More people seeking help with debts, says service

FAILED small business owners and people with jobs are among a growing number of people seeking help with debts, according to the Money, Advice and Budgetary Services (MABS).

Set up primarily to get those on social welfare away from the clutches of money lenders, MABS said there was a 20% increase in the number of people seeking help with debts last year compared to 2001.

While some had debts of up to €60,000 the average for the 1,054 seen was €15,000. MABS Cork manager, Denis Corbett, said for the first time in their history they had broken the 1,000 barrier having seen only 883 people the previous year. The 2002 figure is 40% up on that for 1996.

“While we are still primarily dealing with social welfare recipients and money-lending problems, we are noticing changes. In fact we’re being inundated,” Mr Corbett said.

He said those who sought help in the aftermath of their business failing were predominantly those who were self-employed contractors in the building industry who’d hit hard times following the death of the Celtic Tiger.

“When insurance costs started to rise we noticed an increase in people who couldn’t continue in their business.

“More employed people are coming forward. Last year 60% or those we saw were in receipt of social welfare, compared to 40% who were employed. If the trend continues by the end of this year it could be 50-50,” Mr Corbett said.

He said he had been talking to MABS managers in other parts of the country who were experiencing similar trends among clients.

Many employed people availing of MABS support have over-extended themselves on credit cards and on loans from financial institutions.

“Advertising is a problem, it makes people feel they need something. But people themselves must beware of impulsive buying,” he warned.

People also find themselves caught up in borrowing from companies which can legally get away with charging an annual percentage rate (APR) of up to 187%.

“We have seen rates that high. A credit union will offer nine-10% (APR). People must ask the question about APR. A high indication is bad, a low one good,” Mr Corbett said.

MABS, which is celebrating its 11th year in Cork, contacts creditors and opens negotiations for the client to pay off the debt over a reasonable period of time.

“Unfortunately there is no such thing as a quick fix,” Mr Corbett said.

Of the more than 1,000 people MABS helped last year, 60% were women and 40% men. Those in debt were mainly 26-40 years old and were evenly split between couples with children, single parents and the unmarried.

“The affects of debt on a person are not just limited to dealing with the financial difficulties but with the turbulent emotions which come with them,” Mr Corbett said.