Billions in recession debt to be forgiven in the spring
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Tens of thousands of Finns will be able to breathe a big sigh of relief on the first of March next year. At that time many of the debts incurred during the recession of the early 1990s will be forgiven.
All debts by individuals in which a decision was handed down on March 1st, 1993 or before will be written off.
The Ministry of Justice says that the change applies to 33,000 people who have been involved with debt enforcement authorities. The principle of the debt adds up to about EUR 1.6 billion.
The actual amount to be written off is much larger, as both the principle and the interest will be cancelled. Penalty interest for late payment rose to 15 per cent during the recession years, which means that in 15 years, the sum to be collected has increased many times over.
In addition to the 33,000 debtors mentioned by the ministry, those who guaranteed the loans held by the debtors will also be released of their burden.
However, the 15-year period for wiping out debt will extend to 20 years in cases in which both the creditor and debtor are individual people. This is also the case when a crime is involved.
Credit records will be wiped clean three years after the debt is nullified. This means that recession victims who have their debts forgiven in March will also have a clean credit records in March 2011.
The total forgiveness of debt is seen as a radical measure by Juhani Toukola, head of the Enforcement Administration at the Ministry of Justice.
He says that he does not know of any other European country that would have passed such a law. However, he notes that there are no other European countries that would have undergone as deep a recession as Finland did in the 1990s.
An extensive legislative programme on insolvency was launched in the wake of the recession. The final, fourth phase of the programme involves the nullification of debt, as well as the position of children.
Toukola mentions a case in which a child became the target of debt enforcement activities already before being given a name; "girl baby Virtanen" was named as not having paid the bill at the maternity hospital.
Helsingin Sanomat
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| 21.11.2007 - TODAY |
 Billions in recession debt to be forgiven in the spring |
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