A growing number of people on middle incomes are seeking help with debt problems due to their inability to maintain heavy borrowing commitments, according to the Money Advice and Budgeting Service (Mabs).
While 90 per cent of the service clients were on social welfare when the service was established 13 years ago, about one-third are now in employment.
Statistics for 2006 show that those in employment accounted for the majority of the €79 million owed by 15,000 new clients who presented to the service last year.
A range of factors, such as a change in life circumstances, a relationship breakdown, or drop in income are generally behind these clients getting into financial difficulties. Mabs also said it had detected a significant increase in clients coming to the service as a result of divorce or separation.
Such clients accounted for 16 per cent of people seeking help from Mabs in 2006, although comparable statistics for 2005 were not available yesterday.
Most clients owe money to financial institutions (€60 million), while the remainder (€19 million) is owed to local authorities, money lenders and gas, electricity and telephone companies. Some legal money lenders claim interest rates of up to 39 per cent.
While this makes up the smaller portion of the overall amount owed, it represents a large number of small debts owed by the majority of clients attending the service, Mabs said.
Minister for Social Affairs Séamus Brennan has described the level of debt facing Mabs clients as alarming and signalled he will strengthen the service.
He said last year there was a need to establish Mabs on a statutory basis with a streamlined national structure and national leadership. Young people make up a significant portion of Mabs clients, with 13 per cent in the 19- to-25 age group. Over half of those using the Mabs service live in rented accommodation. Single adults make up 24 per cent of people coming to the service.
The service was set up over a decade ago, primarily for people on low income and social welfare who are in debt or in danger of getting into debt. It is funded by the Department of Social and Family Affairs.
