Personal Debt – MABS Investigates

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Welcome to another MABS Investigates blog. 

We get a lot of great questions about personal money matters and how to tackle debt. Questions that we know many people are asking but don’t know where to go for answers. 

MABS Investigates is here to help! In this blog series, we will investigate and answer many of these common questions. We will work to make the answer clear and break down the jargon.  

This week we are looking at ‘Personal Debt’. Personal Debt put simply is any credit you avail of, which is not secured against a family home. Examples of personal debt include:  

 Let’s dive into some of our most frequently asked questions on ‘Personal Debt’: 

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. 

 

If 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.  

 

The first thing to do is assess your situation and calculate the amount of money you have available to pay to your car loan. 
This will inform the conversation you have with your lender and 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, WhatsApp, or email.  

 

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?  

 

The first step is to assess your current situation and complete a budget. This will allow you to see where you stand financially.  

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

 

I’m paying my mortgage/rent in full but falling behind on other payments, should I pay a little towards each? 

 

Regarding paying your mortgage/rent in full, continue doing what you are doing. These are considered ‘priority debts’, along with food, heat & 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’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.  Check 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: 

  •  confirmation in writing of the amount required to settle the debt in  a receipt for the payment when it is made.  
  •  the lender to update 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 a 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. 

Judgement Mortgage

If there has been legal action taken, where the debt has been secured against your property you should request that the ‘Judgement Mortgage’ is removed from the property.  Again, it is important to ensure you receive confirmation of this in writing. The removal of a ‘Judgement Mortgage’ may have an additional charge. 

 

If you don’t feel you can talk to the credit provider, contact MABS, we can help. You can contact us by calling the Helpline on 0818 07 2000 or by contacting your local office. 

 

I’ve lost my job temporarily (C-19) so just looking for an option to reduce my payments while I’m out of work. 

 

The first thing to do is assess your new situation. See what impact this will have on the amount of money you have available to pay to your debts while you are out of work. . You should then contact your creditors to let them know that you have been temporarily laid off and that you are looking to reduce your payments at this time. Tell them how much you can afford to pay while you are out of work and ask for an agreement based on this.  

Ask what it will mean to your future repayments if you reduce your payments now so you are clear about the impact it will have when you are back at work. Questions you should ask include:

  •  Will extra interest be charged,  
  • Will it take longer to repay the loan,  
  • Will the normal monthly payment increase when I am back in work. 

 

Do you have a question for MABS Investigates? Get in touch and let us know mabs@ciboard.ie. 

Disclaimer: This blog does not represent legal advice and is intended for guidance only. If you are concerned about your current or future personal financial situation, please contact an adviser from MABS. Advisers are available by phone, email or you can message us on WhatsApp. 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 here.  

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