MABS says people will not be forced to give up cars or insurance

People will not be automatically forced to abandon their private health insurance, give up their second car or surrender a subscription to Sky Sports just because they enter a personal insolvency arrangement, a spokesman for the Money Advice and Budgeting Service (MABS) has said.

"If you are 24 and are in good health and have racked up a large credit card bill and want to be declared insolvent then absolutely your health insurance will come under scrutiny but if you are in your 60s and not in the best of health then I can't see the banks on the Personal Insolvency Service insisting you get rid of it," Michael Culloty of MABS told The Irish Times.

He also said that the while a family who had two cars and lived in an urban centre may be forced to surrender one of them another family who lived in a rural area and could show that they needed both cars would most likely be allowed to keep it.

“People are going to be asked to enter into these arrangements for a long time so they have to be sustainable and they have to be affordable. “Our view is that if there is a good case to be made for a certain expense then there will have to be a degree of flexibility shown,” Mr Culloty said.

“It will not be acceptable for people to be forced to wear some class of hairshirt. What ever agreements are reached have to be sustainable or else they will fracture.”

Mr Culloty pointed out that MABS had more than 20 years experience of helping people in financial difficulties to prepare financial statements for lenders and certain principals would be retained into the future.

“People will have to be allowed a certain amount of money each month for social activities and they will be allowed to build up some small amount of savings. If someone decides to divert some of that money into a subscription for Sky Sports then that is a value judgement that they make and I can’t see it being queried.”

He was responding to reports which claimed minimum income guidelines would be published by the head of the Personal Insolvency Service, Lorcan O'Connor, and the Minister for Justice Alan Shatter next week will force people to take their children out of fee-paying schools, give up foreign holidays and health insurance and abandon subscriptions to premium television channels.

“When it comes to income retention people will be given an allowance depending on the size of the family and their individual circumstances and once they do not go over that, I can’t see their expenditure being forensically examined,” Mr Culloty said.

He added that anyone who was struggling to make ends meet needed to do a huge amount of research into what they actually need to live as many people underestimate the amounts of money which are needed even for basic items like food and utilities.