Written by Thomas Molley

IRISH lenders may be forced to write off credit card bills as debt rises and borrowers struggle to pay them off.

The International Monetary Fund expects 7pc of the €1.34tn of consumer debt in Europe will be lost as people default on credit card debt, the 'Financial Times' reported. In the US, the percentage of consumer debt that will be lost is double this, it added.

The number of people contacting the Dublin-based debt advice charity Myvesta about credit card problems has doubled in the past eight months and their debts have increased as well.

The average credit card debt of somebody in trouble is now €8,009 this year compared to just €3,833 in 2006 as the country's appetite for debt rockets.

"The whole culture of borrowing for lifestyle has been rampant both here and in the UK," said Sean Tyrer    , head of Myvesta. Borrowing on credit cards has been far more subdued elsewhere in Europe where there is still a stigma attached to going into debt, he added.

A spokesman for the Irish Banking Federation said earlier this month that credit card providers were forced to raise interest rates because the providers had to cope with greater numbers of people defaulting on their credit card debts. AIB, Ulster Bank, Permanent TSB, Bank of Ireland, Halifax and National Irish Bank have either increased the rates they charge on their cards or imposed higher fees in recent months, according to an Irish Independent survey.

The higher charges were introduced despite a record six falls in European Central Bank interest rates. The number of credit cards in Ireland is rising, touching 2.4 million in May, but the monthly amount being borrowed has fallen to €927m.

Payments on credit cards exceeded new spending in May and outstanding indebtedness fell by €23m during the month, the Central Bank said recently. Payments on credit cards has exceeded new spending every month in 2009 to date, and this led to the annual rate of increase in outstanding indebtedness on credit cards to slow to 0.1pc in May.

This is the lowest annual increase in outstanding credit card indebtedness since records began in 2002.

This article appeared on 'independant.ie'  on Tuesday 28th July 2009 

By Jennifer Hough

Wednesday, July 01, 2009

Tens of thousands of Irish people in debt are enlisting the help of private debt management companies to renegotiate new repayment terms with their lenders.

National Debt Relief, a British firm set up here last August, has dealt with more than 12,000 customers, according to its director.

Another debt help firm, Debtadvice.ie, said it too was dealing with "very significant volumes" of people in debt.

A spokesman for Debtadvice.ie said people were being "overwhelmed" by debt and that going bankrupt in Ireland was not an option as legislation was "outdated and draconian" compared to the rest of Europe.

He said people in debt were seriously considering travelling to Britain to petition for bankruptcy as they could potentially free themselves from debt after a year.

"Bankruptcy tourism is something that a lot of people are seriously considering."

The director of National Debt Relief warned going bankrupt here had "severe consequences".

"If someone in Ireland declares themselves bankrupt they can remain caught in the process for 12 years more. In England, a bankruptcy can end after as little as 12 months and the slate is wiped clean."

Mr Duffy said it was complex for someone to get back on their feet if they declared themselves bankrupt here.

"It is a nightmare, and people can find it very difficult to access credit afterwards," he said.

Mr Duffy said the firm had set up here due to a large number of enquires to a parent company in Britain.

He said people were reporting big delays with the State-financed Money Advice and Budgeting Service, and needed instant help to manage their debt.

Mr Duffy urged the Government to introduce new rules to help people formally address debt problems.

"We want the Government to introduce legislation to help Irish people to formally address their debt problems without having to go bankrupt," he said.

This story appeared in the printed version of the Irish Examiner Wednesday, July 01, 2009

Surviving the recession is hard enough without trying to keep up with the re-payments on an existing loan, many people are often left frustrated and confused when dealing with debt problems.

Purchasing everyday items on a credit card is a clear sign that you or someone you know may have debt issues. Many people will admit they have issues with debt but continue purchasing items on their credit card without realising the damage they are causing on top of their pre-existing debt, which may result in some borrowers not being able to afford the repayments on that debt. 

Unfortunately due to Irelands out-dated laws there are significantly lower options for debt related solutions compared to other countries in Europe and USA. Poor debt enforcement laws meant that people in Ireland have not been able to seek proper protection from the courts, resulting in over 1000 people being sent to prison between 2002-2006 for debt-related offences. By re-visiting the law surrounding bankruptcy in Ireland it would be beneficial to adopt a similar procedure from the UK in which borrowers owing a sum of 1900.00 Euros or more can apply for bankruptcy which would last for a full year, after which the debts are no longer repaid.  

A normal reaction for many borrowers with poor credit history who owe money to one or more debt collecting agencies is to merge all their currents debts into one consolidation debt loan. Although this offer is attractive to many of its customers, it can in almost all circumstances increase the final amount of debt you re-pay, especially if you have poor credit history or have existing discrepancies’ against their name. Visiting the ‘Debt Advice Team’ at http://www.debtadvice.ie can help you feel at ease with FREE expert advice and friendly qualified solicitors who are willing to help reduce the debt problems you may be experiencing. By filling in a few simple details about your debt they can steer you towards the right direction of a debt free life.

Credit card companies may be forced to warn customers that they are charging them high rates of interest under a revision of the consumer protection code being considered by the Financial Regulator.

New provisions to come into effect next year mean moneylenders will have to warn their customers that their loans are high cost. Any moneylenders who charge more than 23pc annual percentage rate (APR) for a loan will have to warn their customers in writing that they are high-cost lenders.

Credit card lenders may also have to tell customers with debt problems how to get access to debt counselling services to that can assist them with their financial problems.

It is possible that the worst may soon be over for over extended consumers following signs that interest rates are on the way down and price rises will peak in the next few months.

However, it will probably be next year before the benefits come through, to judge from the cautious stance of the European Central Bank and analysis of a surprise drop in inflation last month.

As the impact of the global credit crunch deepens many people are being refused consolidation loans as they attempt to 'borrow themselves out of debt'.

Even those individuals that have not actually missed payments to credit and debt commitments are being refused debt consolidation loans on the basis that they may be able to service thieir repayment obligations as debt problems continue to worsen in Irelend.