Record numbers seeking help with debts

A record 7,593 new clients were dealt with by the Money Advice and Budgeting Service in the first quarter of the year, with personal loans the biggest problem.

More worrying is the profile of the majority of those seeking help — people aged between 26-40 — who because of the size of their mortgage repayments are struggling to repay loans, utility, and credit cards bills.

The figures from MABS show of the 7,593 people who contacted the state debt service, 6,162 needed mediation with creditors, with MABS helping to set up special accounts for 340 clients in partnership with credit unions.

The largest percentage of new contacts (3,349) were in the 26-40 age bracket, 2,662 were aged 41-60, 370 were 19-25, and 114 were over 60. Of the new contacts, 2,864 were people with mortgages, 1,300 lived in private rented accommodation, and 1,142 were local authority tenants.

The primary income of 4,409 seeking assistance was social welfare, while 2,093 were self-employed or earning a wage.

Pressure on MABS, which has more than 60 offices nationwide, continues to mount. It deals with about 7,000 new clients a quarter.

The latest waiting list figures from the end of last year show 1,676 people looking for a first appointment across the country.

Blanchardstown in Dublin had the highest number waiting for assistance — 122 waiting on average more than two months for an appointment. In Kildare, 120 had to wait for more than four months for their first appointment.

According to MABS, urgent cases, such as anyone threatened with a disconnection, legal proceedings for repossession, or a threatened eviction, can be prioritised.

Elsewhere, the number of people waiting for free legal aid is also spiralling.

To the end of January, 4,443 people were waiting for their first appointment with a solicitor — a 40% increase from Jan 2011.

Of 29 state-funded Legal Aid Board centres, 22 have a waiting time of more than four months.

People in Clondalkin, Tallaght, and Tipperary are waiting the longest, with delays of up to 10 months to see a solicitor.

According to FLAC, which is a separate body from the Legal Aid Board but which complements its work, the latest figures are “depressing”.

Meanwhile, the IMF has said that household debt reduction policies and mortgage write-downs can result in significant economic benefits.

The organisation said recessions and housing slumps are worse when preceded by a buildup of household debt.

In its World Economic Outlook report released yesterday, it said such policies can mitigate “excessive contractions” during such recessions

In the five years before 2007, the ratio of household debt to income in advanced economies rose by an average of 39%, to 138%, while in Ireland and certain other countries, debt peaked at more than 200% of household income.

“Because debt is acting as a brake on economic growth, it is important to unstick the brake,” said report author Daniel Leigh.