Managing your debts

There are 3 basic methods for managing debts

Sniper approach … paying off the most expensive debts first
Consolidation .. bundling all your debts into one and taking out a new longer term loan ( ideally with an asset i.e home / property, as security )
Negotiation – when you cannot pay, and it seems impossible, you MUST at the very least negotiate with your creditors

The fundamental rule is if expenditure exceeds income, you have two choices.. earn more or cut costs. Where it is not possible to earn more, the cuts HAVE to be made or negotiated. Income is your number one asset, whether personal or corporate, and all things flow from this. You cannot make a silk purse from a sow’s ear – if you have nt got it, you have nt got it, BUT you MUST still communicate and manage your responsibilities.

Negative equity

Example – your home is valued at € 400,000 and you owe € 450,000 – the negative equity here is € 50,000. You owe more than the property is worth.

Remember that when you originally applied for this loan, it was approved on the principle that you had the ability to repay the loan. If you still have employment, that ability has not diminished. Your asset i.e. home, might not be worth as much, but perhaps in time, some of these values will be restored.

Where you have lost your employment or business, this is the path you must follow

1. Communicate with the creditors ( lender ) AT ALL TIMES AND OFTEN
2. Ask for a moratorium on both capital and interest ( no repayments at all ) – minimum 6 months reviewable so that you have time to reinvent, obtain employment or start anther business
3. If refused, ask for a moratorium on the capital, just pay the interest f you can – 6 months reviewable
4. If refused, and if you can continue the interest payments, stop the direct debit and set up a standing order to pay that interest payment every month but notify the lender and give them hope that better days are ahead as regards the repayment of your loan ( the lender must be given hope that you will eventually resume payments )
5. If refused, pay ANY amount as a token of your responsibility

The reality is that if you do not have that ray of hope, and no ability to make payments of any sort, you may be forced down the path of repossession. If the property can be sold, it would be better for you to sell rather than the lender repossess.

Please contact us ( .(JavaScript must be enabled to view this email address) or Dublin 278 5555 ) for advice and/or representation to your creditor.


Credit card debts

If you have a “maxed out” credit card, where you have spent right up to and beyond the approved credit limit for the card, here are the steps to follow

1. If you credit history is good ( Irish Credit Bureau, Newstead, Clonskeagh, Dublin 14 – tel Dublin 260 0388 – costs € 6 to find out ) you could apply to one of the many credit card companies offering to transfer your credit card balance at 0% for 6 months. This at least gives you 6 months to think about what you are going to do to reduce or pay off this debt. It is a fallacy to believe you can keep doing this – eventually you will run out of credit card companies.
2. If you have either run out of credit card companies for transferring balances or your credit history precludes you from applying to another supplier, you must either pay the minimum balance ( now 3% of the balance for most credit card companies – but remember, if you are only paying this minimum balance, it will take you 20 years to clear the debt ) or contact your credit card company to negotiate.
3. If unable to pay the minimum, ask for a moratorium for up to 6 months while employment or other debt issues are being sorted. Remember any refusal on the part of the credit card company will result in your good name having a black mark against it. Any defaults remain on the Bureau for 5 years while a Judgment is there for life.

Individual Voluntary Agreements

The Green party have proposed this policy for consumers unable to pay their debts. Essentially, if you have unmanageable debts, all creditors meet and 75% of them have to agree to write off a certain percentage – could be as much as 62% of the total debts. The balance – 38% - is paid off over a 5 year period BUT you also incur a registration on the ICB which remains for 5 years.

This is in force in the UK and substantial business is being completed. I would call this the last chance saloon option.

Please contact me (.(JavaScript must be enabled to view this email address) or Dublin 278 5555 ) if you wish to discuss your debts and how best to manage them.