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Reasonable living expenses
From Insolvency Service of Ireland
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The ISI believes that you are entitled to a reasonable standard of living while you address your debt problem. If you tackle your debt using one of the ISI’s solutions, there is a reasonable standard of living that you are entitled to which allows for expenses such as food, clothing, health, household goods and services, communications, socialising, education, transport, household energy, childcare, insurance and modest allowances for savings and contingencies.
The figures used in these guidelines have unique application to personal insolvency and are not intended to be used for purposes other than the stated purposes of these guidelines under the Personal Insolvency Act.
Guidelines on a reasonable standard of living and reasonable living expenses
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The ISI is required by section 23 of the Personal Insolvency Act 2012 to prepare and issue guidelines as to what constitutes a reasonable standard of living and reasonable living expenses.
Under the model developed by the ISI, reasonable living expenses are the expenses a person necessarily incurs in achieving a reasonable standard of living, this being one which meets a person’s physical, psychological and social needs.
The costs attributed to a household are termed ‘set costs’. To these are added the reasonable costs of housing, childcare, motor vehicle insurance and home insurances (where applicable) and special circumstances where these arise. This produces the total for reasonable living expenses for a given household.
The guidelines are intended to give direction to Approved Intermediaries and guidance to Personal Insolvency Practitioners in assessing, for relevant provisions of that Act, what may be considered ‘reasonable’ in the context of a standard of living and living expenses.
| Household Composition | 1 |
| Housing | 2 |
| Childcare | 3 |
| Motor Vehicle and Home Insurance | 4 |
| Special circumstances | 5 |
Set costs can be found by looking up the table contained on pg. 8 of the guidelines and finding which best fits the situation of the applicant based on household composition and on the need of the household for a motor vehicle. The set costs of a household are compiled by totalling the costs for each individual in the household.
Housing can also be a significant expense. In considering what constitutes a reasonable and sustainable accommodation expenditure in an individual case, the Approved Intermediary or Personal Insolvency Practitioner should assess the rent or mortgage payments taking into account the factors outlined in the guidelines.
A significant expense arises where paid childcare is needed, particularly at the first two stages of childhood i.e. infancy and pre-school. Where childcare costs are paid they are added to the total for set costs. The Approved Intermediary or Personal Insolvency Practitioner should assess the reasonableness of these expenses taking into account the factors outlined in the guidelines.
In response to feedback from the 2021 public consultation on RLEs, the ISI decided to expand the building blocks constituting RLEs through the removal of ‘motor vehicle and home insurances’ from the set cost category into a new standalone category. This category will be used to reflect the actual costs of motor vehicle and home insurances where applicable.
The differing needs of persons, having regard to matters such as their age, health and whether they have a physical, sensory, mental health or intellectual disability can be accommodated by a debtor specifying reasonable costs which arise as a consequence of ill-health, age or disability under this category of special circumstances. This category may also be used where a debtor has persons other than his or her minor children financially dependent on him or her, such as where the debtor is contributing financially to the care of an adult dependent such as, for example, an elderly relative or a college-going child.
In accordance with Section 23 of the Personal Insolvency Act, the Insolvency Service of Ireland (ISI) has issued guidelines as to what constitutes a reasonable standard of living and reasonable living expenses (RLEs) effective from 17 October 2023.
Under the section 23 guidelines on a Reasonable Standard of Living and Reasonable Living Expenses, child benefit has already been deducted from living expenses of a child. This is done on the basis that child benefit payments are intended to be spent on a child. Failure to disregard child benefit payments from income of the debtor when preparing a proposal will effectively result in overstating the amount the debtor has available from which to make payments to creditors; the debtor will appear to have income despite the fact that this money has already been factored into the calculations of the expenses per child.
Calculate your household’s monthly Reasonable Living Expenses.