Overview of problem debt

If you owe money and you are not able to keep up with the repayments, the debt can become a problem. If you are in this situation you may find yourself:

• Missing payments and getting letters from creditors
• Borrowing money to pay bills and catch up with arrears
• Making promises to pay unreasonable amounts
• Facing legal action

It is important to take action to deal with your debts and stop the situation getting worse. For example, if you don’t start getting your debts under control, your creditors could go to court and eventually repossess your home. This can happen even if you have no mortgage on your home or your mortgage payments are up to date.

The Money Advice and Budgeting Service (MABS) is a free and confidential service for people with debt problems and money management problems. MABS can help you to explore your options and deal with your debt in a systematic way. Its website mabs.ie provides information and resources.

You can use the My Financial Healthcheck tool as a starting point to find the right information, advice and support.

Managing your money: MABS can help you manage your money and stay on top of your bills. You can use the MyBudget tool to help you make a budget plan. There are also tips on managing your money to make your money go further.

Dealing with creditors: MABS has agreed a protocol with the Banking and Payments Federation of Ireland (BPFI). The lenders that have signed up to the protocol have committed to work with MABS money advisers to help customers with their debt problems and agree a sustainable plan of repayments. The protocol between MABS and BPFI (pdf) allows for write-off of some debt, at the lender’s discretion.

MABS can also help you to agree a sustainable repayment plan with your other creditors that have not signed up to the protocol.

Accessing personal insolvency options: All MABS services are registered as Approved Intermediaries with the Insolvency Service of Ireland (ISI) and can bring you through the process of getting a Debt Relief Notice if this is an appropriate solution for you. MABS can also advise you on how to access the other personal insolvency options – see below.

Dealing with mortgage arrears: MABS has Dedicated Mortgage Arrears (DMA) advisers that can give you independent expert advice if you have difficulty with mortgage arrears. DMA advisers can help you find out what type of financial, insolvency or legal services you need and help you to access them.

MABS is involved in providing free support to people with mortgage arrears, as part of the Abhaile scheme. Abhaile can offer financial and legal support and advice.

Contacting MABS: You can call the MABS Helpline on 0818 07 2000 from 9am to 8pm, Monday to Friday. You can also request a callback, email helpline@mabs.ie or make an appointment to meet a money adviser in person in one of the nationwide network of MABS offices.

There are 3 personal insolvency options for people who cannot afford to pay their personal and mortgage debts.

The Insolvency Service of Ireland (ISI) administers these debt resolution processes.

The ISI also provides the website backontrack.ie, with information on the insolvency options and dealing with debt. You can use the website to request a callback, or you can call the ISI’s helpline at (01) 764 4200.

MABS provides Money Tools that can help you:

• Manage your money
• Find out if you are in difficulty and where to get help
• Make a plan to deal with debts

You can use the My Budget tool to help you work out a budget plan. It shows you how much money you have coming in and going out over a year and shows how much is left over or by how much you are short. MABS has advice on managing your money to make it go further.

If you are not sure whether you are in financial difficulty yet, you can use the MABS tool My Financial Healthcheck to find the information, advice and support you need.

If you want to work out a plan to tackle one or more debts, you can use the MABS tool My Full Financial Picture. It shows how much money you have coming in and going out and how much is left over or short for paying bills and debts. It includes space to record bills, credit, assets and debts, giving you a total debt figure.

The information you gather with these tools will help you to take the next steps.

Read about the 5 steps you can take to deal with your debt.

There are different types of debt, including mortgages, loans, overdrafts, credit cards and hire purchase agreements. Some debts, for example, mortgages, are secured. This means that goods or property, usually your house, is used as security in case the debt is not paid. Find out more about types of debt and the words used about debt in our glossary of debt terms.

Some debts have specific rules and practices in place in relation to how they are managed and collected. These are mainly debts which are owed to the State or a State body. In particular, taxes, social welfare overpayments, local authority rents and housing loans, utility bills and TV licences all have specific rules and procedures. Find out more about the rules for specific debts.

There are general rules under consumer credit legislation in relation to collecting debts, including rules in relation to privacy, contact points and harassment and intimidation. There is a particular code of conduct for how lenders must engage with people in mortgage arrears or pre-arrears.

If you do not engage with your lender, your lender will most likely initiate legal proceedings to recover the debt. The case can be taken in the District Court, Circuit Court or High Court, depending on the amount of money involved. Once your lender has a Court judgment setting out the debt, this judgment can be enforced in various ways, including, in extreme cases, through bankruptcy proceedings. Being in arrears on debt repayments can also have other consequences, for example, it can affect your credit record and make it difficult to get credit in the future.

When someone has died, there are detailed rules about how their debts must be dealt with.