Households owe a mountain of debt - €171.5bn to be exact, according to the Central Bank. Some €150bn of this is owed on residential mortgages, with around €2.9bn owed on personal credit cards.
More and more people are struggling to meet their repayments, with many people getting into arrears.
Many people who get into arrears on their mortgage or credit card are tempted to ignore the problem. Instead, you should take immediate action.
1. LIST YOUR DEBTS
Make a list of all your debts. List the most important debts first – mortgage or rent, followed by electricity and gas. These bills have to be paid first. Never pay your credit card bill if it means you can’t pay you ESB bill.
Separately list your other debts – credit cards, overdrafts, personal or motor loans and set them out with the most expensive first. Pay the ones with the highest interest rate first.
2. MAKE OUT A NEW BUDGET
Work out how much you have and what you can afford to pay each lender. Check if you are entitled to Mortgage Interest Supplement, mortgage tax relief or Family Income Supplement.
3. CONTACT YOUR LENDERS
Contact your lender as soon as possible. Have all your facts and figures to hand, including how much you owe.
Do the following:
- Make an offer to your lenders. Contact your lenders by letters, and not by phone.
- Know what you can afford and do not agree to pay more on the phone.
- Be honest and open. Stay calm and never be aggressive.
- Get anything you have agreed on in writing.
- Assure them that if your situation changes you will revise the your situation with them.
- If they refuse to negotiate ask for someone senior.
Remember, some 30,000 people have successfully re-negotiated their mortgage deals with banks and building societies, according to the Irish Banking Federation.
For more information see www.mabs.ie, and www.itsyourmoney.ie.
You can email Charlie Weston at lastwordfinance@todayfm.com.