Brendan Burgess
Founder
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This sample scenario is designed to illustrate the features of a joint PIA. (Full story: [broken link removed])
1 . N O E L A N D C H RI ST I N A ’ S ST O RY
Noel and Christina are married with three children, twin boys aged 1 and a girl aged 3. Noel is an office worker and his net monthly income is €3,500. Christina works in retail and her net monthly income is €1,400. They own a car currently worth €4,000.
Noel and Christina bought their Principal Private Residence (PPR) together five years ago. The current mortgage outstanding is €400,000 and they are on a 25-year tracker. Their PPR is valued at €300,000. They have a total unsecured debt together of €60,000, which consists of a credit union loan of €30,000, credit cards totalling €25,000 and an overdraft of €5,000. All of their debts are jointly held and their current monthly commitments are as follows:
• Mortgage repayments - €2,002
• Unsecured debts repayments - €1,800
Their day-to-day outgoings amount to €2,500 per month. They have cooperated with their bank in relation to their PPR mortgage under the Central Bank Code of Conduct on Mortgage Arrears in relation to their home for a period of ten months, but have been unable to agree a sustainable repayment solution. Noel and Christina are unable to pay their debts in full as they fall due and acknowledge they are insolvent.
Noel and Christina meet with a Personal Insolvency Practitioner (PIP) and provide full details of their financial circumstances so the PIP can understand their financial position.
Income |€4,900
Set costs|€1,888
Childcare|€1,100
Available for debt repayment|€1,912
Mortgage |€2,002
Unsecured debt repayments|€1,800
Deficit|(€1,890)
Potential PIA for Noel and Christina proposed by PIP
Noel and Christina have revised their monthly expenditure and reduced their living expenses from €2,500 to the prescribed amount of €1,888 in accordance with the ISI Guidelines on a reasonable standard of living and reasonable living expenses.
The PIP assesses whether a change in mortgage terms or interest rate will make the mortgage sustainable. The PIP recommends a term extension on the PPR Mortgage for an additional 10 years, bringing the mortgage to 35 years. This reduces the monthly mortgage repayments from €2,002 to €1,653 a month.
The reduction in mortgage payments and living expenses frees up €259 per month for the first year of the PIA, which is available to make payments to unsecured creditors. As the children get older, the total set costs will vary. Variation can also be expected with regards to childcare costs, hence reasonable living expenses will vary during the lifetime of the PIA (breakdown of the Annual Total Set Costs is contained in Appendix C).
The repayments table in Appendix B gives a detailed breakdown year on year of Noel and
Christina’s expenses and the amounts available to unsecured creditors.
Noel and Christina’s monthly income and expenses after PIA restructuring for Year 1
Income |€4,900
Set costs|€1,888
Childcare|€1,100
Mortgage |€1,653
Available for unsecured creditors|€259Noel and Christina’s monthly disposable income, after deducting total set costs and mortgage repayments, is €259 per month for the first year of the PIA. This amount is now available to make payments to their unsecured creditors. This equates to €3,108 for the first year.
Their expenditure over the next 6 years goes up and down which results in the following repayment table:
Year |1|2|3|4|5|6|total
repayments to un secured {br}creditors net of PIP’s fees| € 2,273 | € 701 | € 8,105 | € 4,961 | € 4,961 | € 9,761 | € 30,762
Noel and Christina's position after meeting their obligations under the PIA
a) Principal Private Residence is now sustainable because: I. Unsecured debts are discharged;
II. The mortgage term has been extended to 35 years.
Noel and Christina will have repaid €30,762 of their unsecured debts at the end of the term of the PIA and the remaining €29,238 is discharged. This represents over 51% return for the unsecured creditors based on amounts outstanding at the date of issue of the Protective Certificate.
b) Noel and Christina are solvent.
1 . N O E L A N D C H RI ST I N A ’ S ST O RY
Noel and Christina are married with three children, twin boys aged 1 and a girl aged 3. Noel is an office worker and his net monthly income is €3,500. Christina works in retail and her net monthly income is €1,400. They own a car currently worth €4,000.
Noel and Christina bought their Principal Private Residence (PPR) together five years ago. The current mortgage outstanding is €400,000 and they are on a 25-year tracker. Their PPR is valued at €300,000. They have a total unsecured debt together of €60,000, which consists of a credit union loan of €30,000, credit cards totalling €25,000 and an overdraft of €5,000. All of their debts are jointly held and their current monthly commitments are as follows:
• Mortgage repayments - €2,002
• Unsecured debts repayments - €1,800
Their day-to-day outgoings amount to €2,500 per month. They have cooperated with their bank in relation to their PPR mortgage under the Central Bank Code of Conduct on Mortgage Arrears in relation to their home for a period of ten months, but have been unable to agree a sustainable repayment solution. Noel and Christina are unable to pay their debts in full as they fall due and acknowledge they are insolvent.
Noel and Christina meet with a Personal Insolvency Practitioner (PIP) and provide full details of their financial circumstances so the PIP can understand their financial position.
Set costs|€1,888
Childcare|€1,100
Available for debt repayment|€1,912
Mortgage |€2,002
Unsecured debt repayments|€1,800
Deficit|(€1,890)
Potential PIA for Noel and Christina proposed by PIP
Noel and Christina have revised their monthly expenditure and reduced their living expenses from €2,500 to the prescribed amount of €1,888 in accordance with the ISI Guidelines on a reasonable standard of living and reasonable living expenses.
The PIP assesses whether a change in mortgage terms or interest rate will make the mortgage sustainable. The PIP recommends a term extension on the PPR Mortgage for an additional 10 years, bringing the mortgage to 35 years. This reduces the monthly mortgage repayments from €2,002 to €1,653 a month.
The reduction in mortgage payments and living expenses frees up €259 per month for the first year of the PIA, which is available to make payments to unsecured creditors. As the children get older, the total set costs will vary. Variation can also be expected with regards to childcare costs, hence reasonable living expenses will vary during the lifetime of the PIA (breakdown of the Annual Total Set Costs is contained in Appendix C).
The repayments table in Appendix B gives a detailed breakdown year on year of Noel and
Christina’s expenses and the amounts available to unsecured creditors.
Noel and Christina’s monthly income and expenses after PIA restructuring for Year 1
Set costs|€1,888
Childcare|€1,100
Mortgage |€1,653
Available for unsecured creditors|€259
Their expenditure over the next 6 years goes up and down which results in the following repayment table:
repayments to un secured {br}creditors net of PIP’s fees| € 2,273 | € 701 | € 8,105 | € 4,961 | € 4,961 | € 9,761 | € 30,762
Noel and Christina's position after meeting their obligations under the PIA
a) Principal Private Residence is now sustainable because: I. Unsecured debts are discharged;
II. The mortgage term has been extended to 35 years.
Noel and Christina will have repaid €30,762 of their unsecured debts at the end of the term of the PIA and the remaining €29,238 is discharged. This represents over 51% return for the unsecured creditors based on amounts outstanding at the date of issue of the Protective Certificate.
b) Noel and Christina are solvent.