Banks to demand mothers sacrifice their jobs

Householders looking for a deal on their mortgage debt must make sacrifices, the Government has said, amid warnings that some of the restructuring rules are “draconian”.

Under Personal Insolvency Service guidelines to be announced next week, lenders can impose income and living standards limits on those in arrears.

These will include forcing them to give up health insurance, TV subscriptions, and even childcare if they enter negotiations on a debt settlement or mortgage write-down.

Fianna Fáil said it is particularly short-sighted that banks will be given the power to demand working mothers give up their jobs if their income does not cover the cost of childcare.

The guidelines state that “where a person is working and paying for childcare as a consequence of his or her employment, the cost of childcare should not exceed the income from the employment”.

Under the arrangements, agreements between banks and customers will be negotiated by State-appointed mediators.

They will undertake a four-step process, firstly looking at family composition — the number of children and adults — then examining the family’s need for a car, childcare, housing, and spending requirements for special circumstances. After this, they will devise a figure for “reasonable living expenses” with all spending considered a “luxury” being ruled out.

They will consider 15 key categories including:

*Food: Spending allowed for a healthy lifestyle and balanced nutritious diet;

*Clothing: Including footwear and accessories to take into account seasons;

*Childcare: Should not exceed the earnings of one of the parents;

*Personal care: Limits to spending on personal hygiene and grooming;

*Transport: Cost of a car allowed only where public transport is inadequate to get to work, school, or important amenities;

*Electricity and heating spending assessed;

*Health and medication: Spending allowed on medicine, visits to GP, optician, dentist; and over-the-counter medicines;

*Telephone, postage, and basic internet usage assessed;

*Education: Uniforms, books, stationary, adult education taken into account;

*Household goods: Some furniture, appliances, cleaning products are reasonable;

*Household services: Refuse collection, chimney cleaning, and maintenance;

*Insurance: Home insurance considered reasonable but car insurance only when the car is needed. Health insurance a luxury;

*Savings and life assurance will be examined;

*Sport events and cinema allowed. Holidays a luxury;

*Rent or mortgage payments taken into account.

Enterprise Minister Richard Bruton said: “It’s going to require sacrifices both from the banks in dealing with the loan overhang, but also by the individuals and families concerned.

“There are many households who are making huge sacrifices to meet their obligations and you can’t undermine the commitment of those people.”

Independent TD Shane Ross described the measures as “draconian” and said they were a sign of a “dictatorial approach” by Government.