest in or cease to occupy his or her principal private residence and shall consider any appropriate alternatives to such vacation. Subsection (2) sets out a number of matters to which the personal insolvency practitioner shall have regard to in relation to this section. These are the costs likely to be incurred by the debtor by remaining in occupation of his or her principal private residence, the debtor’s income and other financial circumstances, the ability of other persons residing with the debtor to contribute to the costs of remaining in occupation, and the reasonable living accommodation needs of the debtor and his or her dependants and, having regard to those needs, the cost of alternative accommodation. Subsection (3) provides that the personal insolvency practitioner shall not be required to formulate the proposal on terms that will not require the debtor to cease to occupy his or her principal private residence in circumstances where the debtor confirms in writing that he or she does not wish to remain in occupation of that residence or where the personal insolvency practitioner, has, having discussed the issue with the debtor, formed the opinion that the costs of continuing to reside in the debtor’s principal private residence are disproportionately large. Subsection (4) provides that a Debt Settlement Arrangement shall not provide for disposal of the debtor’s interest in the principal private residence unless firstly, the debtor has obtained independent legal advice in relation to such disposal or has declined to do so and, secondly, that all applicable provisions of the Family Home Protection Act 1976 or the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 are complied with.