Personal Insolvency: Will it work?

Personal Insolvency: Will it work?

The new personal insolvency guidelines will put strict spending restrictions on anyone signed up to it

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…

  • Do you think the new guidelines will work?
  • Will people want to sign up to such a restrictive scheme?
  • What problems do you envisage?
  • Is it fair to put such spending restrictions on people when other more prominent individuals are still living in relative luxury?
There are 26 comments for this article
  1. Rez at 10:14 am

    June Smyth is right. How spoilt have we become? Satellite TV is an essential nowadays is it? If you are bankrupt, not only should you get no holidays, but no satellite TV, no social life and no exorbitant luxuries until you have paid your debts. Then when you’ve actually learnt the value of money you can teach your children and we’ll all be better off. These things must be earned, people seem to just expect instant gratification now with little or no accountability. Shocking country, we have gotten exactly what we deserved.

  2. Patrick at 10:25 am

    Ah God be with the days when we had all we needed.
    The open fire in the kitchen where we sat on those hardy winters nights. The soft glow of the paraffin lamp and the flicker of the candle light.
    The few chickens to supply you know what, the pit of home grown spuds in the garden.
    Mothers homemade bread,and if you were really lucky you had your own cow in a communal pasture,and you could churn your own butter.
    Now I know all these stuck up super rich mothers
    of today, you know the ones with the big cars and houses and the negative equity and more.
    Yes the ones that have got used to living in decent modern dwellings fit for human habitation
    and not in old clay & wattle or at best cold damp mass concrete constructed property.
    Yes we all talked about heat loss and energy conversation and we put a ould coat, if ya had one at the bottom of the door an attempt to keep the gales out.
    Now I see all the modern Miss Irelands queuing at the alter or where ever waiting to be swept off their feet through the front door to Bake the Bread, Dig the Spuds,Milk the Cow,Washing by hand with the old washing board,Do the cooking,Wash the Kids, Yes all of them. And after all of that if you had a minute to your self you could bring in the wet turf, you know the stuff you helped to wheel and save in the summer, and put on a lovely fire,switch on the wireless and Jesus the battery is dead. A well just have ta read the Africa Missions or Ould again.Moore.
    Ah yes dem were the days, must put ould hot water jar in bed. I think the old head is not what it used to be, but how could it be with all the goins on about people wanting grand things.
    You know if this Government for the want of a better word gets their way we will all be out in the garden,the pasture,the bog,and with all this penal taxation thats coming about, we may very well need that spade to go dig that wattle and a good knife to cut the scallop.Now thats enough for one night, So Good Night. A well said no,7.

  3. kenny at 10:05 am

    once upon a time there was a new country where the freedom fighters became the new leaders. there was great hope in the country. The leaders said that there would be great happiness in the land. Dancing and singing and the new language would be the old language would be the old language.
    People would be free at last said the new leaders. Very soon people were not any better off, they began to leave. The leaders were secretly happy because the emigrants sent home money to the new free people. Soon the leaders ask the religious to keep the people happy. The religious at the behest of the new leaders did so. Soon there were new churches built and processions of great colours and holiness. The people were happy again. The religious soon fell by the wayside. The leaders were perplexed. What will make the people happy ? Soon the leaders solution came. Let us join our friends across the sea. They will make the people happy and in return we will give them our seas. It will be like the old times where we gave to the religious.
    Now the people were happy. Soon the leaders decided that they were infallible. They could do no wrong. The banks were their friends just like the friends across the sea and before them the religious before them. The finance minister saw that his interests were the interests of the people and gave all to the banks because he could do no wrong. Was he not the man of the people?

  4. fungibility at 1:35 pm

    Wtf? I have lived in UK for 30 years as well as Ireland and it never ceases to amaze me how backward and pathetic is the level of responsibility and debate over simple things such this in Ireland. Every other normal economy on earth has an insolvency service. Our nearest neighbour, UK, has one which is 100 times less generous than ours. Believe me I lived through the recession in UK in early 90 and it was brutal. People went bankrupt,houses repossesed, lost jobs, on a huge scale and people accepted their responsibility and got on with it and rebuilt their lives within a few years. Ditto USA. People in UK USA and Germany would drop their jaws in amazement if they really paid attention to the crying and whinging going on here. Before people say “oh but its totally different in UK Germany and USA, they have bigger stronger economies…” well I would simply say that this debilitating cultural curse we have of refusing to accept responsibility and blaming others is a large part the reason we have had such a f**ked up economy since independence. Its also a reason those with ambition and drive have left this blighted isle for the last 150 years in droves and continue to do so. The retards left in charge here know they cannot make it anywhere else, cling for dear life onto power and controlling positions throughout our society, whether it be politics, press, law, medical, business etc etc ensuring the vicious cycle continues ad infinitum.
    Time to grow up as a nation methinks.

  5. June Smyth at 11:44 am

    Well said Andrew, from one old fogey to another I am far from dementia thank God. Yes I don’t have any debts but that is because us old fogeys know the value of money. We were brought up the hard way and because of that we manage our money so much better they the youth or maybe middle aged people of today. Bad management is what is the problem. I can’t believe they are allowing holiday for people in debt. I never had a holiday untill I was 17 and paid for it myself. Now I hear you young people say I am living in the past but believe me I am not now and can afford to have the nice things in life as I didn’t squander money when it was plentiful. Health insurance is for those who can afford it not for people who are out of work. When most people took out their morgages they could afford to pay them. They still can. They feel bad because they are in negative equitity. So what. If we could all have seen what was coming we would be millionaires now. We could have sold our houses and now bought them back at half the price. We didn’t see it coming so what. Don’t cry ove spilled milk. I know a lot who have apartments in negative equitity and they rent them out and have bought houses now. The rental income is paying one morgage and the second is not as high because of the property drop. Stop moaning about poor me and get on with living but as Andrew said some of the best things in life are free. Be thankful for what you have and do not expect someone else to pay for your extravagance life style.

  6. Hostage To Banks at 10:46 am

    And how much did they spend on this then!!!

  7. Helena at 10:37 pm

    So I am presuming that the personal insolvency solutions are not ment for those in receipt of social welfare, as the allowences far exceed the social welfare allowence, and in that case other measures for these people will have to be taken.

  8. noel at 9:47 pm

    Idon’t think they will work. The permitted allowances for the different categories are so unrealisticly low! There would be no living.

  9. John Joseph mcDermott at 9:15 pm

    Will the new Insolvency Service of Ireland (ISI) make allowance for payment of the new Property tax-and proposed water taxes-when doing their sums.?

  10. anthony morton at 7:20 pm


  11. Stephan de Beer at 5:44 pm

    I have been following the debate on the personal insolvency with intrest, the first question that comes to mind is WHY? Why would you want to go insolvent in Ireland and submit yourself to the mercy (????) of the banks? The way I understand insolvency is that normally when you go insolvent, all your possessions is sold off, and the creditors share the proceeds. That is it. You are then prohibited by law to engage in credit or loans etc. After the required period you are rehabilitated, and Bob is your uncle – life carries on. Here, it seems you pay the price of an insolvency yet the banks can come back at you time and again.

    My second question is: The PIPs, these people will work with you and me for a period of 70 days whilst they negotiate with our creditors, then it’s over, they deal with the banks daily though. How long before they fall into a pattern with the banks and they just do what they know the banks will not oppose – whether it is for our best or not? What stops them from becoming “extensions” of the banks who again sets the banks intrests first and ours last?

  12. owen at 4:37 pm

    NO allowance is made for the property tax. What does the government say about that….bet that will be changed!! The burden will increase for the health service, as more will rely on it.
    The audacity of the government allowing the banks to destroy our economic life, now they want to destroy our emotional and psychological life. Were there no psychologist asked to have an imput.? People are being pushed further into the ground with no hope for the future. And this by the people who destroyed us and caused the problem in the first place, the banks, government(albeit a different one) , regulators . Who would rely on the advice of bankers when they caused the problem to start with. People must have hope and be allowed to make their own decisions. Go into insolvency and your there for life..there is no time limit for it to be removed, in fact no method of being removed is stated in the guidelines….and the banks have a veto in any case. We all know education and ambition is what will get the country going…but this scheme denies that possibility.
    Now they want to destroy peoples hopes, ambitions, mental health, having destroyed their economic life. What an absolute disgrace to allow this to happen.

  13. Andrew at 3:36 pm

    June Smyth says it so well but I expect many of the younger people who visit here will be thinking along the lines of “There goes an old fogey, over 60? must be ready for the happy land of dementia” 🙂

    No offense intended June I’m not that far behind you.

    What a generous scheme!

    I haven’t read it but heard on the infamous mid day radio show that holidays were not altogether excluded?

    No health insurance except in exceptional cases!

    Wow I haven’t been able to buy Health or Life insurance / assurance since 2007 looks like I’m already in the dark ages.

    One car if no public transport near you?

    I would love to be able to give up the car and would be happy to walk, unfortunately my 98 year old Mother is not nearly as fit as I am.

    The Holy Grail:

    No Sky or Cable TV !!!!!!!!!!!!!!!

    Haven’t had those in a long time either.

    Nobody forced me to impose such austerity on myself, I don’t owe millions or even hundreds of thousands.

    Mortgage is a little over 500 per month (in arrears) is supposed to finish in 2016 maybe with a little luck I will catch up.

    Before anyone points the finger I share a wireless broadband connection with a neighbour, so we both have contact with the outside world.

    Property tax? You must be joking.

    All that said I am far from starving, the house is comfortable, I can’t use all the saor view services in the box.

    Maybe not as well dressed as I used to be but then Penney’s clothes are not as bad as some appear to think.

    Looks like June and I are not snobs who believe everyone else should pay for our way of life.

    I suggest to many;

    Get out with the family except this time go walking, seriously you could be amazed at the sights around you.

    When you get home take a moment to thank Yourself or your God that you were fit enough to go for that walk.

    Don’t forget to be polite when the Bank Official / Lender calls you, let them know (hopefully) that you woke up this morning all fingers and toes were working, you are able to take their call and hope for a more positive call to follow when they have finished.

    There is a lot more to this life than money, relieve the stress by cutting your clothe to suit your measure.


    Another “Old Fogey”

  14. damiangibney at 3:22 pm

    not a hope in hall ,,you have nothing to live on ,you stand a better chance staying in your home fighting them in the court system ,fight back dont let them take your home away from you ,,,,you can beat them

  15. Grafter at 2:42 pm

    Omg have we lost the run of ourselves. It’s the nanny state, we took these loans out we weren’t made do this, each person must be made pay these back and the bankers and big people must be equally made to pay. I’ve had 2 mortgages I’ve had bad health I’ve lost my job 3 times. I’m just about out of negative equity and its been blood sweat and tears to get here. Noboby but me is responsible for my actions. This easy way out is a joke. The amount of money people are allowed to live off is far too much and the fact people are complaining shows their not able to manage their finances. We need to work harder and face up to responsibities and stop moaning and looking for an easy way out……

  16. Neville at 1:22 pm

    No I think it’s nothing more than legalised slavery!!!

  17. Patrick at 1:13 pm

    Yes Thats Life Jim, But not as we know it.
    It is so grossly unfair that for all the wrong reasons we shackle our most unfortunate people in this way.
    This conservative coalition government has done absolutely nothing to help the oppressed people of this country.
    The few that have had to stay here to facilitate their children s education coupled with the fact they are committed to enormous debt and can not leave.
    Correct me if I am wrong, but I have not seen the same measure of constraint applied to our much talked about Bankers and Builders.
    It has to be regarded as a terrible indictment
    of our governing bodies, that they believe this is a fair and equitable solution to a problem not of our making.
    In any event like all the other half baked schemes introduced over the past two years,ie Household charge,Septic tank,and now the house tax,Some will be forced to avail of it and others will do as they please.
    Why not just write it off and let people start paying in line with current valuation of their properties,no need to get them valued as the revenue know the values already, Dont They ?? In that way people will get their souls back, and can start to plan for holiday,pay for health
    care and all the other little perks that are necessary in living a life to the full. I do not want Mr Kenny and or Mr Gilmore telling me and my family whether we can have a holiday or not.

  18. whistling jack smith at 12:48 pm

    I see the pip advisors are likely to be the same individuals, brokers and so called mortgage advisors, who had agencies with the sub prime lenders and contributed massively to the problem of over borrowing.
    Does anyone seriously believe that people who take advantage of any of these arrangements will ever be able to have credit again?
    Every application for credit asks something along the lines of: have ‘you ever beeen declared bankrupt or made an arrangement with creditors’.
    So how can it be of long term benefit?

  19. Declan at 12:35 pm

    This insolvency legislation has been practically written by the banks. First the veto, then their grab of pensions, now making slaves of those unfortunate enough to have accepted their Tiger loans. Some Republic!

  20. June Smyth at 12:33 pm

    I’m not sure what works and what doesn’t but are far as I see people have gotten too used to the luxeries nowadays. If anyone in their sixties remembers, we never had central heating just a coal fire in the main room. A parafin heater in the kitchen before we went to school. Lino on the floor or the bedroom so when we got out of bed we stood on cold floors and had to get dressed quickly. We walked to school and mostly our food was stews and soups, fruit if we grew it in the back garden. 2 stations on TV that is if we had one. Fridge was standing milk in the sink overnight to keep it cool and only the more wealthy had a phone. Washing machines were the kitchen sink where nappies were done and hung out on the line to dry. No disposable then. Did it do us any harm. No. We grew up healthy and lived to tell the tale.

  21. paddy19 at 12:24 pm

    The ISI is already a joke.

    Only a Government quango could live in a universe where you budget an item for 10 Euros a year.

    They haven’t even the brains to round the monthly figures to the nearest euro. Everything is down to cents, personal costs € 0.78.

    See Table 3 on page 39

    I jest you not they have 3 figures for Personal Costs ….. per person…per month…

    Infants are allowed 86 cents, for schoolchildren it’s 69 cents and adults get the princely sum of 78 cents…

    3 numbers varying by 17 cents per month

    This is per person per month…..

    A yearly total of ten euro.

    Nobody who over tried to do a household accounts would claim that level of precision for a monthly budget.

    Madness, but then folks from the Department of Justice were never great at the sums.

  22. Stephen at 12:17 pm

    While I think the proposal put forward won’t work in real life, neither should everyone be able to keep their home. Just because someone bought a home at somepoint, doesn’t mean they should be allowed keep it forever irrespective of being able to pay for it or not.

    Personally I think we need something more like the UK. Surrender the assets, run through a period for creditors to work out what they need to, then start fresh. None of this work through a system for X years, then get declared bankrupt at the end of it anyway.

  23. Paddy at 12:17 pm

    Up to your neck in debt and little prospect of paying it off?
    Option 1; Plant a veg patch and earn a bit in the black economy
    Option 2; Emigrate and apply for bankruptcy
    Take your pick!

  24. aodhmar at 12:16 pm

    it is possible to live on this. i currently work part time to allow me time to start working on a personal project and for the last 3 years cut my expenditure to facilitate the drop in income. currently our household of two costs 130per week to run (excludes rent) includes upc, broadband, home phone, esb/heat, tv licence and food. (we dont do convenience food and dont shop in aldi or lidl!). cut-backs of any type are not easy when one has enjoyed a previously higher standard of living – but having a good standard of living is not all about money either

  25. PJ Hurley at 12:02 pm

    I have been following Paul Carroll on the radio and tv – he seems to be a rock of sense on the whole personal insolvency deal –

  26. Rita at 11:57 am

    No I don’t think it will work. Even if people sign up to this, the banks still have a veto and they will use it. If they had any interest in solving this problem we wouldn’t be still talking about it 4 year on. The banks will only do what suits the bank. They are what have caused the problem in the first place by (a) lending shed loads of cash for developers to purchase over priced land and (b) then they had to lend shed loads of money to the punter to purchase the over priced houses/apartments on the over priced lands so they could get their developer loans repaid and the end result is, developers have walked away and average punter pays!!!! Bernie Madoc I believe is in prison in the USA for such a scheme?

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