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, Christmas etc.
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.

www.mabs.ie/

www.dataprivacy.ie/2b.htm

www.oasis.gov.ie/personal_finance/irish_credit_bureau.html

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