Selling family home and opting to rent
JOHN and Mary (names changed to protect identity) are in their early 30s, married with three children and living in Dublin.
John works as a civil servant and comes out with €2,520 a month. Mary is employed as a nurse, netting €2,780 a month. She has a long-term health issue and requires health insurance.
They have a mortgage of €400,000 on their family home, which is valued at €265,000. They also have two buy-to-let properties valued at €135,000 and €92,000 respectively, owed to different banks.
They have unsecured loans of €26,000, a credit card loan of €5,800, and credit union exposure of €12,500.
Under the deal done with the banks, the family is allowed:
* Day-to-day costs of €1,969 a month (this will fluctuate over the six years as the children's ages change).
* They are also allowed childcare costs of €1,200.
* €440 for a second car and health insurance.
The total monthly living expenses comes to €4,809, which leaves €491 (this is set to rise as there will be less spent on childcare in coming years) to service the unsecured debts.
The family decides to surrender the family home and rent a property nearby as they are overwhelmed by the level of debt and want a clean break.
They have also agreed to sell both investment properties with an estimated loss of €105,000.
The sale of the family home will crystallise a further loss of €135,000.
This will leave a total unsecured exposure of €284,000 to be dealt with in a personal insolvency arrangement (PIA).
The couple will pay €54,000 into an arrangement to be split among the creditors on an equal basis over the six-year PIA period.
At the end of the arrangement the €233,000 will be written off, if the terms of the arrangement are adhered to.