New personal insolvency guidelines were published yesterday, aimed at helping to solve the problem of borrowers with unsustainable levels of debt.
While opening up to the new Insolvency Service of Ireland (ISI) could lead to those in financial trouble getting some form of debt writedown, the scheme will not be painless for those who enter it either.
The three solutions put forward – Debt Relief Notice, Debt Settlement Arrangement and Personal Insolvency Arrangement – are aimed at restoring an insolvent individual back to solvency within three to six years – without them becoming bankrupt.
However, the measures put forward by the government and the ISI mean that every cent spent will be monitored like never before with a single adult with no car permitted expenditure of €898.96 in set costs over and above any mortgage or rent payments each month.
That might seem all well and good but when the likes of food, heat and electricity are excluded from that, it is far from a luxurious amount.
Will this work though? And perhaps more importantly will people have the discipline to stick with it?
A reasonable standard of living is described by the ISI as one, which meets a person’s physical, psychological and social needs so they are not worried about people enjoying themselves.
Luxuries are automatically in question with holidays most definitely out, while satellite TV is only allowed if something else is cut out. Children will have to leave fee-paying schools while health insurance will also have to be cut.
The likes of childcare costs, for example, will also be examined on a case-by-case basis while perhaps most worryingly people could also lose their home in the end anyway.
While signing up to such a service will allow people to remain in their homes, this will only remain the case until it is deemed too big for their needs, for example when children leave.
Of course, we’ve had so-called “solutions” before so there will be those who will feel this is just another PR stunt. Past “solutions” have benefitted so few people that you could probably fit all the beneficiaries into one housing estate.
Also, how will the banks react? While Minister for Justice Alan Shatter said yesterday that it would be in their interests to get on board with the new scheme, that gives no guarantees.
Today we ask your opinion on the new guidelines. Have your say in the comments section below...
