Finns in increasing numbers fall into consumer credit debt trap

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Individuals caught short by their inability to deal with multiple consumer credit loans form the basic clientèle of the consumer advisory services in Finland. The number of such people among those listed in the Credit Register as individuals with payment difficulties is also definitely on the rise.
     
The telephones of the various debt guidance professionals ring off the hook. The problems of those in insurmountable debt are increasingly complicated compared to, say, the 1990s, when most debt-related problems had to do with post-recession bankruptcies and guarantees on loans that had gone bad.
      The much-discussed SMS instant loans and other fast (and high-interest) credits only show up among the many debts of a typical credit counselling client, often as "the last straw that broke the camel's back".
      Now the counsellors fear that they will soon be encumbered with an altogether new client group: namely those with extensive long-term housing loans, whose tight budgets do not stretch to accommodate even the slightest unpredicted additions to their expenditure - such as a sudden rise of interest rates. The scale of their problems is likely to be appreciably larger.
      The financial and debt counselling services offered through the state-maintained Consumer Agency are meant for people whose indebtedness has driven them to the brink of insolvency. Similar advisory services are also available through the Guarantee Foundation.
     
The basic clients of these organisations are individuals with multiple loans - often having taken off loans to pay off earlier debts - who have lost their ability to manage the lot. The counsellors' task is to help to untangle this mess.
      The Consumer Agency Money and Debt Advisor services took on board 15,580 new clients last year. This was slightly less than a year earlier, but then again there was also a minor cutback in the funding. This year, slightly more money has been allocated to the operation.
      The queueing time varies. In the Helsinki area, one may have to wait for two months to get an appointment.
      The debt problem is here to stay, says Marianne Rikama, head of the Economic and Debt Counselling Unit of the City of Helsinki Social Services Department.
     
The main cause of over-indebtedness is often difficult to pinpoint. But the availability of easy loans certainly does not help. There has been much discussion about quickie loans, some of which can even be accessed by mobile phone. These come at a hefty price, but are used - sometimes with disastrous results - as a last resort by those already on the brink of going under.
      As a rule, retail stores offer the use of a credit card as the first choice for payments of larger purchases.
      In the first instance dept counselling professionals nevertheless shy away from blaming indebtedness on revelling and recklessness in spending.
      Also, it is not a problem rooted among the younger generation. The majority of those overly indebted are middle-aged.
      According to Aulikki Pentikäinen, the leading debt counsellor from the City of Espoo, the indebtedness phenomenon is related to poverty. In a consumer society, people's basic requirements are the same, regardless of their level of income.
      "Those with smaller incomes still aim to maintain a basic level of consumption, which makes their economy frail and susceptible to disturbance", Pentikäinen continues.
     
Sometimes an ending of a relationship may lead to spiralling indebtedness, when the household bills suddenly fall due for just one person.
      Getting into debt in business operations, long-term illness, or unemployment are also among the most common triggering effects for a debt spiral.


Links:
  Consumer Agency - Money and Debt Advisor
  Guarantee Foundation

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