Your queries answered by DOMINIC COYLE

How will my loan arrears be affected by insolvency bill?

I have a mortgage with Permanent TSB but have run into trouble. I was in a relationship at the time we bought the house, but that has since broken up and I am carrying the full bill.

I am employed but cannot afford all the monthly outgoings. I have also been falling behind in other utility bills.

So far, I have said nothing to the bank as I have been waiting for this insolvency bill. Can you tell me what will it mean for me? Am I going to be able to get out from under all this mess?

Ms AL, Dublin

You don’t say how long you have been in arrears on your mortgage but it strikes me that you have been quite foolish.

As you now know, publication of the proposed personal insolvency regime has been delayed and passage of the required legislation is not now likely until close to Christmas. Getting the apparatus of the regime in place will add to that timeline.

Even if you were only now beginning to struggle, you would need to take steps before the personal insolvency legislation kicked in.

This is particularly so because your bank will have a significant say in whether you can avail of the voluntary debt settlement arrangements in the proposed legislation.

In any case, debt settlement should be a final port of call, not the default first option. It will not be an easy out and, in any case, will affect your credit rating (ie, ability to borrow money for any purpose) for years to come.

Putting your head in the sand with the bank (or indeed the utility providers) is the path least likely to lead to ultimate amicable settlement.

The proposed new legislation, if enacted broadly in its current shape, allows for four different paths for people in financial difficulty. Leaving aside for the moment, judicial bankruptcy – which would see you exit the process in three years rather than the current 12, as long as you play fair with the court-mandated arrangements – there are three non-judicial routes being proposed.

The first two – the debt relief notice and debt settlement agreement – will not apply to people in your position as, while very useful for many people, they do not cover mortgage debt.

That leaves you looking at the final option – a personal insolvency arrangement. This is certainly no easy arrangement and the work-through time, if approved, will be six years – twice the length of time you would be constrained in a bankruptcy under the new proposals.

A second, and very relevant, condition in your case is that such arrangements will require the support of 65 per cent of your creditors. In practical terms, that means the bank must approve the arrangement.

I’m not sure on what grounds you consider a bank would be likely to agree to write off some debt on the mortgage of someone who has not even attempted to engage with them as their payments went into arrears and these arrears mounted, but I would consider it most unlikely.

The one likely good piece of news from your position is that the banks are likely to be more receptive to restructuring mortgage payments in the medium term. Doing so at least holds out the prospect for them of full repayment and, for you, of staying in your home, which is a stated goal of the Government in framing this new personal insolvency regime.

Just last week, Permanent TSB announced a wide range of restructuring options that it intends rolling out. You would be strongly advised to contact your lender with a full statement of your financial affairs and attempt to reach some sort of reworking of your current arrangements, which must be proving very stressful. One word of advice – do everything in writing, even confirming in writing the terms of face-to-face meetings.

Finally, do get in touch with any utilities where you are also in arrears. In my experience, most are open to sensible payment plans, but all are becoming more focused on cutting off people who simply won’t engage.

Do I qualify for tax relief on second house charges?

Some of my income is in the form of rent from a second house. I pay Non Principal Private Residence charge of €200 and Household Charge of €100. In doing my income tax return, are both allowable as an expense? (Otherwise this would be double taxation on this income).

Mr SK, Dublin

As letters start to go out this week for those not paying the household charge, you at least have the comfort of knowing that you are compliant with the law.

Anyone owning property is required to pay the €100 household charge per property – regardless of how hare-brained the scheme as presently constructed is. One can only assume it was intended as a data collection exercise to shape a proper future property tax, but for now it’s an obligation.

You’re also required to pay €200 annually for every property you own outside your main family home – or principal private residence.

Neither is allowable as an expense against rent. This is a specific stated feature of the legislation in regard to each charge.

Most likely it reflects the need of the State to raise money – allowing offsets against income from rent or otherwise would only defeat the purpose.

This column is a reader service and is not intended to replace professional advice. Please send your questions to QA, c/o Dominic Coyle, The Irish Times, 24-28 Tara Street, Dublin 2, or to dcoyle@irishtimes.com. No personal correspondence will be entered into.