New insolvency rules to allow €899 monthly spend for debtors
Single adult will be permitted €247 for food and and €35.73 for clothes per month
The UK does not makes its spending guidelines available to the public but they are known with the industry and, according to Mr O’Connor, the levels of expenditure in the Republic will be higher than in the UK.
“That is not to say we are being more generous because the cost of living here is higher but it does give us comfort that our figures are not off the wall.
“I could have said that an adult had a spending limit of €1,000 a month but the guidelines – which are for information purposes only – are trying to bring transparency to the process. This is a stepping stone to get unsustainable debt written-off and it is hugely positive. But again these are just guidelines and it will be for the PIPs to use them as a starting point. Debtors have been signing up to arrangement with their banks which have set expenditure too low.”
He said as a starting point “health insurance is not included” and claimed that this “was not an easy decision to make”. However he said there would be flexibility . “If you have a pre-existing condition that requires ongoing health care then that will be looked at or if you are of an age where getting insurance after allowing it to lapse would be difficult you will be allowed to retain it.”
Mr O’Connor said the figures included allowances for “social inclusion” to help people remain part of society. That has been set at €125.97 a month for an adult or €28.97 a week. There is a provision for a basic television subscriptions but Mr O’Connor denied people would be forced to surrender premium television subscriptions such as Sky Sports as part of any arrangement.
He said there would be “no micro-management of finances”.
People could see the amounts they are allowed spend each month increase as the process goes on and, according to Mr O’Connor, PIPs will be given the flexibility to allow people an additional €100 in the second year of the process and a further €100 in the third year.
He said “there are very few people in Ireland who could claim to be experts in personal insolvency” and he highlighted PIPs would have to a legal or financial background and would also require “the intangible which are the negotiating skills needed to bring opposing sides together”.
Those with a financial or legal background who have successfully completed an approved insolvency course will be able to apply to become a PIP.
“We need this to happen by June and we have been talking to various professional bodies for several months.”
The Law Society will start a course which has been signed off on by the ISI tomorrow while another course for accountants will begin in May.