BROKE families that have no income and no assets they can sell off will not be able to avail of the new state-backed insolvency deals.
Head of the new Insolvency Service of Ireland Lorcan O'Connor revealed that these people will have no option but to declare themselves bankrupt.
Mr O'Connor's admission will further perceptions that the new Insolvency Service has been set up mainly to benefit the the professional classes, and is not for PAYE workers.
A massive controversy this week forced personal insolvency practitioner Jim Stafford to withdraw claims that middle-class professionals would be able to retain "trophy homes" even if they were insolvent.
Insolvency Service boss Mr O'Connor said the new service, which started taking applications this week, is open to everyone.
But he admitted that people with no income, other than social welfare, and no non-essential assets to sell, would be unable to get a new personal insolvency deal.
This will mean the likes of a personal insolvency arrangement (PIA), for those with mortgages and other debts, will not be an option for homeowners with no job and no investment properties to sell.
A PIA is a court-backed deal, brokered by a personal insolvency practitioner, and approved by the Insolvency Service. A PIA will last for between five and seven years, and will lead to some debts being written off at the end of the agreement.
Debt-settlement arrangements (DSA), which are for debts that do not include mortgage borrowings, will also be closed off to those on low incomes, with no large assets to sell.
And anyone seeking a PIA or a DSA will have to find at least €5,000 to pay a PIP to propose a deal to their bank for them.
But Mr O'Connor denied claims from some mortgage groups that an income of at least €3,000 a month would be needed to qualify for a personal insolvency deal.
He said: "As of now, there are a full suite of solutions available, but they won't apply to everyone. Debtors will need to bring something to the table.
"If they are on a very low income or cannot offer to sell a non-essential assets, then they are looking at bankruptcy."
But he emphasised that bankruptcy would now last for three years, instead of the previous 12.
Justice Minister Alan Shatter is due to bring in the new shorter bankruptcy term next month, and the three-year term will apply to those already declared bankrupt.
The Insolvency Service was forced this week to deny claims that accountants or solicitors would be allowed to retain ownership of "trophy homes" they couldn't afford because of their professional status.