Dealing with debt can be stressful, so it is important that you do not feel under added pressure to respond to any unrealistic financial demands and deadlines from people you owe money to. Creditors should always follow the law and consumer protection rules.
Before you respond to creditor contact, you need to know what they are allowed to do. This will help set priorities for payments and to know which debts need immediate attention.
Setting priorities to stop your situation getting worse
To stop your situation getting worse, deal with urgent debts and set priorities to repay the most important debts first. Doing this can help you to avoid losing your home or other essential goods or services.
You need to tackle your debts in the following order:
Urgent debts
You will need to contact your creditors urgently if they are classed as a priority debt and have started taking action to recover the debt. Their action might include stopping you from accessing their services or trying to seize goods or take back the money you owe them.
Priority debts
A priority debt is one where due to the contract, your creditor can take back property or a car, or cut you off from their service.
Action to repossess your home
Mortgage
If you are in mortgage arrears, it is important to deal with the problem quickly, even if you can’t afford to make the full mortgage payment.
If you have taken a Covid-19 payment break, you can read more about Covid-19 money guidance.
If you are in danger of losing your home, we recommend you get advice from MABS urgently.
You may be entitled to help under Abhaile and you can read more about dealing with mortgage arrears.
Rent arrears
If you’re renting, your rent is the most important bill to pay each week or month. If you can’t afford your rent or think you might fall behind, contact MABS or read more about problems paying your rent and what steps to take to avoid eviction.
Action to disconnect essential services
Essential services are things like:
- Electricity
- Gas
- Broadband
If you receive a notice that your supply is going to be disconnected, take action immediately. You may be allowed to pay by instalments and avoid disconnection.
If the supply gets disconnected, you can be charged a disconnection and a reconnection fee on top of the debt.
There are a number of payment options you could consider to help spread the cost or pay as you go. You can read more about problems paying your bills, our utilities blog, or contact MABS to discuss your options.
Action to repossess essential goods
Depending on how important the goods are to you, you may need to take urgent action if you receive threats to repossess goods or services such as your car. A lot will depend on what type of agreement you have signed.
You can read more about problems making car repayments or contact MABS to discuss your options.
Court action
Whether it is for a priority debt or a secondary debt, you should never ignore deadlines set by the court. For more information read about:
Otherwise:
- Contact MABS for professional advice and non-judgmental support
- Read more about how MABS can help
Secondary debts
You will also need to respond to other secondary creditors urgently if they have started court action.
Dealing with urgent debt and priority creditors
Action against you for debt can take some time
It may take creditors some time to process any action against you for overdue debt. Meanwhile, you should be able to reach an agreement with them, so they don’t take the action.
When collecting arrears, most creditors must:
- Follow Codes of Conduct
- Give you notice that they plan to try to recover the money you owe
- Allow you some time to make payments.
However, you must talk to your creditor and pay what you can afford.
What to do if a creditor contacts you
It will take time to gather an accurate financial picture, possibly a few weeks. If any creditor contacts you before you are ready, let them know you are following the MABS 5-step path to tackling debt. Tell them you will be in touch as soon as possible when you have a Full Financial Picture and have considered your options.
If they have not received your letter saying this, ask for the correct contact person and their address, then send a copy. Read our tips for writing to creditors and sample letters.
Under the consumer protection code if you ask them to, the creditor must end the call immediately. We recommend writing, so there is a record of what has been discussed and agreed. However, if you prefer to talk to your creditor by phone, make sure you are prepared. See our tips for telephone calls with creditors and always make a note of what you discuss.
How to ask for time
Even if there is no urgent action needed yet, you may want to ask your creditor for information and for some time while you work through how to tackle your debt.
- Use MABS sample letter A
- Read about statute of limitations
Sometimes a creditor makes demands that you cannot respond to in time. For example, you do not have the information being asked for yet. If this happens, let them know why there is a delay and when you expect to have what they are asking for.
If you cannot afford what is being demanded, let your creditor know that you are working through the MABS 5-step path to tackling debt. Tell them you will be in touch as soon as possible with an update.
If you do not have any income, you can:
- Read about Supplementary Welfare Allowance
- Read more about ways to improve your finances
- Contact Citizens Information on 0818 07 4000.
Should I pay one secondary creditor to keep a line of credit open?
You might think it a good idea to keep one line of credit open by paying off what you owe on it as soon as possible, but this can be risky. Doing this could put you at a disadvantage when negotiating with other creditors, particularly if you are thinking about an insolvency option later. Read more about approaches to paying off debts.
There is also no guarantee that credit will be available to you from that source when you need it if you already have multiple debts. This is because creditors must make sure you can afford the credit you have applied for.
There are also risks with borrowing more if you are already in debt.
Your next steps
By now you will know which debts are the most important to pay first, and when you need to act quickly. You may need to know more about priority debts and secondary debts.
When you have dealt with urgent debts, you will be ready for Step 3. It involves looking for financial improvements like checking options to increase income, and any options to make the most of your income.
Then you can decide on the best tackling debt solution for you, covered in Step 4.
How to get more advice and support
If you get stuck along the way or just want some free and confidential advice and non-judgmental support, you can:
- Contact MABS
- Read more about how MABS can help
If you decide to contact MABS, before you do it would be useful to organise:
- Your Full Financial Picture
- Your questions
- Your most recent letters and emails
- Court documents from your creditors
- Any credit agreements (contracts) if you can find them.
You can also arrange to email your Full Financial Picture for an adviser to look at before your appointment if you wish. But even if you don’t have this information, still make the call and MABS will help.
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