Can no longer pay your debts

Insurmountable debts, seizure or bankruptcy, it can happen to anyone. Losing your job will leave you short on cash and ultimately you will no longer be able to pay your home or car loan. And before you know it, the bailiff is on your doorstep. Anyone who enters “get rid of debts” into Google will be overwhelmed by good advice and promises such as: “Debt-free in 3 years, without personal bankruptcy, without BKR, without risk, immediately more money to live”. That sounds great at first glance. But most of those promises and offers are aimed at offering you a new loan. This may make sense in some circumstances, but it usually does not mean a permanent solution.

When is excessive debt burden?

We speak of an excessive debt burden when a person or a family can no longer fall back on savings and the monthly income is no longer sufficient to pay rent, electricity and other obligations such as the repayment of loans, all structurally. Experts estimate that tens of thousands of households in the Netherlands have too much debt. According to the BKR, the majority of payment arrears occur in:

  • the tax;
  • energy suppliers;
  • housing associations;
  • health insurers.

In fact, one in ten adults in this country is so deeply in debt that they cannot escape this vicious circle on their own and have to resort to the WSNP (statutory debt restructuring).

Debt is also increasing alarmingly among young people

Forty percent of households no longer know a way out of debts under an amount of 10,000. Young adults who still live with their parents often have a debt of more than 1,000 over their heads. There is a risk, especially for these young people, that they will no longer be able to escape the debt spiral and will find themselves in a vicious circle for years in which old payment obligations are financed with new debts.

Mortgage payment arrears are increasing rapidly

The number of homeowners who can no longer afford their mortgage payments is increasing alarmingly. More than 72,000 households had difficulty meeting their monthly costs in September 2012, an increase of approximately 10,000 compared to January 2012. These numbers were announced in October 2012 by the Credit Registration Office (BKR). Continuing this trend, BKR feared at that time that the number of households with mortgage payment arrears would amount to approximately 76,000 at the end of 2012, an increase of no less than 20%.

Not paying the mortgage

Not paying the mortgage is usually one of the things homeowners try to avoid for as long as possible. Apparently this was preceded by a number of other financial problems. In that context, the risks of forced sales should not be taken lightly. As a result of the sharp drop in house prices, an increasing number of homes are ‘underwater’, so to speak. This means that the house is worth less than the mortgage, so that you are saddled with a residual debt when you sell it.

Who can insolvency affect?

It does not matter. Man or woman, young or old, with title or without education. Every private individual can end up in a situation where a mountain of debt looms before him. Most debtors are between 30 and 50 years old. At that age, many people start their own families, buy their own homes and take out loans. If something unexpected happens, the debts can easily grow beyond your head. Even the unplanned birth of a child can overwhelm some financially.

People on benefits are mainly affected

The income of people affected by insolvency (inability to pay) is often very low. Thirty to forty percent of those affected who can no longer get out of debt on their own, live on benefits. Their financial leeway is so limited that it barely covers the basic necessities. If payment obligations from better times also accumulate, the situation is almost hopeless. In practice, divorce, dismissal and excessive consumption are the main causes that lead to a high debt burden.


Divorce is one of the most common causes of debt. People who end up in such a situation have to run a double household. Rent, electricity and everything that belongs to normal subsistence must be paid twice, although the disposable income remains the same. In the event of divorce, it may also happen that the woman is left with a mountain of debt from her ex-husband if she co-guaranteed a company or her husband’s company at the time of the marriage. If the company goes bankrupt and they separate, the divorced spouse must in principle also pay for the debts. However, if it concerns a marriage where the partner has never worked and was solely responsible for providing for the family, she can rely on this fact and may not have to pay her guarantee obligations.

Redundancy and financial shortage

Another important reason that people find themselves in financial need is unforeseen unemployment. You can no longer pay the financial obligations entered into for the purchase of a house or a car. If the affected person does not have a sound professional qualification or a proper level of education, the path back to paid employment is usually very difficult. Owners of their own home who can no longer pay their mortgage have a number of options to avoid a forced sale. Even if the situation seems hopeless, it is important not to give up and wait for the bank to report. Own initiative can prevent a lot of misery.

Buy now, pay later

And finally, there are the temptations of consumer society, which some people cannot resist despite their tight wallets. The fact is that aggressive advertising nowadays doesn’t exactly make it easy to pass up tempting offers.

Buying on installment

In addition, social status is now often equated with the possession of material goods. By purchasing on credit, the consumer has unlimited access to the plethora of offers. Under the motto “buy now, pay later”, the door to unwanted debt is opened wide. Mail order companies in particular have a bad reputation in this regard and lure many people into debt traps. But beware: anyone who conceals their financial situation with purchases on credit may even be suspected of fraud.

If we pay late

Many people have debts, for example in the form of a mortgage for their house or a loan for their car. And entire tribes of people are sometimes overdrawn at the bank. That is also guilty. Debts in themselves do not have to be a problem. It only becomes a problem when people can no longer pay their bills on time and pay off their debts. A recognizable image for many of us. You receive reminders from the energy supplier. The credit card is blocked. And to make matters worse, we also owe statutory interest in the event of late payment. Then it is high time to seek help.

Debt restructuring offers a solution

Debt restructuring means that one institution takes over all debts and payment obligations from you. As a rule, this is the Municipal Social Services or the Municipal Credit Bank. In fact, you only have to deal with one creditor. After 3 years you can be debt free. In practice, creditors are usually willing to cooperate in such debt restructuring because they will then receive at least part of their claim back.

No more debt

If your income is not sufficient to put 10% aside every month in a savings account, you should scale back your wishes. There is no other option to live long-term free from financial worries. For example, forgo lotteries, flat-screen TVs and cigarettes. Find a cheaper holiday destination or forgo a holiday altogether. Sell your car and travel by bus again. Or look for a smaller apartment that costs less rent. But of course you can also look for a better paying job. Anyone who fails to reserve 10% of their income for worse times is heading for more debt despite everything. But if you consistently keep track of all your income and expenses and adjust your income requirements if necessary, you will never get into debt again and live a life without financial worries.