Life after Debt
from MABS, the Money Advice Bureau (Ireland)
Causes of Debt
Anyone can get into debt for reasons which are many and varied and not
usually due to irresponsibility, as is commonly assumed.
Most debt problems arise when people experience changes in circumstances
which leave them unable to meet their commitments. This can be due to
the loss of a job, a birth, ill health, a bereavement, etc.
The effects of debt can be devastating to people and their families. On
a practical level, clients' liberty, their home, goods and services may
be lost or at risk. Emotionally, indebtedness can cause people to feel
ashamed, guilty, frustrated, and angry and can seriously affect both their
mental and physical health. It can also be the cause of a relationship
breaking down amongst other things.
The difficulties faced by clients visiting MABS cover a wide spectrum;
one person could owe money to the local authority, the ESB and a money
lender, another could have a highly complex combination of debts such
as a mortgage, maintenance arrears, personal loans, a car lease, court
fines and a hire purchase agreement.
Important things to Remember
Do not ignore the problem. It will not go away. Take action now. Seek
advice if necessary. Advice is free.
Work out a budget. Calculate your total income and expenditure on a weekly
or monthly basis. The MABS website (see below) have a Budget Spreadsheet
to help you to do this. Check social welfare payments etc. and seek advice
on entitlements. Be careful not to exclude any debts, arrears or credit
payments. Do not forget about occasional items such as school expenses,
Be realistic about your basic needs for food, fuel, clothing etc. Examine
your expenses and see if economies can be made.
List everything that you owe including all arrears and work out how much
you can afford to pay your creditors.
Inform your creditors that you are in difficulty. Show them your budget.
Reputable lenders will have a reasonable view if they know the circumstances.
If you have come to an agreement with creditors, maintain it without fail.
If a creditor does not accept a reasonable offer of repayment, seek advice
from your local MABS office.
Do not ignore letters, reminders or default notices.
Always attend court hearings and bring a copy of your budget.
As a general rule, do not borrow more money to pay off existing debts.
It increases your outgoings and just delays dealing with the problem.
Your mortgage or rent is a priority debt. Problems with mortgage repayments
can occur all too easily and arrears can grow very quickly. If in difficulty,
contact your mortgage provider immediately. Remember that your home may
be at risk.
Your home cannot be repossessed except by an order of the court. Lenders
prefer not to repossess: it costs them time and money but in some circumstances
have very few other options left open to them. Before legal proceedings
are considered your lender will write asking you to make arrangements
to bring your payments up to date. Be realistic with your lender and try
to put a plan of action in place which is practical to you.
Many people who experience debt problems become concerned about their"Credit
Rating".The Irish Credit Bureau (ICB) records information about client’s
payment records with the Financial institutions who are members of the
ICB. Typically, the citizen's payment profile history over a 24-month
repayment period is recorded. Information on citizens is held for five
years. The ICB does not provide a credit rating but merely supplies relevant
information to the financial institutions who themselves make the credit
decisions. The following two links will give you detailed information
on the ICB and how to access your own credit details held at the ICB.
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