Addressing household over-indebtedness

Updated on 06/01/2022

Eurofound – (Dubois, Hans; Fóti, Klára; Kable, Ethan; Anderson, Robert) – 2020

“Over-indebtedness is an ongoing concern in Europe. For some Member States and population groups, recent increases in over-indebtedness can be observed. This report provides an overview of the main causes, triggers and consequences of household over-indebtedness. It also investigates two policy responses in the EU and Norway: debt advisory services and debt settlement procedures.”

Key findings

  • In 2016, 14% of people (EU28) reported not being able to make scheduled payments related to rent or mortgages, consumer credit, loans from family or friends, or utility or telephone bills. If those with difficulty making ends meet – but without any arrears – are included, 21% risk being over-indebted.
  • Over-indebtedness is on the increase again in some countries and population groups.
  • People aged 25–49 years are most at risk. A smaller group of over-indebted people aged 65+ experience greater financial problems and lower mental well-being.
  • While policymakers often focus on mortgage or consumer debts with financial institutions, debt problems in low-income groups often relate to non-payment of utility or telephone bills, rent, taxes or fines, debts with friends, or healthcare costs. Policymakers interested in early intervention should not overlook this.
  • If over-indebtedness is not addressed in an appropriate and timely way, there are negative consequences for affected individuals and households, as well as for society as a whole. Issues arising from over-indebtedness can include mental and physical health problems, as well as unemployment and inactivity.