There are several Debt Solutions available in Ireland which can help people address their unaffordable secured and/or unsecured debts. If you’re experiencing financial difficulty and thinking of entering into one of these solutions, a debt advisor or PIP (Personal Insolvency Practitioner) will carry out an assessment with you, which involves reviewing your household situation, your income, expenses, debts and any assets. The assessment will determine what you can afford to pay towards your debts and if you are eligible for any of the solutions.
In order to make sure that your monthly expenses are realistic, fair and reasonable for both you and your creditors (the people you owe money to), the Insolvency Service of Ireland (ISI) have released up to date guideline figures that ensure you will have a reasonable standard of living during any period of Insolvency. These Guideline figures are referred to as “Reasonable Living Expenses” or RLE’s. This article explains RLE’s in more detail.
What are Reasonable Living Expenses?
RLE’s are estimated costs that are associated with maintaining a reasonable standard of living in Ireland. These expense figures cover all essential expense items for any household, such as housing costs, food, utilities, clothing, transport, healthcare, childcare, recreation and education etc…
The purpose of RLE’s is to ensure that individuals and families have access to the necessities required for a decent quality of life, both physically and mentally. RLE’s also help a PIP determine exactly what solution might be suitable for you.
Your RLEs are deducted from your monthly household income to show the PIP what income is left over to pay your creditors in an arrangement, in a sustainable way that is suited to your means.
RLE’s consist of three main categories:
- Set Costs which include necessities such as food, clothing, transport, utilities and socialising as well as other categories which the ISI have identified as necessary for a reasonable standard of living.
- Other Costs which include costs of items of varying amounts between different households, such as Housing costs, additional vehicles, childcare costs and various types of insurance.
- Special Circumstances which might cover costs for people in relation to needs because of their age, health needs, or if they have a disability. For example, there might be a requirement to care for an elderly relative who is financially dependent or there might be a child that is attending college…
RLE Set Costs: Household composition
You might wonder how the set costs are calculated. The ISI use a model that has conducted extensive research, focus groups and separately determining what people need to achieve a reasonable standard of living. The ISI model allows reasonable set costs for food that is nutritionally balanced, clothing, personal care, health, household goods and services, communications, social inclusion and participation, education, transport, energy, insurance and modest allowances for saving and contingencies. The model is based on the VPSJ (Vincentian Partnership for Social Justice) model but is not identical.
RLE set cost figures vary according to the type of household scenario and apply appropriate figures according to each. For example, a couple with children and a car will spend more on set costs in a month than a single adult with a car. The categories determine what the expense amount will be for set costs are:
- How many adults are in the household?
- How many children are in the household?
- What ages are any children in the household (different ages require different needs financially)?
- What type of transport does the household use?
- There is also an additional adjustment for any 3rd and 4th Children. If there are more than 6 children, additional expenses can be placed in the special circumstances category.
If you are struggling financially and would like an idea of the budget that you could be allocated, if you were to pursue an Insolvency solution, click here to work out your own RLE expenses.
For more information on the RLE guidelines and the Insolvency Solutions available to help you deal with your secured and/or unsecured debts, get in touch on 01 247 88 99 or fill in the form below and we will contact you.