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The situation is truly dramatic: according to a survey by the umbrella association of debt counseling centers, 70 percent say that consultations with specialized centers have increased, as indicated in the statement from the Swiss debt counseling service. 27 percent have even noticed a significant increase in inquiries since the start of the pandemic.
This increase in debt is due to the loss of income of those affected by short hours, the loss of jobs and the elimination of additional income opportunities.
Arms particularly affected
According to the announcement, the economic research center of ETH Zurich has carried out an analysis of the effects of the Covid-19 pandemic. It found that 11% of households with incomes below CHF 4,000 and 6% of households with incomes between CHF 4,000 and CHF 6,000 had to go into debt to cover their current expenses. In particular, people who have become unemployed (25 percent), are self-employed (13 percent) or have a short-term job (11 percent), as it is called, have borrowed.
The average debt of people who came to a counseling center was 71,063 francs (2018), according to the Keystone-SDA news agency. The problem is that people ask for advice very late, that is, when the debt spiral is already changing. On average, this is five years after debt. Therefore, it makes sense to seek the advice of a specialized department at an early stage.
Tax debts and health insurance companies
Most of the indebted have tax debts (77 percent) and debts with health insurance companies (62 percent), as said upon request. Debts resulting from consumer loans, such as small loans or leases, play a role in 47 percent of debt cases. Cash loan deals and the like affect about 30 percent of the over-indebted, as the 2018 figures show.
According to Debt Advice Switzerland, the loss of income also jeopardizes ongoing restructuring processes for over-indebted people, because payment plans could not be met due to loss of income and despite low expenses.
The survey in the counseling centers had been conducted since the start of the pandemic until March 1 of this year, it was said on request. (pbe / SDA)
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