On November 1, 2016, the Debt Settlement Act was amended. The new law is part of the government’s strategy to counteract over-indebtedness and now the enforcement authority has issued a first report and analysis of the effects of the amended legislation.
The size of the debt does not have a decisive significance
It is easy to misunderstand that existing legislation exists to help people with large debts. The analysis shows that this is not the case. People with small debts also have the option of obtaining debt relief if they have no repayment capacity. In total, more than 31,000 people have applied for debt relief since the new law came into force. The median debt for those granted debt restructuring was approximately USD 558,000. USD 13,426 was the lowest debt amount for a person who received debt settlement among those included in the analysis.
The analysis shows that, above all, three factors affect the possibility of debt settlement:
1. The cause of the payment problems.
Illness, divorce and unemployment mean more likelihood of debt relief than over-consumption or other causes.
2. Age of applicants
Older people are more often given debt relief.
Nearly 75 percent of those who applied for debt relief were over 40, 13 percent were 67 or older. The analysis shows that the likelihood of debt settlement increases with increasing age. The explanation for this could be that older people, especially pensioners, find it more difficult to change their income situation in order to pay off their debts in the long run. In addition, older people have often been over-indebted for a long time.
3. If they have visited a budget and debt adviser.
There is a marked difference in the degree of grants of people who have visited debt counselors compared to those who have not taken help.
“It is very gratifying that the Corona Lend Finance has done this analysis which adds a lot of knowledge about the new debt restructuring law that came into force in November 2016. I think it is a common misconception among the public that it is only the people who have “large debts” who receive debt restructuring, which is not the case, “says John Henry, Vice President Debt Collection at Klarna and course leader at the Arts to get paid and continue. “The basic prerequisite for being able to benefit from debt restructuring at all is that you cannot” pay for your debts “for a reasonable period of time. It is therefore also very reasonable that the probability of getting debt restructuring is higher the older you are . “
Here you can find out the analysis “The reason for the payment problems more important than the size of the debt when deciding on debt restructuring”