# PIAs and reasonable living expenses



## Brendan Burgess (18 Apr 2013)

*Example 5 – Conor – PIA*


This example is designed to show how these guidelines are applied in the case of a debtor who is living beyond his or her means.

Conor is employed as an accountant and takes home €4,000 a month. 
He is single and lives in an apartment which he bought in 2006 for €280,000 but which is now valued at about €160,000.
 The outstanding mortgage balance is now €258,000 and the monthly payment is €1,200. 
He also has a mortgage with an outstanding balance of €210,000 on a buy-to-let property which is unoccupied. 
Conor has a personal loan from a bank with an outstanding balance of €39,000 and outstanding balances totalling €22,000 on three credit cards. 
He owns outright a car worth €25,000. 
 His discretionary spending leaves him little money to pay his debts. He is hoping that a PIA or DSA can solve his financial problems.


Using Table 2 (One adult household, vehicle), the total set costs for the household are €1,029.83 a month. 
To this is added the €1,200 which Conor pays in mortgage payments which the PIP has assessed as reasonable having regard to the criteria on pages 11-12. 
Conor’s reasonable living expenses come to €2,229.83.

The PIP will make the following calculation:




Monthly income after income tax and social insurance contributions

||    
€4,000.00
T
o
tal set costs
 |    
€1,029.83
Mortgage – reduced payment under the proposal
  | 
€1,200.00
C
h
ildcare
 | 
None
Special circumstances|
None
Reasonable   living expenses
 |
€2,229.83
 | 
€2,229.83
N
e
t disposable income
|
€1,770.17 For Conor’s application, this means income of €4,000.00 less reasonable living expenses of

€2,229.83, giving a net disposable income of €1,770.17 a month.

  [FONT=&quot]
 [/FONT]  Conor is living beyond his means. The PIP will likely advise Conor that he will need to consider reducing his spending so as to enable the PIP to put forward a proposal more likely to achieve creditor support while keeping Conor in his home. The PIP, in formulating a proposal to Conor’s creditors, will consider Conor’s need for a car and may suggest that he should sell his car and either not replace it at all or replace it with a less expensive model.


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## Brendan Burgess (18 Apr 2013)

I don't really understand this example. 

He has a mortgage of say €280,000.  The interest on this at 4.5% would be €1,050 per month, so the mortgage is sustainable. 

He has €1700 a month or €20,000 a year to pay towards his unsecured debts of €61,000.  So they will be paid off over 3 years. 

Why is the buy to let unoccupied?  If it's sold for €100,000, he will have unsecured debts or around €160,000 which he could pay off from his disposable income. 

It would seem better that he lets the apartment. 

Not sure why he would go for a PIA.


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## Brendan Burgess (18 Apr 2013)

Hi sahd

That would make some sense, but where does it say that? 

Brendan


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