– The House of Cards Collapses – E24

Today, we are listed with comments of payment for NOK 64 billion in unsecured debt. It shows the industry figures that E24 has received from the Creditors Association.

Non-performing consumer debt has risen by NOK 7 billion after the government introduced debt registration in the summer of 2019, according to figures from Bisnode.

And the increase does not come in spite of the new tool that will save Norwegians from the debt trap, but as a direct consequence of it, says Creditors Association Chief Executive Officer Bjørn Grønnesby.

– The house of cards collapses

– We have been under artificial stimuli for many years, where debtors have obtained new loans to service old ones. But now this debt spiral is closing. The house of cards collapses, Grønnesby tells E24.

The debt register provides banks with an overview of our consumer debt. This is how they will avoid new loans to people who already have payment problems.

– We now see a sharp increase in delinquent loans. And I think that’s because of the debt record, which means that people can no longer refinance their debt. Someone with four or five old credit cards will soon be discovered, says Grønnesby.

– And is it good that these people are not allowed to borrow even more?

– That is very good. There has been unhealthy development for several years, and these payment problems would appear sooner or later anyway.

But the closed loan taps also mean that “payoff time” has come for many Norwegians at the same time, the collection chief explains.

Heralds a new wave of debt victims and new billions in bad loans down the road.

Nav updates auxiliary device

– Many have lived beyond their means for a long time. They are now blacklisted and in serious financial trouble. Debt advisers will be the first line to help them, and I think Nav can expect a sharp increase in clients who need help, says Grønnesby.

He is concerned about the lack of capacity in the public assistance system.

– We see that there are already capacity challenges in the municipalities, he says.

Nav offers advice for people with debt problems. The department director, Jan Erik Grundtjernlien, says they have prepared for more breakthroughs in the future.

– We have increased the staff at Gjeldsrådgivning, at the same time that we are working on a new digital guide and opening new hotlines, Grundtjernlien tells E24.

– So far we have not registered a sharp increase in progress, but our county governors are prepared for more people to need debt assistance, either because of the crown situation or as a consequence of the debt registration, he adds .

The Consumer Council: – It has gone better than feared

Jorge Jensen, Chief Financial Officer for the Consumer Council, supports the debt collector’s reasoning on the challenges of recording debt. But he’s not that worried.

– Last fall, we were very concerned about the negative short-term effects of the debt registry. We know that some consumers have lived going from one loan to another, and we didn’t know many who would overflow at the same time. But the effect was not as strong as we feared, says Jensen.

– Does the debt collection industry report seven billion more in defaulted debt since the debt registry was introduced?

– Yes, but in the meantime we have had a pandemic at the top. All things considered, I think this has gone better than expected.

– At the same time, Grønnesby believes that the peak has not been reached: do you expect more bad debt and more new victims in the future?

– Of course it may be that it will increase more, but I doubt that in that case it is due to the record of the debt. We should have seen that effect by now, says Jensen.