The Cost of Problematic Debts on Society: Over 8.5 Billion Annually


Household problematic debts cost society at least 8.5 billion euros annually, or about 1 percent of the gross domestic product. This is even considered a “significant underestimation,” as revealed by research commissioned by officials from various ministries. Not all costs can be expressed in monetary terms, and some factors have been left out of consideration.

In a so-called Interdepartmental Policy Research (IBO), officials examined the ‘problematic debts’ of households. These are debts that someone cannot repay now or in the near future. Nearly 9 percent of Dutch households are struggling with these problematic debts: 730,000 households. According to officials, it is a “common and persistent problem,” but they also conclude that the policies of the government and its predecessors are not working well enough.

The cost estimate of at least 8.5 billion euros was calculated by Panteia, Utrecht University of Applied Sciences, and the Nibud commissioned by the State. The amount is a “conservative estimate” and is largely “shifted onto society.” The costs include direct costs of involved parties (such as creditors, judges, and governments), as well as costs that arise as a result of problematic debts. People with debts often suffer from stress for a long time, “which can lead to absenteeism, loss of productivity, and additional healthcare costs.”

Looking at the cause
The “persistent” problem lies mainly in the ‘chain’ of involved parties. Sometimes they point too much to each other and are at the same time very dependent on each other. The State mainly has ambitions but leaves the implementation too much “to private parties, independent judges, and autonomous municipalities.” This results in a lack of policy unity. The government must also look at the causes of debts: “insufficient income, changed life circumstances, (structural) overspending, addictions, the current consumer society.”

Once people fall into debt, debt counseling should be better, for example by offering help earlier. Still, too few people with problematic debts report to the municipality.

New cabinet
Outgoing Minister Carola Schouten (Poverty Policy) sent the IBO to the House of Representatives, but noted that a response to it is up to her successor. The new cabinet will be sworn in early next week.