The Problem of Debt
The MABS Perspective
MABS Presentation
Living with Dignity – Promoting Social Inclusion
Dunraven Arms Hotel
18 October 2010
John Lawless
National Development Officer
MABS National Development Ltd.
What is MABS?
The Money Advice and Budgeting Service is the only free, independent,
confidential and non-judgmental service, providing one-to-one advice to
people having difficulty managing their money, are in debt or are in
danger of being in debt.
The service is funded and supported by the Citizens Information Board
MABS Local - over 60 services nationwide
Limerick Office: Unit 9, Tait Business Centre, Dominic Street, Limerick.
MABS Website –
MABS Helpline -1890 283 438
MABS Mission Statement
To work towards the elimination of over-indebtedness
through the provision of an accessible, free,
confidential, independent, community and rights
based Money Advice & Budgeting Service.
One of the Aims of MABS is to prevent:
• Homelessness
• Fuel Disconnection (ESB, heating, cooking)
• The exclusion of the person from access to essential
services (School, Water, transport, clothing, medical)
• The loss of Liberty
Source MABS Mission Statement
MABS seeks to achieve this mission by
• Identifying, supporting, and educating those experiencing or at
risk of over-indebtedness especially those experiencing
inequality in terms of access to financial services
• Facilitating empowerment of its Clients in a non-judgemental
• Using the knowledge and experience gained from working with
Clients to bring about changes in policy and practice on poverty
and debt related issues
National Traveller MABS
National Traveller MABS seeks to empower by
supporting capacity building within the Traveller
community and ensuring equality of access to legal
and affordable financial services for all
One of the Strategic Priorities is:
• Equality across all financial and related services: To
work with internal and external bodies to promote
equality and diversity within financial services
Causes of Debt
Money difficulties can arise for various reasons
The most common reasons in our experience are:
• Changes in life’s circumstance
• Illness
• Unemployment
• Relationship breakdown
• Over borrowing
Slippery Slope to Insolvency
Stage One
The Debt Trigger
unemployment, illness, etc.
Stage Two
Initial Missed Payment
beginning of creditor pressure
Stage Three
Robbing Peter to pay Paul
the spread of debt
Stage Four
Multiple Debts
multiple pressure
Stage Five
Contact with Creditor
promise to repay
Stage Six
Broken Promises
further increased pressure
Slippery Slope to Insolvency contd.
Stage Seven
Personal Reaction
depression, denial, strain on family
relationships, fear, isolation
Stage Eight
Legal Pressure
letters from creditors, letters from
solicitors, court summonses, court orders
Stage Nine
Financial Chaos
enormous debt problems causing
Stage Ten
Facing Sanctions
home, utilities, loss of essential items,
possible imprisonment
Stage Eleven
Further Losses
marriage breakdown, deterioration of
physical health, mental breakdown,
Psychological Effects
Blame (self/others)
Conflict (partners)
Constant tension and worry
Fear (of prison)
Feeling helpless
No end is sight
No social life
No-one with whom to share anxieties
Sense of going mad
Stigma (neighbors)
Stress and depression
Suicidal tendencies
MABS Approach...respecting the individual
• Self Help approach..... Providing the resources for
self help
• Self Help with one to one assistance either on phone
or in person
• One to one consultations
• Negotiations with creditors and advocacy
• Ongoing support
Case Assessment
Financial Situation
Nature of the debt(s)
Capacity to Pay
Capacity to deal with the issue(s)
Personal Motivation
Family & Social context
Client Capacity
Diminished capacity in a time of crisis
Literacy or language difficulties
Mental illness
Debt crisis one element of an overarching crisis
Client motivation
Distinguish between
Won’t Pay and Can’t pay.
MABS Plan for Dealing with Debt
A holistic mediated approach
MABS Four Step Approach:
Step 1: Assess the situation
Step 2: Work out a budget
Step 3: Make proposals to the creditors
Step 4: Managing the payments
What are Priority Debts?
Some debts are more important than others. Important debts such
as mortgage arrears, rent arrears, fines, and maintenance
payments are called priority debts.
• The family home may be at risk
• A client might be evicted
• Electricity, gas or telephone may be disconnected
• Failure to pay a fine or disobey a court order may result in a
prison sentence
• The car or goods on hire purchase could be repossessed.
Secondary Debts
These are debts where money has been loaned to a client without the
client having to provide any security. The most common credit debts
• Bank Overdraft
• Catalogue Debts
• Credit Card Debts
• Credit Sales Agreements
• Credit Union Loans
• Personal Debts to friends and family
• Personal Loans with Banks and Finance companies .
These are dealt with on a Pro Rata Basis
Making proposals to creditors
A Budget is prepared
A Standard Financial Statement is prepared.
Verification of details on the Statement
Proposals are made to the Creditors
Priority Debts & Secondary Debts
MABS relationship with creditors
An honest broker
Protocols in place with many of the main creditors
Irish Banking Federation members
Utility companies
Credit Unions
Individual creditors
Where to from here ...from the current
context into the future
• Rise in number of clients year on year
• Increase in debt among self employed and middle
• The new poor
• Huge increase with clients presenting with Mortgage
• Referrals to MABS from Credit Unions, Banks and
building societies, Courts, Social Workers, CWO’s
and Society of Vincent de Paul etc.