Determining Reasonable Living Expenses 1) Does the applicant have children, number of adults in household? 2) Household would not normally need a car in an urban location with adequate public transport. If public transport is not adequate, then choose a vehicle based on needs of household (not wants). 3) Childcare costs (especially at infancy and pre-

school). PIP to consider:- reasonableness of cost to be considered:- (a) hours of childcare needed, type of childcare (creche, childminder), typical cost in debtor's locality. Proof of cost needed where it appears excessive. The free year of childcare and early education (Early Childhood Care and Education - "ECCE") should be deducted. Household costs - The PIP should review:- (a) Costs to remain in current accomodation (b) Ability of other persons residing with debtor to contribute to accomodation costs (c) the reasonable living needs of debtor and dependents and the cost of alternative accomodation. The PIP may use their knowledge of the local housing market, CSO rental indices, the Private Residential Tenancies Board (PRTB) databases, the Residential Property Price Register, the quarterly Daft.ie Rental Reports and other leading property related websites advertising properties for sale or rent. 4) Special Circumstances - age, health, disabilities. Allowance to be made for reasonable costs which arise from the special circumstances. PIP may request documentation to support costs. This may also apply where a debtor has persons other than minor children that are financially dependent on the debtor (elderly relative, college-going children). It's important that people in employment are incentivised to stay in employment, hence they should be able to retain some of their earned income before the balance is used to discharge their debt. The alternative is they cease employment and rely on social welfare. The PIP would need to strike a balance between this and the demands of the creditors. In the medium/long term, creditors should do better if the debtor stays in employment.

4 Steps for PIP to follow

Debt Relief Notices (DRN's) To be eligible for a DRN, debtor's net disposable income must be €60 or less per month and assets worth under €400.

Section 110 of the Act - the debtor will not be required to make payments of such an amount that he/she would not have sufficient income to maintain a reasonable standard of living. A minimum standard of living is one which meets a person's physical, psychological and social needs. It is a standard of living that is based on needs, not wants, but it is more than survival and allows for meaningful participation in society. It should not be regarded as a standard of living for people in poverty. Private Health Insurance The Insolvency Service of Ireland (ISI) model on reasonable living expenses for a debtor availing of the reliefs under the Personal Insolvency legislation excludes the cost of private health insurance unless there is an underlying health condition and the cost of the condition outweighs the cost of the private insurance or unless the debtor's employer funds the benefit. It may also be allowed where an existing medical condition would make it difficult/impossible to regain insurance cover or where the debtor is of an age that it is reasonable to maintain the private insurance. In these cases, the PIP may retain the cost as an exceptional item and include an explanatory note in the relevant section of the application form. Home Heating The ISI model uses the average expenditures on electricity/home heating from the Household Budget Survey. Capital cost of a Car Set at €2,000.

Calculation of Net Disposable Income

Child Benefit Payments These are not to be included when assessing income for the purposes of determining eligibility for a DRN, it is deducted from the reasonable living expenses of a child. Overall Budget So long as a debtor (availing of the reliefs under the PIA) comes within the overall headline figure for reasonable living costs, the ISI will not specify what the debtor can and can't spend their money on => the debtor makes their own choices. Only where a debtor exceeds the budget will it become necessary for the PIP to look at spending by category.

The tables above are the "set costs". Added to these are the reasonable costs of housing, childcare and special circumstances to produce reasonable living expenses for the household.

The ISI guidelines have a range of Tables which would be used by a PIP (or an Approved Intermediary (AI) for a DRN) in assessing reasonable living expenses.

The ISI guidelines also include worked examples at the end of the document. Example 4 shows where the reasonable living expenses are halved in a situation where there are two adults living together and one is applying for a DRN and is being assessed for eligibility. In this example the other adult has sufficient independent income to cover the other half of the reasonable living expenses. Example 5 shows an applicant for a PIA (Personal Insolvency Arrangement) who using the Tables to assess his reasonable living expenses and comparing it to his net income suggests a monthly surplus. The PIP in this scenario will likely advise the applicant to reduce his spending to enable the PIP put forward a proposal for creditor support.