One of the features of the new Insolvency Legislation is that in order to be eligible for a Debt Relief Notice a person’s net monthly disposable income is €60 or less. The disposable income is income after deductions for reasonable living expenses .
The Insolvency Service of Ireland will be publishing guidelines very soon about reasonable living expenses to be used here in Ireland
In England – where similar insolvency legislation has been in place for a few years – these are the guidelines they use for deciding what kind of expenditure is classed as being ‘reasonable day-to-day living expenses’?
Normal monthly expenses, would include rent or mortgage payments (which are reasonable for the area you live in and the size of your family), food, heating and lighting, etc.
Below are some examples of things that can also be treated as reasonable expenses in England
TV licence, TV and video hire
Car tax and insurance (if the trustee decides your car is ‘exempt property’ and allows you to keep it)
AA/RAC or similar membership (if you still have your car)
Membership of a professional body, needed for your job (unless your employer pays for this)
Payment under a maintenance order or Child Support Agency assessment
Mobile phone (a reasonable monthly cost)
Other expenditure items that could be considered:
Extra curricular activities for children
After school clubs
This is not meant to be a complete list, and other expenses could be considered.
What kind of expenditure would not be classed as ‘reasonable day-to-day living expenses’ in England ?
The following are examples of expenses which are likely to be disallowed (unless there are special circumstances):
Gym membership, any sports expenses or club membership
Additional pension contributions to enhance a pension
Private healthcare insurance
Money for gambling, alcohol or cigarettes
Excessive mortgage payments
Regular payments to charitable and religious organizations/tithing
Again, the list is not meant to be complete.