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Borrowers must learn to help themselves

The revelation that almost one in five of all consumer loans are now in arrears confirms fears that the problem of loan arrears is much worse than the Central Bank suggests. As unemployment rises and wage cuts and tax increases slash the incomes of those lucky enough to keep their jobs, a tsunami of personal debt arrears is about to strike the Irish banking system.

The Central Bank arrears statistics, which only cover mortgage arrears, have always been deeply flawed. Borrowers who have notified their banks that they are experiencing problems meeting their repayments are effectively excluded from the numbers, meaning that while the Central Bank reported just under 56,000 homeowners were in arrears on their mortgages, figures from the Irish Credit Bureau, which monitors loan arrears on behalf of all the Irish banks, indicate that over 90,000 of mortgages are behind.

That is an awful lot of homeowners, with one in eight who have mortgages now at least one month in arrears.

And the problem with personal loans is even worse, with almost one in five of these now at least a month in arrears. And it's not just banks. Some 200,000 gas and electricity customers are also in arrears on their bills.

The huge number of homeowners who have fallen behind points to an unfolding social and economic tragedy.

For hundreds of thousands of people, life at the end of every month consists of a financial juggling act, with the most strident creditors being paid, while the other bills are allowed to pile up.

With another tough Budget due, there is no sign of relief for financially strapped homeowners. Instead, with property and water charges likely to take another chunk of incomes in 2012, the problem is going to get worse.

For borrowers in arrears there is no magic bullet. Those waiting for the Government to "do something" will wait in vain. They must take matters into their own hands instead. All they can do is to cut back on their day-to-day spending so that they have the cash to pay their bills. When it comes to loan arrears, God and the Government are most likely to help those who first help themselves.

Irish Independent