The Government has launched their new personal insolvency service, which will see new arrangements for overburdened borrowers to reach agreement with their creditors.
Applications for the new service will commence by the end of June.
The new personal insolvency guidelines say people who enter arrangements should not expect to live in luxury or at a subsistence level.
Details of the scheme – under which there will be three options depending on the amount of debt involved – were published this afternoon.
There will be a number of strict conditions for people who avail of the service – depending on a household’s composition and access to public transport.
Individuals will be given a budget of €247 per month for food, €31 for healthcare, €35 for clothing and almost €29 per month for socialising.
According to the guide a reasonable amount of money will be allocated for spending on childcare or mortgage repayments – depending on circumstances.
The Justice Minister Alan Shatter said the Insolvency Service of Ireland will not deprive people from continuing in employment.
“The guidelines on reasonable expenses provide an essential defensive shield to ensure that neither financial institutions nor other creditors attempt to provide debtors of funds they truly need for reasonable household family expenditure, he said.
“Or indeed deprive debtors in employment from benefitting from continuing employment.”
A website and phone number for debtors will also become operational today. The address for the new service is www.isi.gov.ie and the organisation’s number is 076 106 4200.
In the coming weeks personal insolvency practitioners will be licenced. These will effectively negotiate deals between lenders and borrowers.
The guidelines include indicators of the amount families will be allowed to live on once they enter into state-approved Personal Insolvency deals.
The three different debt solutions will depend on the amount of debt involved, individual circumstances, whether there is a mortgage, and whether the debt is secured or unsecured.
The Debt Relief Notice (DRN) is for debts up to €20,000; the Debt Settlement Arrangement (DSA) is for unsecured debts of no limit; and the Personal Insolvency Arrangement (PIA) is for unsecured and secured debt.
The Insolvency Service will be in a position to begin accepting applications at the end of June.
”The three new debt solutions available provide certainty for those crippled with unsustainable debt and will help restore people who are insolvent to solvency in a fair, transparent and equitable way,” commented Minister Shatter.