Debt action plan

If you are having money problems, you may be tempted to ignore them and hope they will go away. If you find you are constantly running out of money, missing loan repayments or relying on credit to pay for your day to day spending, tackle your situation as soon as possible, before you fall into more serious debt.

Remember that getting into debt and missing repayments can affect your credit rating and make it difficult to get loans in the future. You can also be taken to court for defaulting on loan repayments.

Step 1: Make a list of all your current debts

Step 2: Make a new budget/check your entitlements

Step 3: Contact your lenders to discuss your options

What about debt management companies?

Where can you go if you have serious debt problems?

Step 1: Make a list of all your current debts

• List your debts in order of priority, starting with your mortgage or rent, and utility bills. You need to pay these first because you could be at risk of losing your home, being evicted or your gas or electricity may be disconnected.
• Then look at your other debts such as credit card debt, overdrafts and personal loans. List your debts in order of the highest annual percentage rates (APR). The highest APR loans should be paid after your mortgage or rent and utility bills.

Step 2: Make a new budget/check your entitlements

• Start afresh with our money makeover and budget planning section - this will help you work out how much you can afford to repay each week or month and how you can spread your money to get more from it.
• Make sure you are claiming all that you are entitled to. Depending on your income, circumstances and mortgage, you may be eligible for mortgage interest supplement, mortgage interest tax relief, other occupation related tax relief and more. The following sites are good starting points: Revenue, Department of Family and Social Affairs and Citizen's Information.

Step 3: Contact your lenders to discuss your options

If you are worried about your mortgage repayments, contact your lender as soon as you can to explain your situation. Have all of your facts and figures to hand - including your list of debts, rates, how much you still owe.

• Outline to your lenders how much you can afford to repay each week or month using your budget.
• Discuss options your lender may allow including: debt consolidation, payment breaks, or extending the term of your loan. This will make your loan more expensive in the long term, but it will make things more manageable for you in the short term. Read up on the options, then contact your lender immediately.
• If you have a car bought under a hire purchase agreement, find out all your options.

What about debt management companies?

Debt management companies offer debt advice or a debt management service, where they negotiate with your lenders and try to reduce your repayments. These companies do not currently require regulation in order to operate in Ireland.

Commercial debt management companies charge fees for their services. In cases where they offer or advise you to consolidate your loans, there may be other costs and the interest rate on the new consolidated loan may be high. These fees and interest rates could lead to further financial trouble for you. Make sure you read and understand all their fees before you sign any agreement with a debt management company.

Always consider all your options if you need debt advice. You can get free, independent and confidential debt advice and money management services from the Money Advice and Budgeting Service (MABS), which is funded by the Department of Social and Family Affairs.

If you are considering using a commercial debt management company, the Money Advice and Budgeting Service (MABS) recommends that you ask the following questions:

0. What are the fees for the service and when do I have to pay the fee?
0. Is the fee paid up- front?
0. If the fee relates to the size of the debt, what % of the total debt is payable?
0. What exactly will I get for that fee?
0. Will you work on and resolve all of my personal debts?
0. Will I pay a fee even if you cannot assist me to get the solution I want, or a solution that works for me?
0. Are you connected to any other organisation that sells financial products?
0. What training/skills do your debt advisors have?   

Where can you go if you have serious debt problems?

The Money Advice and Budgeting Service (MABS) is funded by the Department of Social Protection and provides free, independent and confidential debt advice and money management services. You can also telephone the MABS helpline on 1890 283 438.

There are other organisations that can offer you support if you are in emotional distress, including the Samaritans.

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