Draconian income guidelines scaring people, Opposition says

Minimum income guidelines to be used by the Insolvency Service of Ireland must be published without delay as a series of leaks detailing how little money people will be allowed to live on if they enter a personal insolvency arrangement is causing fear among many distressed borrowers, it has been claimed.

Under guidelines which have yet to be published by the Department of Justice, families who enter an insolvency arrangement could be forbidden from taking holidays for as long as six years while a single adult will be allowed just €31 a month to cover health costs. This will have to cover the cost of over-the-counter medicines, as well as GP visits, trips to the dentist and opticians. This amounts to €373 a year, or the cost of half a crown at an Irish dental practice.

The guidelines will not be published until the middle of April but as a series of leaks over the last week have suggested that people may have to give up their jobs if their income is less than the cost of childcare while health insurance and cars may also have to be surrendered.

The latest leaks suggest that the ISI is considering allowing a single person just €29 a week for "social participation" while people who live close to a public transport network may be forced to sell their cars and be given a monthly allowance of €136 to spend on public transport.

Just over €100 will be allowed to cover all energy costs while single people will be given €20 a month to cover emergencies.

"These guidelines are far too prescriptive and go into far too much detail as to what people can and can not spend money on. I don't think it is possible to fill all families under this one umbrella," Fianna Fail's finance spokesman Michael McGrath said this afternoon.

He pointed out that a family with a special needs child or one with asthma would hit their medical spending ceiling very fast. "There are many families I know of who already only take their children to the doctors as a very last resort,” Mr McGrath said.

He suggested that the Insolvency Service would be better advised setting a level of spending for different categories of household with people given more flexibility as to how they spend their money. "The reality is that people who are looking for a debt deal will be aware they cannot live an opulent lifestyle and there will have to be guidelines."

"People will be very scared by what they have been reading,” he told The Irish Times. “We have had a series of leaks which are not without foundation and the aim of them is clearly to condition people into thinking that the insolvency service is not going to be a free-for-all and that there will be a very high price to pay," he said.

He called for the detailed guidelines to be released immediately "because the longer the leaks are allowed to continue the more it will damage the service and scare off people who should be availing of it.