Effective assistance to households at risk of overindebtedness

This project focuses on households at risk of overindebtedness. These households are at risk of not being able to manage their indebtedness. In the short term, they may find it difficult to manage their expenses and pay their debts. For these households, control over their indebtedness is a key problem in order not to end up in overindebtedness, i.e. the permanent inability to pay the debts.

Households exposed to debt can receive help and support from the municipality’s budget and debt counselling. Budget and debt counselling are part of the social services. Its work consists of both support to help-seeking households and preventive work. During 2021-2022, the budget and debt counselling at Östersund municipality handled approximately 190 aid applicants annually. This compares with the fact that, in September 2023, about 1,600 municipal residents had debts registered at Kronofogden, of which 1,000 for more than five years and 700 with debts above SEK 100,000. From a socio-economic perspective, knowledge about how budget and debt counselling can help household to manage their debts and avoid overindebtedness is important. In this project, we study early interventions with support, counselling and preventive work intended to give households at risk of overindebtedness effective assistance.

The state of the art is unclear as to which measures and support can prevent households from becoming overindebted. On the one hand, the importance of knowledge about private finances and indebtedness is highlighted and that lack of knowledge can explain why vulnerable households do not use support that can improve their situation. On the other hand, the professional expertise among the budget and debt counsellors highlights the need for preventive work and tools to help households that are not granted debt relief. This project contributes with knowledge of how this preventive work can be carried out in order to most effectively help indebted households manage their situation and avoid overindebtedness.

The purpose of this research project is to explore and understand how households at risk of overindebtedness may improve their financial situation, manage their debts and prevent overindebtedness.

This purpose is achieved by answering three research questions:

1. How susceptible are the households to targeted support and preventive measures from the municipal budget and debt counselling?

2. What are the effects of preventive support on the households and on other municipal activities?

3. What needs and experiences of budget and debt counselling have individuals seeking support and help?

The questions are answered empirically by collecting register data on a preventive intervention at the budget and debt counselling in Östersund consisting of a targeted offer of support to young individuals with rental debt (study 1) and by interviewing individuals seeking support and advice through the budget and debt counselling’s drop-in activities (study 2).

Study 1: The Effects of Preventive Support to Young Individuals with Rental Debt

The study focuses on early identification of young households who have payment problems with the rent to offer support. The initiative is carried out by the budget and debt counselling at Östersund municipality and consists of attempts at contact with all individuals aged 18-30 years regarding whom the municipality receives a notice of unpaid rent from the landlord. Contact attempts with the offer of support are made via telephone and SMS. If accepted by the contacted individual, support can be given in different ways; by phone, office meeting, or home visit. The intervention will last one year with the goal of contacting about 50 individuals. This estimate is based on historical data from the municipality regarding the number of annual notifications of rental debts for this age category.

Follow-up is done with register data from the municipality, Statistics Sweden and the Swedish Enforcement Authority (Kronofogden). Relevant outcomes are whether households accept the offer of support, the extent to which evictions can be avoided, whether voluntary relocation takes place, and how the household’s debt situation develops. This aims to answer research questions 1 and 2.

Study 2: Need and Experiences of Budget and Debt Counselling

Budget and debt counselling in Östersund municipality already today has ongoing drop-in activities. This means that the local residents have the opportunity to meet with advisors without booking an appointment in advance. In this study, individuals who seek drop-in support are interviewed regarding their situation, needs, and experiences of budget and debt counselling. This answers research question 3.

Financing

This is a research project in collaboration with Östersund Municipality in accordance with the collaboration agreement (swe. samverkansavtalet).

The project application can be ordered from Mid Sweden University by e-mail: registrator@miun.se. Please submit the project title when ordering. The project application is in Swedish.

Participants from Östersund municipality:
Debt Counselling at the Social Services, manager: Kajsa Sundell

Total funding granted from the collaboration agreement:

SEK 1,250,000 of which

Östersund Municipality: SEK 625,000

Mid Sweden University: SEK 625,000