Paying Off Debt on a Low Income: How Long Could it Take?

In the latest report of the Council for Society (RVS), ‘simplicity pays’ from June this year, we read those debts are increasing because the government has made them too complicated. The rules are complex and sometimes even contradictory. As the report title implies, simplifying the game laws in this country pays off and may improve cooperation between aid providers. If we all know that debt causes other problems, such as health problems, why can’t we make it easier in the Netherlands? RVS indicates possible directions for solutions. Simplify the rules, make it easy to get help, and give creditors room to help. But we are not there yet.

Debt is Not a Problem

There are so many reasons for getting into debt. Consciously or unconsciously. A divorce, higher healthcare costs due to illness, or perhaps more significant expenses than income. There can be all kinds of reasons. As I said in my last blog, debt is not a problem. It only becomes a problem if payment agreements are no longer met or if one can no longer repay a loan. The person in question must act. If you know the cause of the payment problem, you can work on a solution. 

Debt is a necessity, we have to have some debt to build credit. Debt is only a problem when you allow your debt to accumulate so much that you cannot make the monthly payments as required. This is a problem. 

But there are also obstacles due to the nature of the problem. For example, work does not always pay off; people often ring the bell too late for various reasons.

In addition to money worries, many also have other problems, such as health problems and psychosocial problems. Debts, whether in combination with other issues, cause a lot of unrest and stress in people and limit their self-reliance. However, these are factors that people themselves can hardly influence.

Where do you go with debt?

For now, finding the right way is still quite a task. The range of help available varies from municipality to municipality. From 2012, when the Municipal Debt Assistance Act (Wgs) came into effect, the municipality had the legal task of organizing debt assistance. The municipality can therefore design this entirely itself.

Due to the complex and sometimes unclear rules, many parties in the care sector do not cooperate well. Because each municipality can design the aid, it is difficult to present a picture of how the ‘standard’ works because there is no standard. What can you do then, and where can you best refer me?

Are you Unable to Manage your Money Affairs yourself?

Then it is essential first to ensure that the problems do not get any bigger. A budget coach or budget manager can help with this. At the same time, the person can seek a settlement for the debts.

A budget coach helps you arrange your financial affairs yourself. You must be able to make an overview of your income and expenses. It will help with budgeting and planning when you can spend something. It prevents new problems or debts. Anyone may exercise the role of budget coach. These coaches can be found through the municipality, social work, or the credit bank. Help is free, provided it is part of a debt relief process through the municipality. Sometimes it costs money.