The publication of Personal Insolvency Guidelines yesterday has been met with criticism and dismay in many quarters. While FLAC tentatively welcomed this as a step forward in a process, for those who desperately need to resolve debt issues, others, including the St Vincent de Paul, have been openly critical of the guidelines, calling them draconian.
Restricted income is a trade off in order for debt to be written down, however, the level of frugality the guidelines recommend would have impressed Eamon de Valera. The tight restrictions in this untested scheme are unrealistic and will leave people living hand to mouth for years. Most debtors are in pain already to inflict these long-term restrictions on them suggests that there is more blood to be squeezed out of this stone.
The guidelines allow €899 monthly spend for a working single person, there is no figure for families in the document. Amongst the recommended monthly spending categories are: €48.87 for electricity, €57.31 for heating, €31 for health and medical costs and the bizarre item of €24.50 for education/training. The guidelines also make a number of recommendations including giving up health insurance, selling the car, cancel the holidays and sell the house and move to rented accommodation.
The reaction from many people has naturally been one of outrage. The difference in the treatment of those bankers who caused the crisis and ordinary people is glaring. When millionaires can escape or simply move to another jurisdiction or have huge debts written off so the taxpayer could inherit their debts. The same rules do not apply to the ordinary Joe soap.
The irresponsible lending policies of bankers and their refusal to discuss reasonable debt restructuring is the real cause of this debt crisis. Yet again the banks are protected, not only that, but they are given a veto over all arrangements while the debtor is stigmatised and put on a public database. People who have worked for years are treated like criminals and there is more to come as the government move to allow for an increase in house repossessions in the coming months. People need to get organised and active against this system, which is intent on maintaining the narrow interests of bankers over the wider interests of society.