New Year, Old Debts? How do I take control?

As we enter the second month of 2023, many people may have made New Year’s resolutions. Especially when it comes to their finances: 

• “I will save more next year.” 
• “I will create a weekly or monthly budget.” 
• “I will watch my spending more.” 
• “I will keep on top of my bills.” 

While it is a good start to set new financial goals each year, you may have some personal debts that are following you into 2023. This may be especially true as the increases in the cost of living continues to impact household and personal budgets.  

Did you know six out of 10 Irish consumers currently have no money left at the end of the month as the cost-of-living crisis weighs on households’ finances globally, according to a new Deloitte survey (December 2022). 

Personal debts, such as bank loans, credit cards, car loans, credit union loans and moneylender loans, are the most common debts. But where do you begin when trying to tackle one of these debts? 

It can be difficult to face overdue bills or repayments. But we are here to help provide advice and tips to take control of your finances. Below are some of the most frequently asked questions we receive when it comes to personal debt. Let’s dive in. 

I’ve been using my credit card and other loans to keep on top of my loan repayments. What can I do to get back on track?   

 This can be a common problem after the Christmas and New Year season or after any family occasions, for example. The first step is to assess your current situation and complete a budget. This will allow you to see where you stand financially.   

Ask yourself: 

• How much money do I have?  
• How much money have I spent using credit cards or other loans? 

Another helpful tool is our financial statement tool which will help you to complete a financial statement. This divides the money you have available to pay to your ‘secondary debts’ (personal debts) in a fair way. 

I’m focusing on paying my mortgage/rent in full at the moment but falling behind on other payments; how do I prioritise these?  

Regarding paying your mortgage/rent in full, continue doing what you are doing. These are considered ‘priority debts’, along with food, heat and electricity. These must be dealt with first!  

Not making your rent/mortgage repayments can have serious consequences. If you have some money left over after paying the ‘priority debts’, we always recommend paying what you can to your other debts. 

I’ve fallen behind on my car loan repayments, but I need my car, how can I stop it being repossessed? 

With car loans, if payments have been missed, the action a lender can take varies depending on the type of loan you have taken out. If you borrowed the money from a bank or credit union, and the loan was not for a specific car (just a general car loan), then you own the car from the day you purchase it. The financial institution cannot repossess the car if you miss a payment. However, they can take other legal options to recover their money.  

Perhaps you got the car through a Hire Purchase (HP) Agreement or a PCP (Personal Contract Plan), you do not own the car until the last payment is made. If you have paid less than a third of the PCP or HP price, the finance company can take back your car without a court order. If you have paid more than one-third of the PCP price, the finance company will need a court order to take back the car.   

These are the recommended steps to take: 

• First thing to do is assess your situation. Calculate the amount of money you have available to pay for your car loan. This will inform the conversation you have with your lender. It will mean that you have a clear idea of how much you can afford to pay.  
• You should then contact your lender and discuss the situation with them.  
• See if you can come to an affordable agreement to catch up on the missed payments. You can do this by spreading them over an agreed amount of time. Or by adding some time to the end of the loan.   

Important tip: make sure that you find out if this is going to cost you extra money in interest payments. You must know exactly what you are agreeing to.  

If you don’t feel you can talk to your lender, contact MABS. We are here to help. You can contact us by phone or email. 

I’m looking to settle an outstanding defaulted loan from years ago, how do I go about it?  

First things first, contact the lender who you borrowed the money from.  How much money is now owed on the loan? 

Be sure to ask that the amount you are being told includes any interest, fees and charges (these may have been applied to the debt since you defaulted on the loan).   

You may find that the loan is no longer being dealt with by the original lender but has been sold to/ being managed by a third party e.g., a debt collection company. If this is the case, you will need to contact this organisation to agree a settlement of the debt.   

If you are looking to pay the outstanding amount in full be sure to ask for:  

1. Confirmation in writing of the amount required to settle the debt in a receipt for the payment when it is made.   
2. The lender updates your credit record to show that the debt has been paid in full. They should confirm in writing that this action has been taken.  

You can access the Central Credit Register to check your credit record.   

If you are looking to ‘settle’ the debt for less than the total amount owed, the creditor may look for a financial statement from you. You can use our financial statement tool to help you with this.  

If you reach an agreement on a ‘settlement’ figure with the lender, please make sure that you get confirmation in writing from them that this amount will be in full and the final settlement of your debt. You should also seek confirmation that you will have no further liability for the remaining balance.   

Please note that a reduced ‘settlement’ of a debt will show on your credit record and may impact on access to future credit. 

We hope our discussion on personal debt and the most frequently asked questions has been helpful. Have you got your own question about personal debts or other money matters?  

Contact Us

You can call the MABS National Helpline on 0818 07 2000 Monday to Friday, from 9am to 8pm or find the contact details for your local office. 

Maybe you would like us to cover a particular debt or topic in our next blog? Please let us know by messaging us on Facebook, Instagram., or Twitter. Don’t forget to follow us too at @MABSinfo. 

Disclaimer: Every effort has been made to ensure this information is current and correct. The details of each case can be unique. As a result, the outcome can be different to what has been described in this blog.

Note: We welcome references to and use of the content in this blog. However, please reference MABS and link said content if you choose to do so.