THE STATE’S main debt advisory service has warned that the number of people unable to pay their debts has doubled since 2007, with “devastating consequences” on the health and well-being of families.
The Money Advice and Budgeting Service (Mabs) told an Oireachtas committee yesterday it had 31,000 clients owing an average of €15,500. It said 6,000 people presented at its offices since the start of the year, and there had been a significant growth in the number of helpline callers. Most Mabs clients have families, a higher percentage is female, and most are aged 26-40.
Michael Culloty, national development officer at Mabs, said the policy at some credit card firms of aggressively chasing repayments from indebted customers amounted to “harassment” that bordered on breaking the law.
“Particularly for vulnerable customers, pressure that is inordinate could have drastic consequences for them: that is of concern to us,” said Mr Culloty, who later clarified that some Mabs advisers had experienced clients taking their own lives over the stress of debt.
Annmarie O’Connor, business manager at Mabs, warned that the service was seeing an increase in the numbers experiencing difficulties paying their mortgage. In 2007, 2 per cent of its clients held a mortgage, compared to 35 per cent clients currently.
People are also approaching Mabs with bigger, more complex debts and often intractable debts such as mortgages, she said.
In 2009 the average amount owed in personal loans by Mabs clients was €13,000, up from €9,000 in 2006. The average credit card debt of clients had increased to €8,000 in 2009, up from €4,000 in 2006.
“Perhaps not surprisingly, at the start of their engagement with Mabs many of our clients are very stressed.
“Often financial difficulties can give rise to ill health, depression and family problems, and this can exacerbate the difficulties as well as giving rise to wider societal costs,” said Ms O’Connor.
She warned that people who couldn’t pay their debts may lose their personal credit rating and be forced to go to moneylenders or online providers offering loans.
“We have a concern that in the absence of mainstream alternatives there could be a growth of high-cost credit forms such as loans from licensed money lenders, and the use of catalogues as a form of credit,” she said.