Dealing With Debts – some options.

When people become unemployed it can be difficult to continue repaying debts such as mortgages, credit cards and personal  loans. Some people just miss a payment and hope they will manage the next one. Others may look for loans to consolidate all the debts into one larger loan – but this may not be the best way to solve the problem. People struggling to repay debts should not just ignore the problem – it will not just go away. You should contact lenders to let them know about your difficulties – they may be able to help by extending the repayment period .

A Formal Scheme of Arrangement is an agreement arranged between you and at least 60% of your creditors. Once agreed it is imposed by a High Court Judge. This is really only used  in more extreme cases, where the level of debt is considerable.

Most “Schemes of Arrangement”  done with creditors in Ireland are done on an informal basis . Informal arrangements are also  known as Debt Managment Plans or  Debt Management Arrangement.

A Debt Management Plan is a process whereby you and your creditors voluntarily enter into an agreement  to help you to restructure, or reduce the amount that you owe them, and the time period over which you will pay them.

The MABS – Money Advice and Budgeting Service is a free service funded by the Government. They have lots experience of dealing with debt problems and can be contacted on 1890 283 438. They have offices all over Ireland – but there may be a waiting time in some areas to see an advisor.

There are also several companies out there advertising their services in “helping” people sort out debt problems.  They will not do it for free – they will expect payment.  There is no regulation of these debt management companies in Ireland by the Financial Regulator .
Many of these debt management companies will charge around 10 or 15% of your monthly repayment each month as well as taking 1  months repayments up front as a fee. So if you agree to repay all your creditors a total of €1000  a month – a debt management company will typically take €1000 up front and then €150 a month after that.
Our advice is to try first.

Some examples of Debt Management companies operating  in Ireland: have a Belfast office and will retain the  first monthly payment of the plan as a set up fee (max £750)  A monthly fee of 15% will be deducted as a management fee, subject to a minimum payment of £25 and a maximum payment of £100.  charge  an initial Fee equal to 1 full month’s repayment, subject to a minimum of €500 plus VAT@21.5% and a maximum of €800.00 plus VAT@21.5% .
They also charge a n ongoing fee equal to 10% of your monthly agreed repayment , subject to a minimum fee of €25.00 plus VAT@21.5% and a maximum fee of €70.00 plus VAT@21.5%