The High Court allowed three appeals over proposed personal insolvency arrangements, overturning Circuit Court refusals and confirming the arrangements. Mr Justice Denis McDonald ruled that the ISI’s reasonable living expense guidelines must be considered, but the law does not require strict adherence in every case. A court may find that a debtor can maintain a reasonable standard of living below the guideline level where the individual evidence supports that conclusion.
The appeals concerned married couple Tadhg and Sinead Hurley, who have four children, and Michelle Phelan, who is separated and has one dependent child. Bank of Ireland opposed the Hurleys’ interlocking arrangements; Allied Irish Banks (AIB) opposed Phelan’s. The Circuit Court had refused the applications under section 115A of the Personal Insolvency Act 2012, and the insolvency practitioner appealed.
The Hurleys’ proposed arrangement would reduce their home mortgage balance to €242,000 and set payments at €829 a month. Their household income was €3,246 a month. As their children moved into secondary school, the court found their guideline living expenses would rise to €2,660.56, leaving a shortfall of €245.56 a month if they also made the mortgage payment. The judge accepted evidence that the family had continued paying €930 monthly to the bank while living below the guideline figure. He concluded they could maintain a reasonable standard of living and were reasonably likely to meet the arrangement’s terms.
Phelan’s arrangement would reduce the mortgage debt to the home’s €95,000 value, with a proposed 72-month term. She was to pay €443 monthly towards the mortgage, €200 monthly towards creditors and fees for the first five years, and €656 monthly in the final year. The court considered her €227 monthly car hire-purchase payment, which she said was needed to travel to work and take her child to school. For a period before 2020, those payments would leave her €1,279 for living expenses, below the applicable ISI guideline of €1,506. The judge found the temporary reduction reasonable in her circumstances and the arrangement sustainable. He noted that the hire-purchase agreement had not been produced and that the evidence about when it would be paid off was not fully explained, but said this did not change his conclusion.
The judge also rejected the creditors’ remaining objections, including AIB’s challenge concerning Phelan’s car and land behind her home. He found neither bank would suffer unfair prejudice: the proposed arrangements were expected to provide better returns than bankruptcy. The court’s order confirms the arrangements on their proposed terms; it does not state that the debtors have already completed them or made all future payments.