At 3pm on Friday, Jillian Godsil walked into her first meeting with her Personal Insolvency Practitioner (PIP) and left it sometime later, scratching her head.
She is broke and living on a pittance. She has debts of €1m arising from what she calls a double whammy of divorce and the failure of her marketing business. The grand family home she renovated in Wicklow in happier times was repossessed by the bank last month. It is expected to fetch a fraction of what she owes.
As she disclosed in this newspaper last Sunday, Jillian planned to apply for a Debt Settlement Arrangement in the hope of coming to a mutually acceptable agreement with her creditors by the end of the process. Last Friday, she discovered she may be too poor to even get into the insolvency process.
She has no assets and her income is less than the Insolvency Service of Ireland's own guidelines on what constitutes "reasonable living expenses".
As she discovered in talking to her PIP last Friday, she literally has nothing to bring to the table to reach a Debt Settlement Arrangement with her creditors. "I am below the poverty line. My income is below the Insolvency Service's own threshold for a reasonable standard of living," she says.
Her PIP told her that, according to the Insolvency Service, a woman in Jillian's position – a single unemployed mother of two children, aged 17 and 19, should be surviving on a minimum of around €1,900 a month.
She survives on €1,300: €200 a week in state benefit and a maintenance allowance of €500 a month. She says she continually applies for jobs but says: "I don't even get interviews. I am 48 and that is an invisible age."
So having totted up her miserly income for her PIP, he rang the Insolvency Service to seek clarification about applicants for a Debt Settlement Arrangement who simply have no money to share with creditors. According to Jillian, the Insolvency Service seemed unsure but advised her to send in her application anyway.
"It is early days and they said they will review my application. I have to see if I fall at these hurdles," she says.
Even if her application is accepted, she says, "it is highly unlikely that the banks will do a deal with me because they don't have to, and there is no money there.
"If I am rejected because I am broke, then I have two choices. I can ignore it and get judgements issued against me all over the place. Or I can go down the bankruptcy route.
"If I go into bankruptcy, well it's horrible. I mean I will be in it at least five years and I will live under a whole host of restrictions. I can't be a director of a company, and I have always been a self-employed person and I would want to start up in business again. I can't leave the country without permission. There are a whole host of restrictions."
She has had one bit of good fortune though. While others are expected to have to pay PIP fees of up to €2,000 to €4,000 and in some cases up to €20,000, Jillian is not being charged anything. Her PIP was arranged for her by the Irish Mortgage Holders Organisation, which only imposes fees on those who can afford to pay them. Jillian clearly can't.
Others may not be so lucky, she says. And those who do scrimp and save to pay a PIP may find themselves coming out the other end with their repayment plan rejected by their creditors.
"There is a two-tier process again," she says. "If you have money you can afford to go the insolvency route. It is quite scary to see I might not even get into it. And I am clearly insolvent."
debt deal reality
Struggling debtors considering an application to the Personal Insolvency Service should consider the experience of Sean, a haulier who fell on hard times during the recession.
Burdened with debts of €720,000 after his business collapsed, Sean was declared bankrupt in June, three months short of the new Insolvency Service opening for business. The Insolvency Service has taken over the management of his debt.
Until he emerges at the other side of bankruptcy in three to five years' time, all of his financial affairs are under the control of officials at the Insolvency Service, who allow him a monthly budget to live on and take the rest to repay his creditors.
Sean doesn't want to give his real name because he is lucky enough to have found a steady PAYE job and doesn't want to jeopardise it. But he's willing to flag up his own experiences for other budding applicants to the Insolvency Service.
It's no walk in the park, he warns, but the fact that he is dealing with his €750,000 debt has taken a load off his mind.
"I can absolutely say it was the start of a new era," he says. "I worried about this thing day and night."
When his business folded, he languished for several months without an income, because like most self-employed people, he didn't qualify for the dole. His land was repossessed by the banks and he handed back his fleet of trucks to the finance companies who had lent him the money to buy them. His marriage broke down and he left the family home. The mortgage, which is in his name, is significantly in arrears.
He was lucky enough to find a job that pays him more than €500 a week after tax. But he didn't have a hope in hell of paying off a €750,000 debt. He felt bankruptcy was his only option.
So in June, he was declared bankrupt, and his debts were taken under the wing of the newly formed Insolvency Service of Ireland.
Within a month, he was called in for a formal interview with two officials who "put a tape recorder in front of me", he said. "They started off with my name, my address, where I went to school, my first, second, third, fourth jobs . . . A life history."
Then it was down to the nitty gritty of his living expenses and how he could cut back on them. After much laborious itemising of his day-to-day expenditure, the Insolvency Service came back with a plan.
Sean had thought he might get away with paying back €100 a month to his creditors but the Insolvency Service proposed that he should cut his living expenses to just over €1,000 a month, with it taking €1,046 to repay his creditors.
Sean says the plan is unworkable. For instance, it allows him €20 a month for car insurance but he says the cheapest he can get is €60. He thought it was a joke when he saw an allowance of 79 cent a month on personal expenditure.
Sean claims the €2,000 plus he earns each month is rapidly eaten up by the costs of going to work each day – a 55-mile journey each way from his home in the West to his job in the midlands.
He says he spends €400 on diesel; €430 on rent; €144 on drugs for his back and other ailments; €50 a month on his GP visits – vouched for in a letter from his doctor; €60 on his ESB; another €60 on his car insurance and €500 on his car.
He doesn't drink and he doesn't smoke. As a separated man who probably isn't the best at looking after himself at home, he spends €10 on "dinner" every day and "makes do with a cup of tea" when he gets home at night. "As I treat I might have a tin of pears, if they're on special offer," he says. "I don't have a social life. There is no excess money."
Sean is appealing the living expenses set for him through the Insolvency Service's appeals system. But the financial plan it comes back with is the one he'll have to live by.
Even if the family home is sold, his interest in it has effectively passed to the official assignee. Such are the realities of living under the rules of bankruptcy.
Despite the hardship, he plans to see it through. "I can carry on with it and hopefully I will be discharged in three years," he said. "I look at this as a big weight off my shoulders. I can talk about it. I am not ashamed of it. We figured that the best way forward for me was to get the bankruptcy in. It seemed to be the right way to go. I'd say I have done the right thing."
To others in financial trouble, he has this to say: "Sort it out. Go to see someone. Because if you don't, it will get on top you."
For a directory of Personal Insolvency Practitioners and advice on how to choose one, go to www.findapip.ie.