# Personal debt 20k but on social welfare



## misterpiki (10 Jan 2013)

Hi there,

I just wanted to ask for some opinions on my situation. Basically I'm married with no children, my wife is a full-time student and presently our only income is from social welfare. I had a loan of around 10k with AIB but haven't been able to make a payment for around the past two years. I had been to MABs and did the budget letter, sent it back to them showing I wasn't able to pay and haven't heard anything from them until this week when I got a letter from their Insolvency and Debt Recovery Unit saying the account is now due for review (the amount due has also increased to 12,300 due to interest/surcharges etc). Now my financial situation is still pretty much the same and I need what little money I do have coming in to survive, so I'm just wondering what do they expect me to do now considering things haven't changed. Would they back off for some more time to see if my situation improves or would they even write the whole debt off? My wife also owes them a similar amount and in the last month has agreed to pay 50 per month to them as she has got a few hours teaching tutorials in the college but really it's only an extra couple of hundred per month. I probably could afford to pay them 50 per month too but it really is a stretch for us. Should I bother suggesting this? I have to give them a call and I'd like to have it clear in my head what are the best options for me (and not the bank!) before I call.

Thanks very much for any help.


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## Bronte (11 Jan 2013)

cashier said:


> You and your wife willingly borrowed 20,000k from the banks so it will have to be paid back somehow.


 
But anyone on social welfare would not be ordered to repay anything by instalment order.  And I don't think anyone on social welfare can afford 50 Euro a month.  In addition this would get the OP nowhere as the bank is continuing to add on interest.  If the bank came to an arrangement with the OP that they stopped adding on charges and interest and that he could then actually tackle the debt then fair enough.

Misterpicki, what exactly has the bank asked you to do in your letter.  I don't think you should telephone them until you know exactly what you are going to agree to do.  What has MABS advised you?  In any case under the new insolvency regime this debt will have to be written off.  It's just a matter of time.


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## Importer (11 Jan 2013)

Under the new Insolvency bill, a person with little or no income and little or no assets can apply to have their debt written off using a Debt Relief Notice.

You'll want to consider if you really want to screw up your credit rating for what is relatively small money. Will you need to apply for a mortgage in the future ? What age are you.

Best of luck


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## misterpiki (11 Jan 2013)

*Can't afford to pay back personal loans. What are my options?*

Sorry I didn't give more details as it's my first time posting. My household income is around 1350 per month jobseekers allowance and 540 rent allowance, so 1900 per month. Rent + heat electricity + phones + transport comes to around 1,100, so we make do with whatever is left over for food, living expenses etc. When my wife does tutorial work it probably adds around 150-200 extra into the pot (so that's why she said she'd pay back 50). I don't have a problem paying back the loan when I can actually afford to but that's not now, and if anything we are trying to improve our situations so that we can have a good financial future (wife is doing a phd and I'm 5 months away from finishing a part-time maths degree, and will be doing postgrad study). I'm not trying to run away from the debt but the situation is the way it is and I like to know what is best for us. I was in Mabs a couple of years ago in the west of Ireland but have been in Dublin for the past 18 months so haven't been in contact with them here as AIB pretty much left me alone since I sent the original Mabs letter to them. Really I can't afford to pay them 50 a month but I could do it at a stretch. Should I even bother as it's not going to make a dent and they keep piling on the interest anyways? What happens if I say to them I genuinely can't make a payment - does it go to court or do they just write off the loan and I have a black mark on my credit rating for a while?

Thanks again for the replies.


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## Importer (11 Jan 2013)

I dont think the bank will be so anxious to write off your debt. Your potential earnings in the future are very positive. If you dont cooperate with some level of payment they may bring you to court and get a judgment against you. Thats presumably as far as it can go because they cant take money from you that you dont have.......
Just come clean with the bank and tell them that you have every intention of paying them back when you have the money. Let them decide what to do then. Theres not much they can do really. The other option to explore is having the debt written off under the new Insolvency Act. The new act will go "live" later this year


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## misterpiki (11 Jan 2013)

Importer said:


> Under the new Insolvency bill, a person with little or no income and little or no assets can apply to have their debt written off using a Debt Relief Notice.
> 
> You'll want to consider if you really want to screw up your credit rating for what is relatively small money. Will you need to apply for a mortgage in the future ? What age are you.
> 
> Best of luck



I'm 30 and I agree that it is a small amount of money and in a few years I'd hope to pay it off relatively quickly. I don't blame the banks, it's our fault for taking the money out while our jobs were not particularly long term or secure. That's why we are now looking at more solid employment for the future. About the debt relief notice, we have no assets, so is it worthwhile going down this route? How long will the credit rating be affected for - I know that it is already a bit screwed because I missed loan repayments over the past couple of years. To be honest I'm not too bothered about mortgages and I also won't be buying anything I can't afford to buy outright (I've learned my lesson the hard way!).

I should also add that my wife had a minor accident a couple of years ago which scuppered a good work opportunity in the UK, and we are waiting for that case to be settled (the third party has admitted full liability but these things take time).


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## elcato (11 Jan 2013)

Has the interest been stopped/frozen on both loans ? Seems strange that they incresed the amount owed between two correspondance or was the second figure the original figure ?


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## dub_nerd (11 Jan 2013)

Importer said:


> Under the new Insolvency bill, a person with little or no income and little or no assets can apply to have their debt written off using a Debt Relief Notice.


 
I don't think it's that simple. Otherwise anybody could just make themselves unemployed for a month and claim inability to pay. I was under the impression that the likelihood of an improvement in ability to make repayments on your debt in the next three years would be looked at. A highly employable graduate and post-grad student, with an outstanding insurance settlement in their favour, would probably have difficulty getting their debt written off.

As someone else mentioned, if it was possible to arrange a moratorium on payments and charges for a while, that might be the best option.


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## misterpiki (11 Jan 2013)

elcato said:


> Has the interest been stopped/frozen on both loans ? Seems strange that they incresed the amount owed between two correspondance or was the second figure the original figure ?



They have definitely increased the amount on both loans by around 2k each so it looks like they are definitely adding on interest accrued.


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## Importer (11 Jan 2013)

@Dub nerd
If you read my post carefully, I said that he would be entitled to apply for a Debt Relief Notice based on the fact that he has little or no assets and little or no income and given that he has already stated that he will shortly commence another degree which implies to me that his financial position will not improve any time soon. 
I have read the new Act and as far as i can see he has a great chance of having his application accepted, based on his circumstances.


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## elcato (11 Jan 2013)

> They have definitely increased the amount on both loans by around 2k  each so it looks like they are definitely adding on interest accrued.


Keep all correspondance to make sure you have all the facts. Looks to me like you just have to let them bring you to court. They will try everything in their power to get you to agree some payment before this though. Always remember, they can't really get anything from you if you don't have it BUT by the time they bring you to court your circumstances may have changed and this could influence any decision. Tell them you want to pay and that you will as soon as things get better. One word of advice: If you are going to tell them that you are due a lump sum then don't divulge the figure. Then offer to pay back the money without penalties as full settlement. Do not let them know you may have more money as they will not relent if they feel they can get the lot off you.


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## misterpiki (11 Jan 2013)

Thanks again for all the replies. I'd say any sum we get from my wife's settlement won't be very much as she (luckily) wasn't badly injured. I've read up on the Debt Relief Notice myself now and it does look as if it is probably the best course of action for us both, especially since we are probably going to continue studying for another 3 years because our work prospects aren't great now.


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## loulou117 (18 Jan 2013)

If brough to court the courts can enforce an instalment order even if your on social welfare..


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## terrontress (18 Jan 2013)

dub_nerd said:


> I don't think it's that simple. Otherwise anybody could just make themselves unemployed for a month and claim inability to pay. I was under the impression that the likelihood of an improvement in ability to make repayments on your debt in the next three years would be looked at. A highly employable graduate and post-grad student, with an outstanding insurance settlement in their favour, would probably have difficulty getting their debt written off.


 
Agreed. If it was possible to have debts written off because you are doing a degree and intend to do a post-grad, yet still get 1,900 SW per month, we would all be down at the university tomorrow and continue in study until we were doctors.


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## Time (18 Jan 2013)

loulou117 said:


> If brough to court the courts can enforce an instalment order even if your on social welfare..



Nope. Judges will not grant orders where someones only income is SW.


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## Jim2007 (18 Jan 2013)

misterpiki said:


> I'm 30 and I agree that it is a small amount of money and in a few years I'd hope to pay it off relatively quickly. I don't blame the banks, it's our fault for taking the money out while our jobs were not particularly long term or secure. That's why we are now looking at more solid employment for the future. About the debt relief notice, we have no assets, so is it worthwhile going down this route? How long will the credit rating be affected for - I know that it is already a bit screwed because I missed loan repayments over the past couple of years. To be honest I'm not too bothered about mortgages and I also won't be buying anything I can't afford to buy outright (I've learned my lesson the hard way!).
> 
> I should also add that my wife had a minor accident a couple of years ago which scuppered a good work opportunity in the UK, and we are waiting for that case to be settled (the third party has admitted full liability but these things take time).



I doubt any judge would agree to a DRN in your case as there is every chance that your situation will improve in the future and on top of that there will be an award on the basis of your wife's injury claim.

Furthermore you should be aware that if a DRN was granted you would be under supervision for a period of three years, I would assume that that means running up credit card or other debt in the near future to support your further studies would be off the table...


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## loulou117 (19 Jan 2013)

Time said:


> Nope. Judges will not grant orders where someones only income is SW.


 

Well your wrong Time, i had an order granted against me when on sw(personal debt, currently discussing) and also, when my husband was divorcing a few years back he showed the judge he was only receiving 110e per week sw and the judge ordered half to be taken weekly from that for child maintenance.


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## Time (19 Jan 2013)

Child maintenance is not the same as a normal debt.

Any order granted can be appealed. I can tell you from personal experience orders will not be granted where the only income is SW this is the case with all of the judges in the Midlands. Any orders granted would not pass muster on appeal. There are appeals procedures in place to vary orders, it is up to the debtor to use these procedures. 

If I was in that situation i would allow the order to go to the committal stage and then obtain free legal aid to engage a solicitor for free (risk of jail exists) and then have the order varied to zero.


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## loulou117 (19 Jan 2013)

Time said:


> Child maintenance is not the same as a normal debt.
> 
> Any order granted can be appealed. I can tell you from personal experience orders will not be granted where the only income is SW this is the case with all of the judges in the Midlands. Any orders granted would not pass muster on appeal. There are appeals procedures in place to vary orders, it is up to the debtor to use these procedures.
> 
> If I was in that situation i would allow the order to go to the committal stage and then obtain free legal aid to engage a solicitor for free (risk of jail exists) and then have the order varied to zero.


 
Well my personal debt is a court order and the judge was very aware my income was purely sw and as explained in my other thread the old creditor was very aware of my finances and he got a judgment mortgage and when i varied this loan before xmas that judge was aware of my finances but i will be now initiating another variation order to vary to zero.


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## Time (19 Jan 2013)

This was back in 2008/9? Even back then judges were starting not to grant orders against SW recipients. 

Judgement mortgages are not given based on means to repay. It is a blunt instrument. All the rage back then not so much these days for obvious reasons.

You should have no problem getting the order varied to zero these days. I has a few cases ongoing at the moment and not one has been refused yet.


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