Tackling the most important debts first
Once you have worked through your budget (see our budget section for help), you will understand the amount of money that you have available to make repayments each month. The next step is to draw up a plan for your debts, especially if you don’t have enough money to pay off the minimum amount required each month on all your loans.
All debts are not equal
There are different types of debt. Secured debts such as a mortgage or secured car loan mean that the bank may look to take back the car or house if you can’t make repayments or come to a reasonable agreement (don’t worry, there is now legislation protecting your rights and guaranteeing you time and space to reach this kind of agreement).
With unsecured debt, your creditors can not lay direct claim to your property in this way. Secured debt should therefore get priority.
Download our free debt repayment calculator. Fill in the sections on your outstanding debts, repayment amounts and the amount that your budget shows that you have available each month to repay debt.
- Your first priority is to protect yourself and your home, ie cover rent or mortgage and prevent gas or electricity being cut-off
- The next priority is most likely to be any other secured debts such as a car loan, particularly if you depend on the car for work
- Finally, you should pay your unsecured creditors. The issue here is that you must be fair to all your unsecured creditors
How much to pay remaining creditors
If you are not able to cover the agreed monthly repayments to your remaining creditors, you need to calculate a reasonable offer for each creditor. A creditor to whom you owe €50,000 is entitled more than one to whom you owe €5,000.
To help you, our free debt planner can automatically calculate the appropriate repayment amounts. It takes the total amount you have available for repayments each month and divides it up on a pro-rata basis amongst your creditors, based on the total amount that you owe each of them.
If you are able to pay more than the agreed monthly repayments, we recommend that you use any surplus to pay down the debt with the highest interest rate-usually any credit card debt you may have- as quickly as you can
Individual circumstances vary, get advice
If you are not able to meet all your repayments, it is definitely worth getting independent advice from a qualified third party to make sure that you fully consider all the different options available to you.
Negotiating with your creditors
- If you are uncomfortable negotiating directly with your creditors yourself, contact getSorted or your existing independent financial advisor for help and advice. In many cases, they may be able to deal with the creditor on your behalf.
- Write to your creditors and explain your situation. We have provided letter templates that you can use on our website:http://www.getsorted.ie/templates. Don’t delay – contacting your creditors early will get you a better result in the end.
- Share your budget and debt planner calculations with your creditors. They need to see that you have worked through your monthly budget and that you are being fair.
- Stay patient, keep cool, keep trying to agree an offer. Remember that it is in each creditors’ interest to try and get you to pay as much as you can – your calculations are based on being fair to all your creditors.
- If you can’t agree an offer, pay the amount that your calculations show that you can afford. It is important legally to be seen to make these “good faith” payments.
- If you receive solicitors letters or a legal notice summoning you to court, contact getSorted, an independent financial advisor, a solicitor or MABS immediately. Do not ignore legal notices but try not to worry. You have paid all that you can afford and done your best to be fair and reasonable, and that is what the Courts expect to see.
- Keep copies of all correspondence that you send and receive and make a note of all your conversations.