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Families told to live on €20 a day as controversial debt deal guidelines unchanged

CONTROVERSIAL guidelines on what people who get a state-approved debt deal can live on have been cleared to be launched this week.

The Cabinet was shown the controversial guidelines at its weekly meeting yesterday, but there is no requirement for the measures to be approved by ministers.

The guidelines are set to remain largely unchanged from those revealed previously in the Irish Independent when they are issued tomorrow.

No figures have changed – meaning a family with two adults and a child in primary and one in secondary will be told to live on €20 a day if they are having debts written off under the new personal insolvency rules. The restrictions are to be issued by the new Insolvency Service as it prepares to offer new deals to consumers.

The highly controversial childcare aspect of the guidelines has not been altered, despite sustained criticism of the measure. A second earner will still be told to give up work if what they are paid does not cover the cost of childcare.

But in a minor adjustment, the final version of the guidelines will state that childcare arrangements, that are loss-making, could be kept in place if they were short term and an economic rationale can be advanced.

This would mean that a family will be allowed to keep the child in a creche if the child is within a year of attending primary school, or the second earner has a prospect of promotion.

This is in line with comments by Taoiseach Enda Kenny in the Dail last month, when he said that those seeking a deal on mortgages and other debts would not necessarily have to quit work if childcare costs were higher than pay.

That came after Transport Minister Leo Varadkar sparked controversy when he suggested women might have to give up their jobs if their childcare costs were more than they earned.

"I know one or two women who probably don't make very much money at all from working, but they do it to keep their position on the career ladder," he said. "But if you can't pay your mortgage as a result, or buy your groceries as a result, then that is something that needs to be taken into account in any insolvency arrangement."

An attempt has been made to soften the blow by stressing throughout the 55-page document that the details are guidelines only, and not mandatory.

But the guidelines will still come down against people having health insurance. Health insurance is seen as a luxury for those who enter a five to seven-year arrangement to pay off what they can, and get the rest written off.

But there will be some flexibility allowing those with serious health issues to retain a low-cost health plan.

Since the details of the new guidelines were first revealed in this newspaper in March, advocacy groups for those in mortgage arrears and opposition politicians have criticised them as overly harsh.


But it is understood that Justice Minister Alan Shatter and head of the new Insolvency Service, Lorcan O'Connor, take the view that the rules will have to be harsh to ensure that those getting mortgage and other debt forgiveness is "earned".

Legislation putting the new service into force was only enacted at the end of last year. It has just moved into its offices near the Phoenix Park in Dublin and has had to draw up detailed regulations for personal insolvency practitioners (PIPs), who will negotiate with banks on behalf of indebted consumers.

A website and a helpline will also be issued with the reasonable standard of living guidelines and the new regulations for PIPs.

Irish Independent