A.E.M.A.

Dealing with your Personal Debt

Tips for dealing with your Personal Debt.

Step 1 Assessing the current financial situation
• Making a list of all your debts and highlighting ones that need immediate attention
• Is your ESB, Gas or Phone Bill in arrears – if they’re not looked after you could be cut off?
• Some debts are more important than others, i.e. Mortgage arrears, Rent arrears, fines &
maintenance payments - these are priority debts
• Have you any Hire Purchase Agreements – you do not own your car until the last repayment is made, if you fall into arrears the car can be repossessed
• You will probably have some form of Secondary Debts, which usually will not involve any security, i.e. Bank Overdraft, Credit Cards, Personal Loans, Catalogue Accounts

 

Step 2 Do a Household Budget Plan
• Establishing Monthly Income versus Monthly Outgoings
• You will be able to see what you can afford to offer to those who you owe money to, as per your list of debts
• What’s available to pay arrears and any other debts?
• A Budget Plan is a critical part of the overall plan to solve your debt problems
• Your Budget Plan is personal to your circumstances so it is very important that all your income and expenses are included - you should check to see if you are claiming all available tax credits, social welfare entitlements, whether there is loan insurance on some of your borrowings or can you rent a room, etc.
• Look at your outgoings and see if there are any particular expenses that you could reduce, i.e. ESB, Phone, Sky TV or have you checked to make sure you have the most competitive Health Insurance, Life Insurance etc.

 

Step 3 Payment Plan
• If after completing your Budget Plan it is evident that you do not have sufficient income to cover your existing monthly repayments and outgoings, then a Payment Plan will be required
• You will need to review your debts under 2 headings - Priority & Secondary Debts
• Work out a Payment Plan based on the Monthly Budget to address all Priority & Secondary Debts with agreed monthly payments being made to all your creditors
• Your Priority Creditors will be given preferential treatment so that your house isn’t repossessed, you aren’t evicted or your ESB/GAS/Phone is not cut off
• It is important to ensure that all creditors receive some level of repayment on a monthly basis, as to ignore a creditor may result in legal action being taken

 

Step 4 Take Control  
• Set up separate Bank Account to make monthly budgeted repayments
• Stick to the Plan
• Regular contact with your Creditors is crucial - if there’s been a change to your circumstances they should know immediately, as they will be more open to adjusting the payment plan if warned in advance
• All communication with your creditors should be in writing and a copy of all correspondence should be kept in a safe place
• If you feel under pressure or stressed - you should seek help immediately - don’t bottle it up

 

What is a Standard Financial Statement?

 

A Standard Financial Statement (‘SFS’) is an application form which your lender must use to obtain financial information from you under the Mortgage Arrears Resolution Process (‘MARP’) framework set out in the Code of Conduct on Mortgage Arrears (‘CCMA’). The SFS will be used by your lender when assessing your case to decide whether or not to offer you an alternative repayment arrangement (reduced repayments, interest only, a payment break or more long term solutions such as Split Mortgages, Trading Down/Negative Equity Mortgages, Mortgage to Rent Scheme & Debt for Equity) and what type of arrangement is appropriate to your circumstances.
Our members are fully up to date and informed regarding the above processes and solutions and can provide their clients with independent advice to ensure that the most appropriate solutions are offered by the Banks and which one best suits their clients’ needs.
Your lender must assist you to complete the Standard Financial Statement (‘SFS’) and may already have a lot of the information requested on their file.
The following is a summary of the sections of the SFS to be completed, which our members can assist with:

 

Section A: Account & Borrower Details
• Mortgage Account number, balance of mortgage, monthly repayment and estimated value of
your home
• Personal details such as name, address, date of birth, telephone number, email address, marital status, number and age of children and job status

 

Section B: Your Monthly Income
• Gross Annual Income
• Net Monthly Income
• Other Income, such as Child benefit, social welfare entitlements and room rental

 

Section C: Monthly Household Expenditure
• Detailed list of personal and household expenditure – very useful to assess your
monthly outgoings

 

Section D: Your Current Monthly Debt Payments
• Details of all of your personal borrowings including your Homeloan, personal loans, overdraft, car loan, credit cards etc – you will need to know the monthly payments, the outstanding balances, the number of years remaining, the level if any arrears on each, the name of each lender and any security you have given for each loan

 

Section E: Property Assets (other than Primary Residence)
• Details of any investment properties, holiday home or business premises to include the address of the properties, their values, the balance of the mortgage, monthly repayments, monthly rental income, monthly expenditure, any arrears and the name of each bank

 

Section F: Non-Property Assets
• Details of any other assets, such as: Savings, Deposits, Investments, Shares etc
• Details of any redundancy received are due

 

Insolvency Bill   Debt Restructuring