Key Post Summary table of Reasonable Living Expense from the Insolvency Service

Brendan Burgess

Brendan Burgess

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[broken link removed] Updated June 2013

Summary of Schedule 1 - Page 36

Car necessary for work

||Set costs|Infant|Pre-school|Primary |secondary|3rd child|4th child

1 adult, no kids|Table 2|€1,045
2 adults, no kids|Table 8|€1,473

1 adult, kids|Table 4|€1,091|€242|€66|€207|€420|€11|€43

2 adults, kids|Table 6|€1,408|€242|€66|€207|€420|€11|€43

No car
||Set costs|Infant|Pre-school|Primary |secondary|3rd child|4th child
1 adult, no kids|Table 1|€ 933
2 adults, no kids|Table 7|€1,496
I adult, kids|Table 3 |€ 940|€242|€79|€219|€432|€11|0

2 adults, kids|Table 5|€1,360|€242|€79|€219|€432|€11|0

Note in relation to Child Age Groups
For the purposes of these guidelines:
infant means a child between the ages of 0-2 years old inclusive,
preschool means a child three years of age
primary school means a child between the ages of 4-11 years old inclusive
secondary school means a child between the ages of 12-18 years old inclusive.
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If you have a college-going child financially dependent on you, you can claim under Special Circumstances


Need for a car:
The household will not normally need a car where the applicant lives in an urban location
with adequate public transport links. Where public transport is not adequate to meet the needs of the household, the AI or PIP should choose the vehicle option based on the needs of the household (needs, not wants). A car will be required where a debtor needs it to travel to and from work. Where a car is not included, the ISI model includes costs associated with the use of public transport.
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3. Childcare costs

A significant expense connected with employment arises where childcare is needed, particularly at the first two stages of childhood i.e. infancy and pre-school.
Under the ISI model, childcare costs are brought in under ‘other costs’. This means that reasonable costs incurred for childcare – as with housing costs - are added to the total for set costs to produce the final figure for reasonable living expenses.
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Presumably this means that if one parent is not working, there would be no childcare costs?
 
Example

John and Mary have two children at Primary School and a net income of €2,000 per month.
They need a car for work.

Their reasonable living expenses would be €1,743 per month before debt servicing.

Set costs| €1,408
2 children @ €165|€ 330
Total|€1,743
So they can afford €257towards their rent or paying their debts.
 
What about Child Benefit?

When doing the calculations, ignore child benefit as income and use the figure in the table as the net cost

Take a pre-school child.

Total cost per month| €372
Less child benefit| €130
net cost|€242

From Page 34
Note in relation to Child Benefit

Child Benefit is deducted from the set costs for each child. Child Benefit is paid at the same rate for the first three children in a household and the rate increases for the fourth child. This increase is accounted for by a further Child Benefit deduction in the fourth child column of the tables.
Child benefit payments are, under section 26(5)(b)(ii) of the Act, not to be included in assessing income for the purposes of determining eligibility for a DRN. On the basis that child benefit payments are intended to be spent on a child, child benefit has been deducted from the reasonable living expenses of a child. To do otherwise would effectively mean double counting child benefit in the ISI model.
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Special circumstances:

The Act contains a requirement to take account of the differing needs of persons, having regard to matters such as their age, health and whether they have a physical, sensory, mental health or intellectual disability. Given the number of possible variables, and the individual nature of physical and mental health conditions and disabilities, the ISI believes this aspect is best addressed through making allowance in these guidelines for a debtor to specify reasonable costs which arise as a consequence of ill-health or disability

The category of special circumstances may also be used where a debtor has persons other than his or her minor children financially dependent on him or her, such as where the debtor is contributing financially to the care of an adult dependent such as, for example, an elderly relative or a college-going child.
 
This thread is for a summary of how to use these guidelines

Please don't discuss any other issue in this thread.

Brendan
 
The Insolvency Service has updated their guides. The increase is around 1.5% since the first version was published.

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We are considering Insolvency but the reasonable living expenses are impossible for us ,is this a common problem and if so are the policy makers aware ?
 
It is a common problem. When the regime was first introduced in 2013, up to 70% of the people that we met were living beneath the RLE's. Accordingly, it was impossible for those people to do five year payment plans, as they had no surplus income to pay to creditors. As I have mentioned before on this forum, "lump sum" PIA's/DSA's can be a good way to go. A "lump sum" might involve the sale of some unencumbered assets, or might involve family members contributing a lump of cash.


Jim Stafford
 
rtc said:
We are considering Insolvency but the reasonable living expenses are impossible for us ,is this a common problem and if so are the policy makers aware ?
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All banks are now using these guidelines in discussing acceptable alternative repayment agreements with clients. From our own perspective the figures are not necessarily "set in stone" and some exceptions are allowed provided that there is an acceptable rationale for them. However, there is now more pressure coming on to limit the exceptions and to decline proposals that do not comply with the spending guidelines. I would recommend that anyone who is applying to a bank for a reduction in repayments should assess the guidelines for their family circumstances and how they can fit their expenditure into the appropriate budget.
 
rtc said:
We are considering Insolvency but the reasonable living expenses are impossible for us ,is this a common problem and if so are the policy makers aware ?
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I'm not clear on what you mean. How are they impossible? Do you think they are too low to live on or that they are too high meaning you have nothing left over to make payments with?
 
Child benefit payments are, under section 26(5)(b)(ii) of the Act, not to be included in assessing income for the purposes of determining eligibility for a DRN. On the basis that child benefit payments are intended to be spent on a child, child benefit has been deducted from the reasonable living expenses of a child. To do otherwise would effectively mean double counting child benefit in the ISI model.




[broken link removed]
 
The ISI have just updated the RLE's. (The previous update was January 2015. The only change appears to be the allowance for the inceased Child Benefit payments.) See link below.

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Jim Stafford
 
I note none of the examples on the ISI website covers an individual who is separated or divorced, thus living alone and paying rent for himself, but supporting wife and children by means of maintenance, mortgage contribution to family home in which wife and children still reside and various other bills/expenses related to family.

Any idea what the procedure would be here?
 
44brendan said:
From our own perspective the figures are not necessarily "set in stone" and some exceptions are allowed provided that there is an acceptable rationale for them. However, there is now more pressure coming on to limit the exceptions and to decline proposals that do not comply with the spending guidelines.
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Brendan
In a situation where both parents work and each needs a car.
One party has a daily round trip of over 200 miles.
Will that be ordinarily be accepted as a RLE?
 
Not necessarily ordinarily Outsider. However, some banks are better than others in allowing leeway where there is a good case to be made for it. Make your case when submitting your proposal and hopefully it will be accepted. If not you have the option of appealing a decline.
 
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