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Friday, 29 April 2011

More households drowning in debt in The Netherlands; paying behavior improves

Yesterday the Dutch Association for Indebtedness Relief and Social Banking (NVVK) came with their annual presentation (link in Dutch) on the state of the Dutch indebtedness over the year 2010.

This association helps people and families that are seriously indebted to put their life back on tracks again. It does this by mediating between indebted people and public and private creditors and by offering emergency loans, in combination with a pay back-arrangement that offers people temporary room to breath.

The figures worry chairwoman of the NVVK Joke de Kock:”The figures reconfirm that indebtedness is a broad societal problem. Debts have deeply penetrated into society”.

The NVVK presents some rather remarkable and disturbing figures on the indebtedness of Dutch people. The most remarkable figures and conclusions were:



  • 80,000 indebted households called in at Indebtedness Relief in 2010 (was 53,250 in 2009 in the ‘middle’ of the crisis.)
  • €47 mln was handed out in emergency loans (was €44 mln in 2009)
  • The number of working people that gets indebted is growing
  • The number of older people (above 65) that becomes indebted grows also substantially.
  • While there is a descending trend among people below average income (often non-working people) to become indebted, the number of indebted people well above average income is soaring.
  • The number of youngsters below 25 that becomes indebted grows substantially from 7% in 2007 to 12% in 2010 

There was also some relatively good news, coming from the 
Society of Bailiffs (GGN) (link in Dutch) in The Netherlands:
  • We pay our bills more in time: was in October 2009 the average amount of outstanding bills €850, in March 2010 this dropped to €817 and in March 2011 the outstanding amount was only €676.
  • The number of people that was involved with a debt-collection agency dropped in 2010, after a few years of rising figures .
  • Late payment in 2010 was often more a question of forgetfulness than of lack-of-money.
  • Restraint in expenses, in combination with better balancing of expenses and income and a rising income in general led in 2010 to less debt contracts, less late payments and less contacts with debt-collection agencies and bailiffs. 
These are the main conclusions: the whole report contains much more information about paying behavior per region and other interesting data.

At first glance the statement of the GGN seems to contradict with the statement of the NVVK, but that is not necessarily so:
  • Indebtedness is turning from a poor people’s problem into a wealthier people’s problem. 
    • The poor Dutch people learned seemingly their lesson, get less indebted in the first place, start to pay off their debts bit-by-bit and pay their bills in time. 
    • Richer people in general have more means to keep paying their most important bills while being heavy indebted (creditcards, overdraft loan arrangements; customer cards); that the amount of debt is rising then is a secondary problem 
  • The main reason for people above average income becoming indebted are excess mortgages in combination with interest raises or loss of income, due to unemployment and / or divorce. 
What some readers might surprise is that the situation of many people in 2010 deteriorated in comparison with the ‘official’ peak of the credit crisis, which was in 2008/2009. 


This is probably caused by the fact that the consequences of the credit crisis have been ailing in The Netherlands, due to all kinds of supportive measures from the government. It is the famous question (thank you, Toddo (www.minyanville.com)) of choosing between the car crash and the cancer. Also the Dutch government chose the cancer.

All in all there is not much to be happy about with these figures and conclusions. I wrote a lot about the mortgage situation in The Netherlands and it keeps on deteriorating: 



  • The Dutch housing market remains firmly locked up
  • People that are heavily under water and want to move / have moved to a cheaper house keep on paying two mortgages because they can’t sell their first house. Not paying your mortgage is not an option in The Netherlands
  • The interest that have been relatively low over the last years, is slowly but steadily rising again, making it even more impossible to sell overpriced houses and pay off the excess mortgage.




Besides that youngsters are lured into taking student loans, going on expensive holidays, boozing themselves up every weekend and on weekdays and getting indebted through buying iPad’s, iPod’s, iPhone’s, Androids, game computers and other unnecessary stuff in these hedonistic times. And €250-plus phone bills per month do the rest. As long as mum and dad can foot the bill in the end, everything is cool. But if daddy suddenly can’t or won’t pay it anymore, then these youngsters get indebted for years and years to come.

Older people are eating into their savings, as the interest on these savings is still a disgrace and not enough to generate a sufficient monthly income. And pensions are not compensated for inflation and rising costs of life.

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