Government denies working parents will be forced to give up jobs for bank deal
THE Government has rejected claims that working parents would have to give up their jobs in order to get debt deals with their banks.
It was reported over the weekend that working parents looking to get their mortgage debt written off under new personal insolvency legislation could be told one of them will have to stay home if the cost of their childcare is too expensive for their incomes.
But this was denied by Junior Jobs Minister Sean Sherlock.|“I don't think so, that is not how I would forsee how this is going to play out,” Mr Sherlock told RTE's 'The Week in Politics'.
The new personal insolvency guidelines are due to be published in the coming week by Justice Minister Alan Shatter.
It was reported that childcare costs will form a key part of the income assessment of the household and that the use of a childminder, creche or pre-school will not be approved if a person is not earning enough to cover the cost.
As revealed in the Irish Independent last week, anyone seeking deals with their bank over debt will have to make drastic lifestyle changes under the new proposals.
Homeowners looking to write off mortgage debt will be told, for example, to drop their health insurance and sell off their second car.
New criteria setting out the living standards for people having debt written off will also force people to:
* Take their children out of private schools.
* Give up foreign holidays.
* Get rid of Sky Sports.
Up to 100,000 families are currently in arrears of at least three months on their mortgages, while the average borrower in trouble has four other debts.
The new minimum income guidelines will be issued by the head of the Personal Insolvency Service, Lorcan O'Connor, and Justice Minister Alan Shatter on Wednesday.
The official guidelines will set out what people can live on before being accepted for debt writedown deals to be overseen by the new insolvency service.
But it is understood the guidelines will also be used by banks for those being offered a long-term mortgage deal outside the new personal insolvency process.
Although the guidelines are not legally binding, banks will only do a deal with homeowners who cut their living standards in line with these rules.
Courts are expected to use them as a benchmark in any legal dispute where people cannot reach a deal with their banks.
This means that a family seeking a split mortgage -- where part of the home loan is set to one side for a period to reduce the monthly repayments -- will have to operate to the guidelines.
And although there will be an allowance for a basic TV package, such as Sky TV, the guidelines are likely to mean no Sky Sports.
But the fact that the guidelines make no allowance for a second family car and ban health insurance is set to be the most controversial aspect.
Experts said people in this country hold dearly to private health cover, with just 8.6pc of people dropping their health insurance since the financial crash in 2008. Some 2.099 million people have private insurance, 46pc of the population.