Stories of bad debts gone worse leave ninth-graders with much to think about

More than half a million new notices of default in 2007

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By Pauliina Pulkkinen in Forssa
     
      A distraint officer and a bank counsellor are touring schools in Kanta-Häme, the region surrounding the city of Hämeenlinna, in order to give financial guidance to pupils in comprehensive schools.
      ”So... you will get rid of the debt in, say,15 years. By then you are going to be in your 30s. It is worth considering whether or not to take an instant loan and fail to pay it back”, says distraint officer Antti Loukonen.
      You could hear a pin drop.
      The audience, comprising the ninth-graders of the Kuhala Comprehensive School in Forssa, were listening in somewhat shocked silence to the unpleasant truths.
     
The reports by the distraint officer on how unpaid bills could lead to an eviction order from a rental apartment were bound to leave the young audience with serious thoughts.
      ”We have studied payments in civics lessons, but never anything much on failure to pay and the consequences”, Laura Papinsaari commented.
      At the same time, some ninth-graders have also heard warnings against instant loans.
      ”Not at school, but from the media and from friends”, reports Inka Vaarula.
      Antti Loukonen from the district enforcement office and financial counsellor Tarja Rajala from the Somero Savings Bank have been touring schools in the Kanta-Häme region for more than seven years, informing pupils of notices of default and what happens thereafter.
     
Such sobering information is needed badly, as both Loukonen and Rajala said that they have ”absolutely way too many” young clients who are only just 18. The financial guidance at school includes more or less just a few civics lessons that leave the subject in something of an emotional vacuum.
      ”It is true that teachers do also discuss the use of money during their lessons, but when somebody who is involved in financial matters reports the grisly truth what has actually happened, it sounds a lot more like real life”, says Rajala.
     
Rajala and Loukonen have noticed that frequently an instant loan that has been taken in order to pay a mobile phone bill may lead to a vicious circle.
      ”If you some day have no money to pay a phone bill, for instance, call the phone company in order to negotiate a new payment date. Or ask your parents or your grandparents for a loan. The main thing is that you do not take any instant loan”, Rajala advises.
      At least Papinsaari, Vaarula and their classmates Lotta Lampinen, Samu Salo, and Teemu Mäkelä have not needed to consider any instant loans, as their parents pay their mobile bills, provided that the sum does not exceed a certain limit that has been agreed upon.
      ”If the sum is higher than agreed, I have to pay it myself. Sometimes it has gone that way”, Papinsaari admits.
     
Rajala gives further examples. She reminds the pupils that a notice of default may prevent them from getting a student loan or later even a loan for a car or for a home. A recorded notice in the credit register can also be an obstacle to subscribing a mobile phone.
      ”And if you fail to pay a fine for riding a moped where you shouldn't, and the fine goes to be recovered by an enforcement order, leading to the distraint of your earnings, the creditor could collect as much as one-third of each salary, starting from your first payday”, Loukonen adds.
      Even though Loukonen and Rajala go as far as intimidating pupils with a prison, they also point out that it is always possible to get some help in Finland.
      ”This is just money, remember, and life is much more important”, they conclude.
     
The school year will be over in a week or so, and the ninth-graders will begin a new phase of life.
      This is the end of comprehensive education - some will leave school altogether, others will head for upper secondary schooling or to vocational colleges.
      Inka Vaarula already knows that she will move to another school in another region.
      ”I will move into a flat of my own, and we have already discussed how everything will be arranged. I think that my financial affairs are in order, but it may come as a surprise how much everything costs”, Vaarula contemplates.
      A counsellor from the Social Insurance Institution (KELA) will come to tell the ninth-graders about financial aid for students, before they are given their school leaving certificates.
     
The number of new personal notices of default recorded in 2007 exceeded half a million, showing an increase of 23 per cent on the figures for 2006.
      A notice of default follows a district court ruling or at the latest when a debt cannot be recovered by an enforcement order.
      In 2007, Finnish district courts made a record number of decisions relating to cases involving debts and other claims.
     
The number of such cases was more than 113,000, which was 48 per cent higher than in the previous year.
      Swelling the statistics are various consumer credits, bank overdrafts, mail-order debts, and outstanding high-interest instant loans, which are increasing at a brisk pace among Finnish consumers.
     
     
Helsingin Sanomat / First published in print 23.5.2008


Previously in HS International Edition:
  Failures to pay instant loans increasingly often lead to litigation (28.4.2008)
  Finns in increasing numbers fall into consumer credit debt trap (19.1.2007)

Links:
  Ministry of Justice: Enforcement

PAULIINA PULKKINEN / Helsingin Sanomat
pauliina.pulkkinen@hs.fi