Struggling debtors
considering an application to the Personal Insolvency Service should consider
the experience of Sean, a haulier who fell on hard times during the recession.
Burdened with debts of
€720,000 after his business collapsed, Sean was declared bankrupt in June,
three months short of the new Insolvency Service opening for business. The
Insolvency Service has taken over the management of his debt.
Until he emerges at the
other side of bankruptcy in three to five years' time, all of his financial
affairs are under the control of officials at the Insolvency Service, who allow
him a monthly budget to live on and take the rest to repay his creditors.
Sean doesn't want to give
his real name because he is lucky enough to have found a steady PAYE job and doesn't want to jeopardise
it. But he's willing to flag up his own experiences for other budding
applicants to the Insolvency Service.
It's no walk in the park, he
warns, but the fact that he is dealing with his €750,000 debt has taken a load
off his mind.
"I can absolutely say
it was the start of a new era," he says. "I worried about this thing
day and night."
When his business folded, he
languished for several months without an income, because like most self-employed
people, he didn't qualify for the dole. His land was repossessed by the banks
and he handed back his fleet of trucks to the finance companies who had lent
him the money to buy them. His marriage broke down and he left the family home.
The mortgage, which is in his name, is significantly in arrears.
He was lucky enough to find
a job that pays him more than €500 a week after tax. But he didn't have a hope
in hell of paying off a €750,000 debt. He felt bankruptcy was his only option.
So in June, he was declared
bankrupt, and his debts were taken under thewing of the newly formed Insolvency
Service of Ireland.
Within a month, he was
called in for a formal interview with two officials who "put a tape
recorder in front of me", he said. "They started off with my name, my
address, where I went to school, my first, second, third, fourth jobs . . . A
life history."
Then it was down to the
nitty gritty of his living expenses and how he could cut back on them. After
much laborious itemising of his day-to-day expenditure, the Insolvency Service
came back with a plan.
Sean thought he might
get away with paying back €100 a month to his creditors but the Insolvency
Service proposed he should cut his living expenses to just over €1,000 a
month, with it taking €1,046 to repay his creditors.
Sean says the plan is
unworkable. For instance, it allows him €20 a month for car insurance but he
says the cheapest he can get is €60. He thought it was a joke when he saw an
allowance of 79 cent a month on personal expenditure.
Sean claims the €2,000 plus
he earns each month is rapidly eaten up by the costs of going to work each day
– a 55-mile journey each way from his home in the West to his job in the
midlands.
He spends €400 on
diesel; €430 on rent; €144 on drugs for medical ailments; €50 a
month on his GP visits – vouched for in a letter from his doctor; €60 on
his ESB; another €60 on his car insurance and €500
on his car.
He doesn't drink and he
doesn't smoke. As a separated man who probably isn't the best at looking after
himself at home, he spends €10 on "dinner" every day and "makes
do with a cup of tea" when he gets home at night. "As I treat I might
have a tin of pears, if they're on special offer," he says. "I don't
have a social life. There is no excess money."
Sean is appealing the living
expenses set for him through the Insolvency Service's appeals system. But the
financial plan it comes back with is the one he'll have to live by.
Even if the family home is
sold, his interest in it has passed to the official assignee. Such
are the realities of living under the rules of bankruptcy.
Despite the hardship, he
plans to see it through. "I can carry on with it and hopefully I will be
discharged in three years," he said. "I look at this as a big weight
off my shoulders. I can talk about it. I am not ashamed of it. We figured that
the best way forward for me was to get the bankruptcy in. It seemed to be the
right way to go. I'd say I have done the right thing."
To others in financial
trouble, he has this to say: "Sort it out. Go to see someone. Because if
you don't, it will get on top you."
By F Meehan
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