Debt advice in Europe

Guided Tour "Debt advice in Europe"

1. Albania

Structure and Organisation
In Albania there is no private insolvency law like in other European countries. One reason for this is that business relationships in daily goods traffic are characterized by cash deals. A businessman selling something will only hand over the object of purchase upon payment of the purchase price. Hire purchase has not been a common practice in Albania. Though there have been basic changes during the last two years hire purchase has still not really become "popular". On the other hand, family structures are developed to a great extent so that financial bottlenecks are solved with the help of the family. This is also the case if debtors are not able to repay the "credit". Under these circumstances the Albanian government did not see any need for legislation in this context.
Given these facts private insolvency cases can only develop in relationship to banks and only if a citizen has taken out a mortgage to either finance a house or a flat or to renovate or furnish it. Albanian legislation soon realized this aspect and already in 2002 the law on the loan handling agency (Ligji per agjencine e trajtimit te Kredive, LIGJ Nr. 8894) was passed. However, it has to be noted that only loans granted by state-owned banks are covered by this law. The reason is that although most banks are run under private law they still belong to the state. According to § 1 the law pursues the purpose of transferring the handling of loans granted by state-owned banks to this agency (ATK) in order to exclude the banks from realizing the securities.

The ATK (Agjencia e trajtimit te Kredive) has its headquarters in Tirana and further 13 offices throughout Albania. They are located in the most important Albanian towns Durrà«s, Kavajà«, Lushnjà«, Fier, Vlorà«, Gjirokastà«r, Sarandà«, KorÇà«, Berat, Elbasan, Krujà«,Shkodà«r, Kukà«s. The ATK is a state institution and subordinate to the Ministry of Finance.

The law
As already mentioned, the law on the loan handling agency (Ligji per agjencine e trajtimit te Kredive, LIGJ Nr. 8894) was passed in 2002. It can be divided in two parts:
1. Part: § 1-10 (powers and commitments of the ATK)
2. Part: § 2-25 (management and control of the ATK).
However, only the first part may be of interest for the citizen (debtor) and will therefore be discussed in the following section.
According to this law, the ATK functions as a mediator while state-owned banks are excluded from realizing borrowers' securities. Consequently, the ATK decides at its own discretion and on the basis of administrative regulations on how to act and what to do with the securities of the guarantor.
According to § 8 the lending bank will be replaced with the ATK which will enter into all of the bank's rights and commitments. Typical powers of the ATK are mentioned in § 8 subsections a to e and according to the law's wording additional powers may follow.
At present they read as follows:
• Extension of the loan's repayment period
• Relief of interest, either entirely or partly, or of other financial penalties
• Change of the interest rate
• Change of credit terms or of the realization of borrowers' securities
• Loan cancellation through conveyance of other or already existing movable or immovable securities
These powers are only mentioned as examples so that more, even broader, powers are possible.
The situation of the debtor is hardly improved by the law's lack of clarity. Because it makes no difference to debtors whether the lending bank is to decide on waiving their debts or whether this decision depends on the discretion of a state institution. Administrative regulations are of no help in this case because they are not available to citizens and consequently they cannot verify whether or not the ATK has acted correctly. Therefore debtors are at the mercy of the respective clerk's mood and discretion.
Another point is that according to § 10 the ATK is obliged to publish the debtors' names, addresses and the amounts due in a newspaper with high circulation. This has to happen at least every three months.
Considering all these circumstances the law is not really helpful for debtors. However, it has to be seen that Albania is still at the beginning of what could be called a legal state culture and, furthermore, that there are far less consumer insolvencies in Albania, in percentage of the population, than in the Western countries.

ATK Drejtoria e Pà«rgjithà«shme ,
Rruga "Prokop Myzeqari",
Vila Nr. 17 Tiranà«
phone: +35542 32321
fax: +35542 21698
opening hours: Mo-Fr; 8 am - 2 pm

Homepage of the "Department of Public Administration" containing information about the ATK

2. Austria

History and Development
In the course of specialist conferences at the end of the eighties it became apparent that debt counselling would develop into an important and independent branch of social work. But at that time, debt counselling did not fit into one of the established areas of social work, neither financially or organisationally nor in terms of contents. Due to the expected importance of the subject discussions about "supraregional networking", "job profile" and "finances" took place.
Between 1991 and 1994, the umbrella organisation "ARGE Schuldnerberatung (ASB)" was founded and the process of setting up Austrian debt advice centres was successfully completed. Since 1993, the umbrella organisation has been active in both internal and ministerial work teams. After initial uncertainty in the mid-nineties about where debt counselling should belong to it was finally assigned to the social work departments of the individual provinces.

The existing 16 debt advice agencies provide a total of 37 advice centres, all of them members of the umbrella organisation ASB. The ministry of justice pronounced 11 agencies "privileged'. They are named as "debt advice agency" in the bankruptcy law and are thus entitled to represent debtors in court.
The Linz-based umbrella organisation ASB is a member of the European Consumer Debt Network (ECDN). ASB operates on the one hand as coordinator and interface between local debt advice centres and on the other as national/international, private/public institutions. Another function of ASB is to ensure high quality counselling and organisation. Every privileged debt advice agency is represented in the ASB advisory board. Other main ASB activity fields are training, improvement of standards in terms of contents and organisation as well as analysis and documentation.
Most of the debt advice agencies are non-profit associations under private law. Some of them are part of public institutions (e. g. town council) or are organised as non-profit limited companies. Mostly they are being financed by the public sector (provinces, towns).
At present, approximately 130 debt advisors are employed throughout Austria so there is on
e advisor per 100.000 inhabitants. The number of advisors has been doubled during recent years, however, there are still strong regional differences. About one half of the advisors are qualified lawyers and about one third are social workers or social pedagogues, other advisors are psychologists, qualified bank clerks etc.

Dr. Hans W. Grohs
Dachverband Arge Schuldnerberatungen (ASB)
Scharitzerstrasse 10
4020 Linz

phone : +43 (70) 656599
fax: +43 (70) 653630

Umbrella organisation ASB (Arge Schuldnerberatungen)


Non-profit debt advice agencies in Austria

Advice centre for debt prevention in Oberösterreich

Quellen und Dokumente

3. Belarus

History and Development
In Belarus the state doesn't provide for debt counselling. Although the earlier version of the civil code and the insolvency act contained the possibility of bankruptcy proceedings these were restricted to a very limited circle of legal bodies, let alone consumers. In recent years the Belarusian legislation including the civil code has been amended. Furthermore, the new Insolvency Act has been effective in Belarus since 2003. It has brought about several positive changes; however, there still is no possibility of bankruptcy proceedings for consumers.
Overindebted people can turn to a lawyer's office or consumer protection organisation. Since 1992, the Belarusian consumer association has been providing free advice in the context of consumer protection.

The highest state institution in the context of consumer protection is the Trade Ministry. The ministry ensures state control and protection of consumer rights. According to section 42, paragraph 5 of the Consumer Protection Act also local governments are entitled to set up institutions providing free legal advice in the context of consumer protection. There are, for example, the Belarusian union of consumer organisations or the Belarusian consumer protection association. Also private companies and citizens are allowed to provide debt advice.

Belorusskii respublikanskii Sojuz potrebitelskih obshestv
220004 Minsk
pr. Masherova 17
phone: (8-017) 22 68 05 0

Ministerstvo Torgovli
220050 Minsk
ul. Kirova 8/1
phone: (8-017) 227 61 21

Belorusskoe Obshestvo Zashiti Potrebitelei
220113 Minsk
ul. Kolasa 73
phone: (017) 262 96 08
Susha Anna

Gorodskoi Centr Zashiti prav potrebitelja
phone/fax: (0152) 31 30 62

220053 Minsk
Starovilenskii trakt 93
phone: +375 172 33 52 13
fax: +375 172 33 25 88

Consumer protection association in Moscow (Moskovskoe obshestvo zashiti prav potrebitelei)

Consumer protection association in Kirov (Kirovskoe obshestvo zashiti prav potrebitelei)

Consumer protection association in the context of education (Obshestvo zashiti potrebitelei obrazovatelnih uslug)

Consumer protection association in the Ukraine (Ukrainskoe obshestvo zashiti prav potrebitelei)

Consumer protection youth organisation "Habar" (Molodeghnoepotrebitelskoe obedinenie "Habar")

Magazine of the international congress of consumer protection associations (Sait zhurnala mezhdunarodnoi konferenzii obshestv zazhiti prav potrebitelei)

Independent consumer protection association (Server nesavisimoi associacii Zashiti prav potrebitelei)

Association of consumers in the Russian Federation (Sojuz Potrebitelei Rossiiskoi Federatii)

Documents and Sources
Address list of consumer protection organisations
Text of the Belarusian Insolvency Act
Text of the Belarusian Consumer Protection Act

4. Belgium

Structure and Organisation
In Belgium debt counselling is provided by social workers of the public social services. These are the OCMW (Openbaar Centrum voor Maatschappelijk Welzijn) in Flanders and the CPAS (Centre Public d’Action Sociale) in the Walloon region. OCMW/CPAS are responsible for social welfare in the broadest sense of the word. The umbrella organisation of the OCMW is the VVSG (Vereniging van Vlaamse Steden en Gemeenten). At present, in some municipalities of the German-speaking community and of the Walloon region debt advice is offered by the European Consumer Centre in co-operation with the respective offices of OCMS/CPAS.
In addition, other private organisations like the CAW (Steunpunt Algemeen Welzijnswerk) deal with debt counselling. In case of serious overindebtedness debtors can apply for collective debt rescheduling (collectieve schuldenregeling/règlement collectif de dettes) that offers them the opportunity of being released from their financial debts if they follow a strict financial scheme during a period not exceeding 5 years. .(Law: Wet betreffende de collectieve schuldenregeling 5 July1998, in effect since 1 January 1999).
Already since 1991 there has been a law (Federale Wet op het Consumentenkrediet of 12 June 1991 /loi du 12 juin 1991 relative au crédit à la consommation) to regulate debt mediation (schuldbemiddeling, médiation de dettes). Only lawyers, bailiffs, notaries and recognised organisations, both under public law or private, are entitled to negotiate with creditors. In a decree the organisations recognised as debt mediators are listed in detail. OCMW and CPAS are recognised organisations under public law.

A list of all recognised debt mediators may be requested at the following phone numbers:
• Walloon region, 0800 / 11 901 (in Belgium only)
• Flanders, (+32.2 ) 553 34 37 or 0800 / 30 201 (in Belgium only)
• Brussels,
(+32.2) 548 98 00

Observatoire du Crédit et de l`Endettement
Chà¢teau de Cartier
Place Albert 1er, 38
6030 Marchienne-au-Pont
phone : (+32)71 - 33 12 59
Fax: (+32)71 - 32 25 00

OCMW Brussels
phone : (+32.2) 543.61.11
Fax: (+32.2) 543.61.06
Hoogstraat 298 A, 1000 Brussel

CPAS of Brussels
Rue Haute 298 A
1000 Bruxelles
phone:(+32.2 ) 543 61 11
fax : (+32.2 ) 543 61 06

Dienst Krediet en Schuldenlast van het Fonds ter bestrijding van Overmatige schuldenlast
(Le Service Crédit et Endettement du Fonds de Traitement du Surendettement)
North Gate III, Koning Albert II-laan 16, 1000 Brussel
phone: (+32.2) 206.50.55
fax: (+32.2) 206.57.60
Johan Lienard ( )
Johan Van Lysebettens ( )

phone: (+32.2) 211.55.00
fax: (+32.2) 211.56.00
Paviljoenstraat 9, 1030 Brussel

phone: (+32.3) 366.15.40
fax: (+32.3) 385.57.05
Diksmuidelaan 50, 2600 Berchem-Antwerpen

phone.: (+32.87) 59 18 50
fax: (+32.87) 59 18 51
Neustraße 119
B-4700 Eupen

Observatoire du Crédit et de l`Endettement
Steunpunt voor de diensten schuldbemiddeling van het Brussels Hoofdstedelijk Gewest
Berufsverein der Kreditgeber
Belgische Nationalbank
Belgisches Staatsblatt
Federale Overheidsdienst Economie
VVSG (Vereniging van Vlaamse Steden en Gemeenten)
Europäisches Verbraucherzentrum
Föderale Portalseite
Région de Bruxelles-Capitale / Brussels Hoofdstedelijk Gewest

Documents and Sources
Law text on collective debt rescheduling ( in Dutch and French language)
Laws and amendment
Published studies on the topic of overindebtedness

5. Bosnia-Herzegovina

History and Development
There are no indications for debt counselling in the history of Bosnia-Herzegovina and neither do we find it today.
Unlike Croatia, the war is still present in Bosnia-Herzegovina with SFOR-soldiers still being the only power in the country to ensure security, and countless uncleared minefields setting the tone of the landscape.

In addition, there is the very special system of government in Bosnia-Herzegovina: outwardly it is a self-governing nation, however, inwardly it is torn due to the individual ethnic groups in the country striving for autonomy. For example there is the phenomenon of the "Republika Srpska" existing as a state in its own right within the state of Bosnia-Herzegovina having its own alphabet and own administration and practising a policy of ethnic separation from the rest of the country.

These circumstances make it difficult to build up a functioning economy and democracy, unemployment and crime being the consequences. After all, debt advice centres only exist in countries with a long-established socio-political democracy and Bosnia-Herzegovina is still far away from a situation like that.

But that does not mean that people were free of debts, for the temptations of consumption are as omnipresent here as they are in other countries. Like in Croatia debtors fall back on the social network family which is able to at least reduce the debts.

The rather rural character of the country, seen as a resource, is even stronger in Bosnia-Herzegovina than in Croatia. The capital of Bosnia-Herzegovina, Sarajevo, may be an attraction for outsiders but the rural population is not attracted in most cases because self-supply with food is easier to manage in the country than in Sarajevo.

In Bosnia-Herzegovina people are far too busy securing their basic needs than trying to get debt advice. People endure debts as an extra evil adding to the whole miserable situation.

There is no debt counselling in Bosnia-Herzegovina and therefore no information on debt advice organisations can be given.

No contacts at present.

6. Bulgaria

History and Development
1. The banking sector and its lending business
According to information provided by financial institutions and experts in 2004, banking is one of the business sectors enjoying the most dynamic development. In 2004, the lending sector alone saw its business double compared to the previous year, so it has grown faster than expected. Consumer and mortgage credits saw an annual growth of approximately 60 % and 130 % (source: As a consequence, the International Monetary Fund (IMF) urgently advised the Bulgarian government to limit and regulate the "credit explosion".
Expectations for 2005 are that once the IMF recommendations have been realised credit expansion will slow down and the annual growth will decrease to about 30 %. However, this reduction will affect consumer rather than mortgage credits.

1.1. Consumer credits
Consumer credits granted by banks are given for the following purposes:
• consumer credits to finance general needs of living;
• credits to finance motor vehicles;
• credits for shopping at chain stores like "Metro", "Technopolis", "Technomarket" etc.;
• credits to buy household products;
• credits to finance holiday trips etc.
At present, the Bulgarian banking business faces strong competition and as a result borrowing conditions have been simplified and credit periods have been shortened.
Bank conditions for lending differ considerably:
• If a loan is secured by surety - provided by 1
to 3 people depending on the amount credited - which requires disclosure of the guarantor's income, borrowers as well as guarantors are jointly held responsible.
• If civil servants take out a loan no surety is necessary, however, the borrower has to grant the bank access to his income in case of non-payment.
• If a loan is taken up to buy a motor vehicle the vehicle itself serves as surety;
• If credit cards or similar cashless payment instruments are issued people have to deposit an amount of money as a security.
Borrowers servicing a loan bear an important share of the responsibility. However, consumers are often not aware of the consequences of not being able to pay monthly instalments or of even becoming completely insolvent. Worst affected are those consumers who were securely employed when taking up the loan and could prove regular income but then lost their jobs and their assured income.
In Bulgaria, there are no known cases of insolvency resulting from the use of credit cards. This is partly due to the fact that credit cards and other means of cashless payment are not yet very common in the country. Another important reason is that banks require the provision of a certain amount of money as security before issuing credit cards.

1. 2. Mortgage credits
Banks grant mortgage credits for the following purposes:
• mortgage credit to buy property;
• mortgage credit to build property;
• mortgage credit to cover the difference between the sale of an old property and the purchase of a new, more expensive property.
• mortgage credit to realise rebuilding and remodelling of properties, such as replacing the heating system or adding exterior insulation.
• mortgage credit for other, non-defined purposes.
Relatively high loan amounts and long repayment periods are typical of mortgage credits. Borrowers take a risk because repayment depends on stability and continuity of their earnings. If they are not able or willing to pay monthly instalments they may be asked for early repayment of the loan and, if they cannot pay, will lose the financed property.

2. Typical problems in lending
2.1. Conclusion of credit agreements
Unfortunately, borrowers who want to raise a credit for private purposes rarely employ consulting services before the conclusion of a credit agreement. In fact consumers rely on the trustworthiness of the lending bank without becoming aware that banks represent their own interests. In those cases where borrowers are already in financial difficulty they are often prepared to accept almost every condition required by the lending bank.
Frequently, borrowers, both consumers and entrepreneurs, only look for advice at a later stage of the borrowing process. At that point payment of their instalments has long been overdue and banks have already taken measures for early repayment. This situation makes the work of legal or debt advisors even more difficult because they are then tied to the conditions predetermined by the lending bank without being able to modify them.
If consumers are not able or willing to repay the loan lenders will collect the debts by execution against the borrowers' private property.

2. 2. Reasons
Reasons for consumers not repaying the loan are often:
• incorrect calculation of repayment terms, especially with long-term loans;
• insecure income that had been considered when lending;
• borrowers becoming unemployed and as a result losing their income;
• employers falling behind with the payment of wages and salaries;
• the expenses that should have been covered by the loan are higher than expected and exceed the amount borrowed.

At present neither government facilities nor private institutions are offering debt counselling for borrowers that have become insolvent. Such activity is not even prescribed by law.
For a long time, there had not been a centralized register to keep lending records. As a result many borrowers could conclude credit agreements with several banks at the same time without securing their repayment obligations. This problem was solved on 01.07.2004 when the 'Bulgarian National Bank (BNB)' established the centralized credit register. Using the register banks may obtain credit information about the borrower as well as information about when and what amount borrowers have taken out as a loan and the present situation of repayment.
Developing a draft to create debt advice centres would be an innovative step for Bulgaria. Such newly created debt advice centres could offer borrowers both legal and financial advice but could also provide psychological and social support. New fields of employment and activity for dealing with borrowing and debt problems could develop. Advice centres would have to be set up outside the banking business to ensure and promote good quality independent services.

Due to non-existing structures in the field of debt counselling no contacts are known

Centralized credit register of the 'Bulgarian National Bank' (in Bulgarian and English language)
Bulgarian consumer organization [in Bulgarian language]
Ministry of Justice
Industry Watch
- independent consulting firm for economic research in Bulgaria (in Bulgarian and English language)

Documents and Sources
Bulgarian law portal (in Bulgarian and English language)

7. Croatia

History and Development
There are no indications for debt counselling in the Croatian history and neither do we find it today. However, the level of debt is provably quite high among the Croatian population.
The reason for the absence of debt counselling like we know it from other European countries is that after the collapse of communist Yugoslavia no social market economy was introduced in independent Croatia. The war that went on until 1995 was an additional obstacle in building up such a system.
Besides, the political culture was not democratic but rather nationalist totalitarian. It was mainly influenced by then president Tudjman who celebrated himself as Croatia's liberator and rescuer. It was only after his death in 2001 that it became possible to develop a more democratic culture, i.e. freedom of the press and of speech, multiparty system and free, independent elections. But despite this development a socio-political market economy did not evolve.
In Croatia maximum tax rates are at 36 % and the conditions concerning industrial law are comparable to the US -"hire and fire" mentality. The trend of the 1990ies towards the neoliberal policy of the WTO easily gained acceptance in Croatia and the other countries of the former Eastern bloc. That explains partly and in terms of economic policy why there is no organised debt counselling in Croatia.
In Croatia people getting caught in the debt trap often have no other possibility than to fall back on their social network, mostly the family, or to incur more debts. During research we found out that private individuals offer credit by way of newspaper advertisements and promote their offer as a possibility to turn many single debts into one manageable debt amount.
Overindebted people are taken in by such offers and as a security they offer the land they still possess as a last straw because of strong agrarian-oriented traditions. The situation is different in towns where people do not have land to use as a security and consequently
get into impoverishment and hardship.

Due to non-existing structures in the field of debt counselling there is no information on organisations providing debt advice.

8. Czech Republic

History and Development
Until 1989 the Czech Republic was a socialist country with a planned economy. Commercial loans and leasing were not allowed, consequently the heavy debt problem did not exist and consumers did not need special debt counselling.
After 1990 the Czech parliament began to enact new economic legislation that should have settled the new situation. In 1991 the Bankruptcy Proceedings Act No. 328/91 was passed. After many amendments this law is still in force.
Unfortunately it had many defects right from the beginning, a fact that is continuously criticized. Among other points special consumer insolvency proceedings are missing because the law is oriented towards both businessmen and consumers.
At present a new regulation aimed at special consumer bankruptcy proceedings is being discussed in parliament. Maybe it is due to the insufficient regulation that neither government nor private organisations providing debt or insolvency counselling have so far been established in the Czech Republic.

As already mentioned above there are neither government nor private organisations providing debt counselling in the Czech Republic. If consumers become overindebted or insolvent (which is, statistically, not often the case) they have but a few options:

  • They can contact a private legal adviser (mostly lawyer) for professional advice, but they will have to pay for the service, of course.
  • They can turn to a consumer protection organization. Their employees are always prepared to help and have professional knowledge in the field of consumer protection. Unfortunately they have no possibility of representing debtors in insolvency proceedings, so the only thing they can provide is advice. The advantage of consumer protection organisations is their free and unbureaucratic service.

The development process of consumer law in the Czech Republic will have to go on for a long time until it will be completed and therefore it may well be that regulations will change in the near future and that, as a result, debt advice organisations will develop.

Spotřebitelskའinformační a poradenskའservis
Sokolovská 95
Praha 8
phone: 224811111
email: (in English language)

Sdružení obrany spotřenitelů ČR
Rytířská 10
110 01 Praha 1
phone: +420 224 239 940

Sdružení českà½ch spotřebitelů
Budějovická 73
140 00 Praha 4
phone: +420 261 263 574

Ministry of Economics (Ministerství průmyslu a obchodu)
Na Františku 32
110 15 Praha 1
phone: +420 224 851 111

Ministry of industry and economics
Consumer protection organisations

Czech Chamber of Lawyers

9. Finland

History and Development
Since 1993, towns and municipalities, state institutions and the church have been providing debt advice. Additionally, several associations, for example the so-called surety foundation (Takuu-SäätiÖ), have also begun to offer debt counselling. Beginning of 2001 the standardisation of debt counselling in Finland was achieved by introducing a law on advice for households and debtors.

In Finland debt counselling is structured in a uniform hierarchical way. While the Finnish Ministry for Commerce and Industry and the subordinated department for consumer issues are responsible for the whole country, 6 provincial administrations have been ensuring debt advice for the municipalities of the individual provinces since 2001. The provincial administrations make contracts with the individual municipalities of their province in which the volume of the debt advice like number of advisers, quality assurance etc. is stipulated.
The Ministry of Commerce and Industry and the Department for Consumer Issues allocate the necessary financial means while the municipalities care for the realization of debt counselling by employing debt advisers. In most cases one adviser is responsible for several municipalities. Finnish debt advisers have joined together to form the registered debt advice society.
Since September 2001, specialists having at least 2 years work experience can train as a debt adviser at a university of applied sciences located in the south-east of Finland.

The Finnish Consumer Agency & Consumer Ombudsman
Haapaniemenkatu 4 A, Box 5
00531 Helsinki
phone: +358 9 77261
fax: +358 9 7726 7557

Department for consumer issues providing information on debt advice [in Finnish and English language]

Documents and Sources
Study report - Short report on the study "Young overindebted people in Finland"

10. France

History and Development
In France, since 1 March 1990, problems with overindebtedness have been regulated by the Law no. 89-1010 on the 'Prevention and regulation of the problems of overindebtedness of private individuals and families' (Loi n°89-1010 relative à la prévention et au règlement des difficultés liées au surendettement des particuliers et des familles), named "Neiertz Law" (Loi Neiertz) after the Minister of State for Consumer Issues. But before, debtors should go to court to apply for a period of grace of 24 months maximum according to Article 1244 of the French Civil Code and achieve temporary suspension of debt collection. The amendment of 1995 has strengthened the role of the overindebtedness committee ("Commission de Surendettement") by authorising them to submit recommendations to the judges. Since 1998, the Committee can recommend moratoria (moratoire de dettes) in case the debt relief plan has taken no effect. Since 2003 there has been an additional procedure for personal debt rehabilitation (procèdure de rétablissement personnel) in individual cases of hardship, including personal fiscal debts.

The overindebtedness committee ("Commission de Surendettement"), a service provided by the Bank of France, plays the most important role in dealing with overindebtedness. As far as the debtor's application has been declared admissible, the
Committee will either try to achieve an amicable settlement between debtor and creditors in form of a debt relief plan laid down in a contract (plan conventionnel de redressement) or, in case of failure, pronounce recommendations or propose and accompany proceedings for personal debt rehabilitation (procédure de rétablissement personnel).
Proceedings commence with the declaration of admissibility of the application submitted by the debtor. The Committee will examine whether the debtor meets the legal requirements for the proceedings specified. Requirements are as follows:
• It is obvious that the debtor is no longer able to meet his debts („impossibilité manifeste de faire face à ses dettes”), see Art. L330-1 of the Code de la Consommation (Consumer Act) for definition of overindebtedness.
• The overindebtedness is not caused by an occupation.
• The debtor acts bona fide.
If the debtor has stood surety for an individual or an individual firm (without having been its managing director), the debts resulting from this obligation will be included in order to assess the whole extent of the overindebtedness involved.
Furthermore, according to Art. L331-5 of the Consumer Act, the Committee can apply for the termination of any enforcement measure to the enforcement judge (juge de l'execution). In cases of urgency the prefect (or his representative), the local representative of the Banque de France or the debtor himself may apply to the judge directly and bypass the Committee.
Since the law entered into force on 1 August 2003, and under the condition that the Committee has declared the application to be admissible, the Committee has to decide which proceedings are best for the debtor according to the individual debt situation. There are two possible proceedings:
(1) Debt relief plan laid down in a contract (plan conventionnel de redressement)
If debtor and creditor agree on an amicable settlement (procédure amiable) a debt relief plan will be laid down in a contract.
The option is applied if the debtor's financial situation is not hopeless (situation financière irrémédiablement comprise). The debtor is obliged to contribute to the settlement of his problems by all means possible, for example by selling property.
Creditors are given written notice on the admissibility decision and are questioned on the amount and nature of their claims. In case they should not agree to the debtor's application they have to prove their claims within 30 days. Furthermore, according to the Consumer Act, the Committee is entitled to make their own investigations into the claims and even publish a notice to all creditors.
The debtor has to validate the liabilities determined by the Committee on the basis of the creditors' information within 20 days. During this delay the debtor can ask the Committee to apply to the enforcement judge for verification in case he doubts correctness or amount of the liabilities stated. The Committee has the same right and is entitled to use it whenever necessary.
The Committee calculates the debtor's ability to repay using the table of seizable income (barèmes des quotités saisissables) according to the French Labour Law.
The amount the debtor should have at his disposal to cover his maintenance shall by no means be less than the supplementary benefit rate (revenu minimum d'insertion [RMI]), increased by 50% in case of a joint household (marriage, etc.).
Loans concerning the debtor's house are to be repaid first. Creditors of consumer and cash loans are treated equally during the winding-up process. Repayments are divided into even instalments for a maximum period of 12 months. The Committee will try to favour repayments of smaller amounts by negotiating a moratorium (moratoire de dettes) with the banks. The draft of the debt relief plan may provide for a grace period or even a waiver of repayment.
The draft will then be presented to the debtor and all creditors and, if all parties agree, will be approved and become legally binding. In case one single creditor should not agree the proceedings have failed and the Committee will prepare a report on the failed agreement (constat de non-accord).
(2) Personal recovery proceedings (procèdure de rétablissement personnel)
If no amicable settlement is possible, personal recovery proceedings will be opened. The debtor can apply for this kind of procedure at the Committee within 15 days after the amicable settlement has failed.
2.1 Recommendations
The Committee works out recommendations for the restructuring of liabilities with the enforcement judge ordering enforcement of these recommendations. Alimonies and fines are excluded.
Within two months after the calling of the Committee it has to deliver a report that provides for two different kinds of measures to be taken:
1. Measures to restructure the debts as extensively defined in Art. L-331-7 of the Consumer Act.
Under certain circumstances, the Committee can recommend
• to readjust repayment instalments,
• to limit repayments primarily to the loan amount and disregard interest,
• to reduce the interest rate, which then must not exceed the lawful minimum interest rate,
• to reduce the share of mortgage loans still to be paid after the corresponding property has been sold.
In the last two cases the Committee has to justify its decisions through the existence of serious cases of hardship.
While establishing its report the Committee has to investigate the basis on which the creditor had granted the loan and whether the creditor has acted in good faith. The Committee can, as with the debt relief plan laid down in a contract (plan conventionnel de redressement), oblige the debtor to contribute to the settlement of his problems by all means possible, for example by selling property.
2. Debt moratorium
A debt moratorium will be recommended in cases where the debtor's insolvency situation is not hopeless although no income or seizable objects are available to at least partly repay his debts. In those cases it is not possible to fall back on the measures for debt restructuring mentioned above.
The debt moratorium will be granted for a maximum of two years. During this period, repayment of interest is suspended unless the Committee decides to the contrary. However, in this case no compound interest can accrue and the interest rate on the loan must not exceed the lawful minimum interest rate. At the end of the moratorium the Committee re-examines the debtor's situation and, if necessary, recommends measures according to Art. L-331-7 of the Consumer Act. Should the debtor be completely insolvent, the Committee will submit an official and well-founded report recommending partial debt cancellation. Alimonies, fines and damages are excluded. The report is to be forwarded to the parties concerned and the enforcement judge (juge de l'execution) within 14 days.
The recommendations become legally valid by implementation through the enforcement judge. If the judge considers a partial cancellation not founded, he will ask the Committee for the necessary amendments. Should the debtor or the creditors contest the recommendations before the enforcement judge within 15 days from notification, the judge is entitled to change the recommendations and bypass the Committee.
2.2 The enforcement judge and the procedure for personal debt rehabilitation / winding-up
Since 2003 the enforcement judge has been entitled to open the procedure for personal debt rehabilitation,
This procedure can be opened if the debtor's financial situation is hopeless to such an extent that the above mentioned measures or proceedings would not make sense. Three parties may take the initiative:
• the Committee (with the debtor's approval)
• the enforcement
judge (with the debtor's approval)
• and the debtor, if the Committee has failed to establish its report on the kind of debt relief procedure within nine months.
Within one month after the opening, the enforcement judge has to summon debtor and creditors to a hearing, which marks the commencement of the procedure.
The enforcement judge appoints a representative who shall establish a report on the debtor's economic and social situation within four months. On the basis of this report the judge can decree the winding-up of the debtor's property. An official liquidator will then sell the debtor's property, except the property essential for his/her living or for practising a profession, as considered by the court .
If sales returns cover the liabilities, the judge will close the proceedings. If this is not the case, the proceedings will be closed due to lack of property, and the debts, including tax debts, are considered redeemed. However, professional debts, alimonies, fines, damages and amounts covered by guarantors are excluded.
The proceedings listed above are recorded in a central register (Fichier national des Incidents de remboursement des Crédits aux Particuliers, FICP) for eight to ten years, depending on their type.

Centre Européen des Consommateurs
Ms Martine Benoist
47 bis, rue Barthélémy Delespaul
F - 59000 LILLE
phone: +
fax: +

Institut National de la Consommation (INC)
80, rue Lecourbe
75015 Paris
phone: 0892707592 (0,34€/mn)

Homepage of the consumer portal "Corso"

Homepage of the magazine "60 millions de consommateurs"

Documents and Sources
Banque de France - List of contacts of the Bank of France, sorted by region

11. Germany

History and Development
Debt counselling began with the provision of general advice to marginal groups such as prisoners, released prisoners and homeless people. Among these groups the interconnection of social problems and financial plight was rather obvious since to many prisoners the subject of debts presented a problem. However, at that time debt counselling was not regarded as an independent task of social work but as just one part of counselling. It was at the end of the seventies that debt counselling became an independent field of social work. Since 1980, rising unemployment rates accompanied by cut-backs of government welfare, and declining wages have led to an increased need for debt counselling. At the same time, private loan taking found more and more acceptance throughout society, resulting in a growing number of borrower households. Additionally there had been a phase of extremely high interest rates that reached its peak in 1981. The accumulation of these social structural developments led to a growing need for debt counselling across all social groups. In the eighties, the number of advice facilities increased considerably thanks to the efforts of the consumer advice centres, among others. These centres originated from the movement for consumer protection, which had become more and more important since the end of World War II, and the foundation of the organisation of consumer associations (Arbeitsgemeinschaft der Verbraucherverbände e. V. = AgV) in 1953. Since the beginnings of debt counselling debt advice facilities have been working in close cooperation with consumer associations. In 1986, as many as 134 advice facilities had been set up in Germany, mostly belonging to church umbrella organisations such as the Caritasverband and the Diakonische Werk.
Since the end of the seventies, debt counselling has been experiencing a development towards an interdisciplinary field of work. Social sciences as well as social pedagogy, economics and law became increasingly important for the further development. Contributions of social pedagogy mainly focused on the psycho-social consequences of debt and overindebtedness.
With the introduction of consumer insolvency proceedings on 1 January 1999, insolvency counselling added to debt counselling as a further field of activity, providing debtors with information, advice, and support on their way to discharge remaining debts. The exact tasks of insolvency counselling are stipulated in section 305 of the Insolvency Statute. Since then, this new activity of debt counselling has become increasingly important. The introduction of consumer insolvency proceedings has made it possible for every debtor to benefit from out-of-court debt settlement. Since 2001 there have been several legal adjustments to improve insolvency proceedings such as the revisionary act to the Insolvency Statute (InsOÄndG) of 1 December 2001.
Today, nearly all independent charity associations (except the central charity organisation of the Jews in Germany), consumer associations, municipalities, and social associations with independent sponsorship, are engaged in debt counselling. However, although the number of facilities has been increasing considerably in the last decades, current need for debt advice can still not be met. The existing facilities provide advice to just 12 percent of all over-indebted households. Furthermore, there has been a cutback in financial support in the last two years, despite increased over-indebtedness.
Complementary to debt counselling, educational programmes for Financial Literacy have been worked out in recent years. For example, on request of the German Government the Institut für Finanzdienstleistungen (iff) has developed an approach to Financial Literacy in the context of poverty prevention.

At a very early stage, organisations and individuals working in the field of debt counselling developed cross-body networks for specialist exchange and political lobby work. In 1986, a nationwide working group on debt counselling, the Bundesarbeitsgemeinschaft Schuldnerberatung (BAG-SB), was set up, organising 30 debt advisers and a few bodies sponsoring debt counselling. In 1995, the BAG-SB and the bodies sponsoring debt counselling set up the working group on debt counselling of the associations, Arbeitsgemeinschaft Schuldnerberatung der Verbände (AG SBV), which coordinates debt counselling on a national level. Members are the Deutsche Caritasverband, the Diakonische Werk, the Paritätische Wohlfahrtsverband, the Arbeiterwohlfahrt, the Deutsche Rote Kreuz, the Verbraucherzentrale Bundesverband and the BAG-SB
In Germany, debt counselling is a municipal task explicitly mentioned in section 11 of Book XII of the German Social Security Code (SGB XII). With the introduction of Book II SGB in 2005, the legislator additionally regulated debt counselling as a means to overcome placement handicaps. . Both laws provide that debt counselling shall mainly be carried out by third parties.According to section 17 of Book II SBG (SGB II), independent charities shall be entrusted with the implementation of debt counselling. According to the regulations of Book XII SGB (SGB XII), municipalities shall co-operate with independent charity organisations and shall not establish own advice agencies as long as the offering of the charities is sufficient (section 5, paragraphs 2 and 4 of SGB XII).
In February 2005, there have been 1094 charity-run debt advice offices, all of which are organised within the AG SBV via their
associations. Most of these offices belong to the Caritas Verband and the Diakonische Werk, followed by more independent responsible bodies such as the Arbeiterwohlfahrt, the municipalities, the consumer centres, the Deutsche Rote Kreuz and the Paritätische Wohlfahrtsverband.
More than 50% of the staff involved in debt counselling are social workers and social pedagogues. Another important part comes from commercial careers such as qualified bank clerks and lawyers.
In terms of contents, debt counselling is organised in four ways: the unitary or integrated debtor’s support in the context of social work, the specialised debtor’s support in the context of social work, the specialised debtor’s support in the context of consumer advice or legal counselling and the specialised debtor’s advice in the context of Funds.
Unitary or integrated debtor’s support is provided as part of the general social services. Here, providing debt advice is not the main point of support but is a part of the original tasks of the services. For example, debt counselling has long been an integrated part of the support given to addicts. The same is valid for therapeutic institutions, probation support and youth custody units.
Unlike integrated debt counselling, specialised debt counselling is provided in case of overindebtedness. This kind of debt advice is provided by specialised debt advice centres established by bodies responsible for the social services. Although these debt advice centres are specialised on the problem of overindebtedness they apply a unitary approach, of course.
Specialised debtor’s support in the context of consumer advice and legal counselling mainly implies out-of-court legal advice and judicial representation by a lawyer. Furthermore, consumer centres can act in a preventive way against overindebtedness by informing and educating consumers.
Specialised debtor’s support in the context of funds can complete the work of the debt advisers in the area of debt settlement. The funds either provide financial means for compromises themselves or stand as surety for the debts.

Bundesarbeitsgemeinschaft Schuldnerberatung e.V. (BAG-SB)
Wilhelmsstraße 11
D 34117 Kassel
Phone: +49 (0) 561/77 10 93
Fax: 0 561/71 11 26

Arbeitsgemeinschaft Schuldnerberatung der Verbände (AGSBV)
Blumenstrasse 20
D 50670 Köln
Phone: +49 (0) 221/91 39-28 84
Fax: 0 221/91 39-28 88

Verbraucherzentrale Bundesverband (vzbv)
Markgrafenstr. 66
D 10969 Berlin
Phone: +49 (0) 30/25 800-0
Fax: 0 30/25 800-218

Forschungs- und Dokumentationsstelle für Verbraucherinsolvenz und
Schuldnerberatung Schuldnerfachberatungszentrum
Johannes Gutenberg-Universität Mainz
D 55099 Mainz
Phone: +49 (0) 6 131/39 - 21 002
Fax: 06 131/39 - 20 777

Platform on debt counselling
Many people seeking advice use the online platform to compare notes on their debt problems on a regular basis. Beside the individual platforms there is a huge advice section providing a lot of concrete support such as sample letters, term explanations, and information on current legislation. In cooperation with the Federal Ministry for Family Affairs, Senior Citizens, Women and Youth, the platform additionally offers an address list of all debt advice centres in Germany. The platform is looked after by an editorial staff of debt advisers. Beside the extensive information offered for their daily work, debt advisers especially appreciate the discussion platforms for an exchange among colleagues. There are ”practitioner platforms” where debt advisers can turn to colleagues with information and questions.

Tips for debtorsMy debts
This is the most extensive pool of information on the subject of overindebtedness on the internet. Provided for people seeking advice in the first place, it is also of help for advisers because of its many support offerings such as the extensive collection of sample letters and the official address list of the debt advice centres (same data background as the address list of the debt advice platform). The site was commissioned by the Federal Ministry for family affairs and realised by the Bundesarbeitsgemeinschaft Schuldnerberatung. Many specialists from the debt counselling scene like the debt advice platform, the Schuldnerfachberatungszentrum (Expert Debt Advice Centre) and Professor Zimmermann of the Evangelische Fachhochschule (Protestant University of Applied Sciences) in Darmstadt have given their support.

Expert Debt Advice Centre
On this site you will find news and information for debt advice experts, with the focus on Rhineland-Palatinate.

Debt advice information service
The Infodienst Schuldnerberatung (debt advice information service) is a joint venture of debt advice agencies from Southern Germany and offers, besides regular news, numerous extensive background reports on current issues around debt counselling. The info service offers to send a newsletter via email, for which people can register on the homepage.

Bundesarbeitsgemeinschaft Schuldnerberatung
On its homepage, the professional association regularly informs about important developments on the field of debt counselling. The online-shop offers print versions of the association’s magazine BAG-Info as well as further working materials available by order or download. Furthermore, an up-to-date address list of all debt advice centres in Germany is provided on the homepage.

Documents and Sources

  • Berner, Wolfgang: Schuldnerhilfe. 2. Aufl., Luchterhand Verlag GmbH Neuwied, Kriftel, Berlin 1995
    Freiger, Prof. Stephan: Schuldnerberatung in der Bundesrepublik. Teil 2. Hg. Bundesarbeitgemeinschaft Schuldnerberatung e.V. ( BAG-SB ), Kassel 1989
  • Korczak, Dieter: Überschuldungssituation und Schuldnerberatung in der Bundesrepublik Deutschland. Hg: Bundesministerium für Familie und Senioren, Kohlhammer Verlag, Stuttgart 1999
  • Krüger, Bernd/ Jaquemoth, Bernd/ Weinhold, Michael: Schuldnerberatung auf der Rechtsgrundlage des SGB XII und SGB II. Hg. Arbeitsgemeinschaft Schuldnerberatung der Verbände ( AG SBV ), Köln 2005, Stand: 22.9.06
  • Müller, Klaus: Schuldnerberatungsstellen: Leistungsumfang und Organisationsstrukturen. In: Schuldnerberatung in der Sozialen Arbeit. Schruth, Peter/ Kuntz, Roger/ Müller, Klaus/ Stammler, Claudia/ Westerath, Jürgen. 5. Aufl., Beltz Verlag, Weinheim, Basel, Berlin 2003, S. 53 - 67
  • Sanio, Werner/ Groth, Ulf/ Schulz-Rackoll, Rolf/ AG-SBV: Das Arbeitsfeld Schuldnerberatung. In: Schuldenreport 2006. Hg. Verbraucherzentrale Bundesverband e.V./ Deutscher Caritasverband / Deutsches Rotes Kreuz / Diakonisches Werk der EKD, Berliner Wissenschafts-Verlag, Berlin 2006, S. 225 - 243
  • Walbrühl, Ulrich: Wirksamkeit von Schuldnerberatung Teil 2. Verlag Dr. Kovac, Hamburg 2006

12. Great Britain

History and Development
In 1991 t
he charity Money Advice Trust (MAT) was founded to improve quality and utility of debt counselling in Great Britain.

The Money Advice Trust (MAT) cooperates with debt advice centres, both state and public institutions, listed under 'Links'.
At present there are about 2,700 debt advice centres all over Great Britain providing free and independent advice

Ian Witcombe, Assistant director of "Money Advice Trust"

The Citizen Advice service
Money Advice Scotland
National Debtline
Peer-Review-Programm Homepage of the "Peer-Review-Program" sponsored by the European Commission

13. Greece

History and Development
In Greece the state does not provide for debt counselling. Since 1988, the consumer association of Athens offers free debt advice for overindebted people within the context of the consumer protection law.

The consumer association of Athens is independent of political and economic interests. Its work is financed by contributions from participants and EU-subsidies. The consumer association attempts to work in close cooperation, both nationally and internationally, with ministries, other consumer associations, scientific institutions, universities and schools.

EKPIZO Consumer`s Association
43-45 Valtetsiou street
10681 Athen
phone: 0030 - 301 - 3304444
fax: 0030 - 301- 3300591

14. Hangary

History and Development
Reasons for overindebtedness in comparison to Germany

In Hungary there are other reasons for overindebtedness than in Germany. In Germany, consumer credits originating in a changed consumer behaviour of large parts of the population present a huge problem in the context of overindebtedness. In Hungary, many people are not able to pay back the mortgages they took up before the change of regime and at the same time they can no longer pay for their energy supply or get into arrears. The reasons for this phenomenon will be addressed in the following text.
Consumer protection is a lot more advanced in Germany than in Hungary. However, members of consumer protection associations run training courses for future debt advisors in Hungary. The so called subsistence level is neither fixed nor guaranteed in Hungary, but the attachability limit should be set according to such an amount.
There is no housing subsidy in Hungary ("Housing subsidy is to be understood as social welfare provisions and measures to support the keeping and obtaining of housing", source: Bauer ((publisher)), Lexikon des Sozial- und Gesundheitswesens, 2. edition, Munich, 1996). The amount of subsidised housing decreased during the 1990ies.

The extent of overindebtedness
(Source: SzocHáló - Társadalomtudomány on-line -Kormányzati program az eladósodás mérséklésére, 15.11.2004)
In 2004, 13% of the Hungarian households were overindebted.
(Literal translation of the Hungarian word „eladósodott” would read "indebted". But by further lecture of the report quoted it transpires that they talk about overindebtedness of households. These are no longer able to pay the monthly instalments of their mortgages and their energy bills). This means that about 500.000 families cannot ensure the maintenance of their homes. In about 100.000 cases proceedings have been taken and the affected households face eviction.
Average payment arrears with extra costs or energy supply is about 18,500 Ft (~ 74 EUR).
The average amount of payment arrears with mortgage repayment is 440,000 Ft (~ 1,760 EUR).

Reasons for overindebtedness
The reasons for overindebtedness are to be found in the switch from the planned economy to the market economy having taken place during the 1980ies and increasingly since the change in 1989.
In detail:
• decrease in real incomes and further widening of the income gap;
• increase in unemployment affecting broad population groups;
• no more subsidising of consumer goods;
• privatisation of the energy industry and consequently profit-oriented pricing;
• increase in interest rates for formerly favourable building loans;
• termination of social housing schemes and privatisation of state-owned housing. They were either sold to the tenants (at a good price) or to the municipalities.
As a result of these changes people are increasingly getting into arrears.
In Hungary, families have to spend the bigger part of their monthly income on food and housing (including energy supply and extra costs).
In 1989, expenses for food were at 32% and for housing at 10% of the total monthly expenditure. By 1997, this proportion had changed dramatically, especially regarding the cost of housing. The percentage of housing costs went up to 18 % and also the expenses for food rose to 40 %.
For the purpose of comparison please see the average monthly expenses for housing in some EU member countries at the beginning of the 90ies:
Belgium 24.3 %
France 29.2 %
Germany 20.6 %
Great Britain 24.1 %
Greece 20.2 %
Portugal 14.2 %
(Eurostat. Európa számokban. 1996. 219.old.)
In Hungary, there are regional differences regarding the backlog of payments with energy costs. In the eastern part of the country these are four times higher than the national average. Unemployment is especially high in this area.

Sociopolitical measures
In 1993, "support in keeping one's housing" ("lakásfenntartási támogatás") was introduced within the context of the new welfare legislation. The measure aimed at giving public financial support to those rent and energy debtors who could pay for their costs only partly by themselves.
Only 60 % of the municipal governments in Hungary were able to finance this form of social support. 65 % of the debtors could not take advantage of the measure. In many cases, recipients cannot pay back all of their debts because the financial support is too small and therefore they get into further arrears.
Consequently, we can think of this measure as a kind of preventive action that doesn't help households with heavy debts.
The "Energy Association" ("Energia Alapítvány”) is similar. With this measure endangered consumers obtain credit for energy consumption but already existing backlogs won't be settled.
(Source: SzocHáló - Társadalomtudomány on-line -Kormányzati program az eladósodás mérséklésére, 15.11.2004)

1. Governmental consolidation programme by government decision of 05.05.2004.
The target group of the programme are people who have taken up a mortgag
e and have got into arrears. The measures of this programme aim at settling the backlog of mortgage and energy bill payments.
People that can benefit from that measure are those who have taken up a mortgage before 31 of December 1988 and are not able to pay the scheduled instalments because of their social situation. Another condition is that the flat's or house's cash value doesn't cover the loan. Under these conditions debtors are given time to meet their obligations until they are able to pay, i. e. until their social and financial situation has improved. More than 20,000 families could benefit from this measure. Costs would be approx. 5,8 billion Ft. (~ 23 million EUR) spread over three years.

2. Debtors who cannot take part in the above mentioned consolidation programme because they don't meet the requirements have to continue repaying their debts. They are given the opportunity to apply for a special financial support for debt settlement („adósságkezelési támogatás”). Furthermore the loan period may be prolonged.
The value of the property financed with the loan presents the basis for calculating the amount of financial support and the extension of the loan period.

3. The third target group are debtors who cannot pay instalments without endangering the basis of their livelihood. For these debtors special insolvency proceedings ("speciális fizetésképtelenségi eljárás”) are initiated.
Debtors and creditors shall reach an agreement or agree on revised repayment terms in front of an independent committee still to be implemented. In case of disagreement the arbitration board will decide on the monthly amount the debtor is actually able to spend on repayment of his debts.

4. The "poorest" overindebted families (mortgage, energy supply) will not be clear of debts even after having been counselled by a debt advice centre and having received financial support in repaying their debts. These debtors have the possibility of being discharged from all remaining debts if they don't take up new debts within the following 6 months.
This measure could help to write off the debts of 2,000 to 3,000 families. Costs would be around 200 to 300 million Ft (~ 800,000 to 1,2 million EUR).

Preventive action
The government has decided to work out an "early warning system" obliging energy suppliers to report those consumers to a debt advice centre who have got into arrears for more than three months.
Another action is to make debt risk consumers pay for their energy supply in advance, on a credit basis. Suppliers would provide such households with power and gas meters operated by means of cards on a credit basis.

Necessity of debt counselling

During the 90ies the different social services noticed that more and more of their clients showed symptoms and problems typical of overindebted people. In bigger cities, including Budapest, the first debt advice centres were opened, financed in the context of projects.
In 1994, co-operation started between „Népjóléti Képzési Központ” (government education facility) and a Dutch organisation for social services "PLAN - Praktijk dynamic assistance b. v.” active in the field of debt counselling, family assistance and arrangement of employment. Objectives of the co-operation were: 1. drawing up a curriculum for debt advisor education, 2. setting up a nationwide network of debt advice centres.
The 3-year -project was financed by the MATRA-programme of the Dutch government and the Hungarian ministry for health and sociopolitical matters ( „Népjóléti Minisztérium”).
The training programme was drawn up in several steps.

The first course focused on the following contents:
• basic knowledge in housekeeping
• communication or leading conversations
• employment, labour law
• methods of debt counselling
• setting up and managing a project in the context of debt counselling
• the system of social services and facilities
• public relations
Participants came from the field of social work and had been confronted with the problems of overindebtedness in their daily work.
Some areas concerned:
• children and youth assistance, mainly with children or youth cared for by the state;
• social work with Roma;
• facilities of family assistance - overindebted people had asked them for advice:

The next course (approx. 40 hours in total) treated the following topics:
• structural background of overindebtedness in Hungary;
• economic situation;
• consumer rights;
A Hungarian specialist led this course.
• future debt counsellors who were planning or realising a project in the field of debt counselling;
• social workers from government facilities in the field of family assistance;
• employees of civil society organisations in the field of social work;
• and unemployed people.

The last course took place for postgraduates.
This course aimed at establishing a certain level of special knowledge in the field of debt counselling. Providing debt advice should become a "new" specialisation within social services. People affected by overindebtedness had turned predominantly and mostly to social services (family assistance) for help and therefore debt counselling was established as part of the social services.
Curriculum of the course:
• housekeeping;
• knowledge of the legislation relevant to debt counselling;
• consumer law;
• communication;
• project management;
• debt counselling in practice;
Most participants of this course are working as debt advisors until today. Many specialists of social services in Hungary give debt advice to their clients without having had corresponding further training.

In October 2003 a "debt advice programme" started.
It has two objectives:
• Preventing people from overindebting themselves so heavily they lose their housing.
• Re-establishing the solvency of overindebted people.
Support in the form of cash is not enough to solve the problem; therefore individual support in the form of debt counselling shall be introduced:
• advice in housekeeping
• regulation of income and expenses
Debtors shall be encouraged to participate actively in these processes.
Participants or parties involved in the "debt advice programme" are: debtors, creditors, municipal governments as supporting organisations of the social measure and the government as intermediary between the parties in the form of regulations and support in solving the problem.
The new aspect of, or the improvement with, the described measure would be the holistic approach to the heavy debts problem and the situation of the debtor. The intervention, that means the debt counselling process, takes place in a debt advice centre especially created for this purpose where support measures are being coordinated. The centre is located in public facilities for family assistance.

Továbblépés Adósságkezelö és Családsegítö Alapítvány
Máhr Zsuzsa
Veres Péter 85.
H-1163 Budapest
phone: (00 36 1) 30/3504314
fax: (00 36 1) 403-2532

Jóléti Szolgálat Alapítvány
dsegítö és Gyermekjóléti Szolgálat
Ruszits Éva
Szabadság u. 8., Pf. 48.
H-7201 Dombóvár
phone: (00 36) 0674 466 772
fax: (00 36) 0674 565 118

„RÉS” Közalapítvány
Kemenes Erika
Dr. Olajos Judit
Kossuth tér 1.
H-4401 Nyíregyháza
phone: (00 36) 0642/524 588
fax: (00 36) 0642/524 586

Documents and Sources
1. Györi, P., Papp, Zs., Adósságkezelés - hasonlóságok és különbségek. A magyarországi példa, 2000
2. SzocHáló - Társadalomtudomány on-line -Kormányzati program az eladósodás mérséklésére, 15.11.2004

15. Ireland

History and Development
In 1992 the "Money Advice and Budgeting Service" was established as part of a pilot project. Since that time it has become a network of local debt advice institutions comprising about 52 centres today and ensuring debt advice throughout the country.

The debt advice centres are independent institutions offering free and confidential advice and support to those affected by debt. Additionally they try to network subject-related institutions and offers as well as to act as a mediator between practice and politics.
Every advice centre is subordinate to a Local Management Committee consisting of representatives of the Credit Union, the Department for Social, Community and Family Affairs and of the consumer advice centres. The Local Committees enable and support the advice centres' work on a regional level.
At present, the country is divided into eight regions which are subordinate to the National Advisory Committee (N.A.C.). The N.A.C.'s task is to set up criteria and proposals for the advice and support work and to present them to the Department for Social, Community and Family Affairs. Numerous workshops within the N.A.C. are also busy researching and documenting the causes of debt problems as well as ensuring the advice centres' IT infrastructure.
Advisors are organised in the Money Advisor's National Executive that strives for high professional standards amongst its members. With the National Management Forum a similar institution was set up for the management in 2001.
The Money Advice Training and Community Education Service, providing several training offers for both advisors and managers, addresses the same objective.

Money Advice & Budgeting Service

Money Advice & Budgeting Service
Department of Social and Family Affairs
Combat Poverty Agency
Office of the Director of Consumer Affairs
Peer-Review-Programm Homepage of the "Peer-Review-Program" sponsored by the European Commission

16. Italy

History and Development
In Italy, debt counselling is part of the social welfare and has been quite unknown until today. Both private and public organisations (such as social cooperatives and consumer associations) offer debt advice, however, this is but one of the many services provided by these organisations. With one exception, 'pure' debt advice centres do not exist.
Furthermore, in realization of the Italian law L. 108/1996, a fund has been set up to support victims of usury by granting loans at low interest.
In 1998, the Caritas (charity) established the first and, until today, only Italian debt advice centre in Bolzano/South Tyrol. The charity has been cooperating with other organisations, especially with "Misericordia", for about two years. As early as 1996, Misericordia set up a fund according to the law mentioned above.
In 2000 the EU commission accepted a proposal aiming at improving and simplifying the EU's work on coordination of the social welfare regulations of its members (decision of the EU Council of 29.06.200, 2000/436/EG).
The commission's work and the increasing importance of the debt advice centre in Bolzano give rise to a positive development, i. e. to a growth in importance of debt advice in general throughout Italy (f. i. a conference was held with several foreign specialists taking part in South Tyrol in 2000).

The advice centre offers free advice to private individuals and families with financial problems and acts in advisory capacity during the process of debt reduction. Companies cannot make use of the debt advice centre. They have to turn to their own associations for help.
The Caritas Debt Advice has extended their debt advice centres so that they are able to work throughout South Tyrol.
During counselling those seeking help give written authorisation to the advice centre to take all steps necessary for debt settlement on their behalf. Debtors' data are used according to the Italian Data Protection Act (L. 675/1996).
Together with the debtor, the debt advice centre establishes an overview of the debtor's economic, legal and social situation. As a second step, suggestions will be worked out in order to achieve an agreement between debtor and creditor.
The centre aims at a long-term social and economic stabilisation of those affected and at working out a future life worth living.

CARITAS Schuldnerberatung
39100 Bozen, Leonardo-da-Vinci-Str. 1/E
phone: 0039 0471 301185
fax: 0039 0471 328472
Opening hours:
Monday - Friday: 9 am - 12.30 pm
Thursday: 9 am - 12:30 pm, 2.30 pm - 5 pm

Außenstelle Caritas Büro West

39012 Meran, Rennweg 52
phone: 0039 0473 258758
fax: 0039 0473 258758
Opening hours:
Mo - Fr 10 am - 12.30 pm

Außenstelle Bruneck:
Paul von Sternbachstraße 6
phone : 0039 0474 413977
fax: 0039 0474 413979
Opening hours:
Mo - Fr: 10.00 am - 12.30 pm

Europäisches Verbraucherzentrum EVZ (Centro Europeo dei Consumatori)
39100 Bozen, Brennerstraße 3
phone: 0471-980939
fax: 0471-980239
Opening hours :
Mo - Fr: 9.00 am - 12.00 am

The European Consumer Centre in Bolzano offers its services to all citizens who encounter consumer problems abroad. It also takes part in the network of European Consumer Centres the European Commission has been setting up in almost every member state to assist citizens in case of cross-border consumer problems.

17. Lithuania

History and Development
In Lithuania, the state does not finance debt advice centres or consumer insolvency regulations; the corresponding legal provisions do not yet exist. However, the "law on governmental legal aid" provides for advice on every legal issue. This law came into force in 2000. Only financially weak citize
ns may benefit from it. The mentioned law will be extended and improved so that, apart from providing free advice for socially weak people, an effective protection of basic human rights will develop. A corresponding bill was published in January 2005. The law was to come into force in summer 2005.
In 1991, after Lithuania had become independent, there were no legal provisions regarding legal aid. Unofficially, some lawyers worked as advisers.

All citizens who want to use legal aid paid for by the state first have to prove their insolvency. Authorities in charge are the municipal offices. At present people are referred to local lawyers. In future, according to the new bill, the municipal offices will conclude agreements with lawyers specialised in this field.
Furthermore, people in need of help may also obtain legal advice from students and professors at either the "Law hospital" at Vilnius University (VU) or the "Centre for Legal Aid" at the Lithuanian University of Law. According to the above mentioned law they are authorised to act as advisers.
The legal position of companies is regulated by the Business Insolvency Act.

Municipal offices

f. i. in Kaunas:
J. Stankiene
phone: +37 0 37 422740

"Law Hospitals" at Vilnius University (Vilniaus universiteto Teises klinika, VÅ¡I)
Vilniaus g. 25
Vilnius, LT-2001
phone: +370 5 2312800

"Centre for Legal Aid" at the Lithuanian University of Law
Konstitucijos prospektas 3

Centre for Legal Aid (Teisines pagalbos centras)
Konstitucijos pr. 3
Räume 215, 216

Dr. Juozas ŽILYS, Chairman
phone: +370 5 2714624

Gintautas DANIÅ AUSKAS, assistant Chairman
phone: +370 5 2714624

Centre for Legal Aid in Kaunas (Kauno teisines pagalbos centras)
Maironio g. 27
LT- 3000 Kaunas
phone: + 370 601 84150

Lithuanian Parlament (Seimas); (in Lithuanian, English and French language)
Ministry of Justice (Teisingumo ministerija); (in Lithuanian and English language)
legal portal "" (Teises portalas)
List of addresses of the municipalities

Quellen und Dokumente
text of the law "Law on governmental legal aid" (2000) ("Valstybes garantuojamos teisines pagalbos istatymas")
bill Law amendment (probably 2005) ("Valstybes garantuojamos teisines pagalbos istatymo pakeitimo istatymo isigaliojimo ir igyvendinimo ISTATYMO PROJEKTAS")
Law Business Insolvency Act (Imoniu bankroto istatymas)

18. Luxembourg

History and Development
Before 1990 debt counselling was provided by social workers from local authorities and private organisations. In 1991 the private organisation "Inter-Actions" established the first advice centre. At the end of 1991 a commission that was set up to analyze the heavy debt situation of private households in Luxembourg suggested measures against overindebtedness pointing the way ahead. As a result a public advice centre was established in 1993, the "Service National de Lutte contre le Surendettement" run by the "Ligue luxembourgeoise de Prévention et d'Action médico-sociales" and the "Red Cross". End of 1996 debt counselling was subdivided into the three areas North, Centre and South.

Since 2001 the "Ligue luxembourgeoise de Prévention et d'Action médico-sociales" is responsible for the areas North and Centre, now concentrated in one single advice centre, whereas "Inter-Action" is responsible for the southern area. At present both advice centres work under the same name "Service d'information et de conseil en matière de surendettement" while keeping their respective independence. Both are assigned to the Ministry for Family Affairs and work in close cooperation with other social services in the country and the Luxembourgian consumer protection organisations.
Right of attachment in Luxembourg: Garnishment of wages and assignment of wages can be serviced at the same time. Individuals entitled to maintenance are not taken into consideration. Garnishments are effected along the following steps:
to 550 Euro 0%
551 Euro - 850 Euro 10%
851 Euro - 1050 Euro 20%
over 1750 Euro 25%
That means 0 € are taken from the first step, 30 € from the second, 40 € from the third and up to 175 € from the fourth step, then the amounts will be added up and transferred to both, the garnishment creditor and the assignment creditor. If the income is below 1750,- €, say 1350,- €, the amount of 1750,- € will be replaced by 1350,- €

Service d`information et de conseil en matière de surendettement
2, rue Marshall
2181 Luxembourg
phone: 352 488 333-300

Ligue luxembourgeoise de Prévention et d'Action médico-sociales
21-23, rue Henri VII
1725 Luxembourg
phone: 00352-220099-1
fax: 00352-475097

9, route de Thionville
2611 Luxembourg
phone: 00352-492660
fax: 00352-492659

Ligue luxembourgeoise de Prévention et d'Action médico-sociales homepage: email:

Documents and Sources
Debt advice centres in Luxembourg and their services, including search function

Guidelines of the "Ligue"

19. Netherlands

History and Development
Before 1992, debt counselling was provided by social workers working for local authorities and by private organisations. At that time, cooperation took place between local authorities and national organisations such as the "Nationaal Instituut voor Budgetvoorlichting" (NIBUD since 1979) and the "Nederlandse Vereniging voor Volkskrediet" (NVVK since 1932). At the NIBUD overindebted households could obtain general information and advice on possible solutions. The NVVK as umbrella organisation of the Dutch credit institutions tended more to provide information on getting credit on a more social basis. Furthermore, people could ask for advice at the regional "Bureau's voor Rechtshulp", a non-profit institution that gave advice on many legal issues.
At the time the Bankruptcy Act ("Faillissementswet") was the last instance in case of overindebtedness. T
he court appointed a "Rechter-Commissaris" and a "Bewindvoerder(s)"(similar to a receiver) to settle excessive debts by law. The "Bewindvoerder(s)" also functioned as a compulsory advice centre.
In 1992, a proposal was made to extend the Bankruptcy Act by a law on debt rehabilitation ("Wet Schuldsanering Natuurlijke Personen" - WSNP) which, after having been submitted and discussed in several commissions, finally came into force in 1998. From then on, direct cooperation between local authorities, private and semi-private debt advice agencies of the 50 "Gemeentelijke Kredietbanken” was compulsory. The objective was to achieve amicable settlements for as much overindebted households as possible without legal proceedings. Additionally the Dutch credit institution (Kredietbanken) also do the amicable settlements in the Netherlands, as well as f.e. the municipal social services (sociale diensten).
If no amicable settlement is achieved a judge can still appoint "Rechter-Commissaris” and "Bewindvoerder" who will set up a rescue plan. This plan represents a binding agreement concluded by debtor, Bewindvoerder and main creditor. Debtors have to follow the rescue plan for three years after which they will be released from the remaining debts. During this period debtors live more or less legally incapacitated and are accountable for their finances.

The "Bureau Wet Schuldsanering Natuurlijke Personen” was founded in 1998 and is managed by the "Raad voor Rechtsbijstand” in Den Bosch. There are four more "Raden" besides the main office in Den Bosch which are located in Amsterdam, Arnhem, Den Haag and Leeuwarden. Each of these offices represents some of the 12 Dutch provinces and is assigned to the Ministry of Justice. They cooperate closely with other social services in the country.
Although it took a few years until the Debt Rehabilitation Act was realized it resulted in a broad and well structured organisation of general debt advice.
All institutions that have been working in the context of debt counselling and rehabilitation are mentioned on publicly available websites. Debtors receive exact information on what they can do and how they can do it. They can apply for debt advice via computer and can download the questionnaire.
To debtors it means an important organisational relief that the different organisations are networked.

Bureau WSNP
Tel.: 0900-2026620
POBox 70503
5201 CD 'S-Hertogenbosch

Raad voor Rechtsbijstand Den Bosch - (Noord-Brant, Limburg)
Eerste Straatje van Best 10-12
5201 CD Den Bosch
Tel.: 00 31 73 681 41 00

Raad voor Rechtsbijstand Amsterdam (Noord-Holland, Utrecht)
Naritaweg 227
1043 CB Amsterdam
phone: 0031-(0)20 5805999

Raad voor Rechtsbijstand Arnhem (Overijsel, Gelderland, Flevoland)
Utrechtseweg 72
6812 AH Arnhem
phone: 0031-(0)26 3518051

Raad voor Rechtsbijstand Den Haag (Zuid-Holland, Zeeland)
Laan van Meerdervoort 51
2517 AE Den Haag
phone: 0031-(0)70 3701414

Raad voor Rechtsbijstand Leeuwarden (Friesland, Groningen, Drenthe)
St. Jacobsstraat 24
8901 BA Leeuwarden
phone: 0031-(0)58 2336233

NIBUD Nationaal Instituut voor Budgetvoorlichting
Postbus 19250
3501 DG Utrecht
phone: 0031-(0)30 2391350
fax: 0031-(0)30 2391399
Ansprechperson Herr Albert Luten

NVVK Nederlandse Vereniging voor Volkskrediet
Westeinde 40
2500 DK Den Haag
phone: 0031-(0)70 3847250

Raden voor Rechtsbijstand
Nationaal Instituut voor Budgetvoorlichting
Nederlandse vereniging voor Volkskrediet
Bureau voor Rechtshulp
Information of the NIBUD on debts and debt advice
Zelfjeschuldenregelen - Information for making an arrangement with creditors
Debt counselling "Plangroep". Member of NVVK
Ministerie van Sociale Zaken en Werkgelegenheid
Ministry of Justice (Ministerie van Justitie)
Peer-Review-Programm Homepage of the "Peer-Review-Program" sponsored by the European Commission

Documents and Sources
1. N. Jungmann, E. Niemeijer and M.J. ter Voert, Van schuld naar schone lei, WODC, ’s Gravenhage 2001
2. Tris Serail, Schulden een (on)dragelijke last, Min. of Social Affairs and Employment, ‘s Gravenhabe 2004
3. A. Menger, G. Mijerink: Schuldhulpverlening: de bijdrage van het maatschappelijk werk. Den Haag : Elsevier bedrijfsinformatie bv. - 93 p. ISBN 9057493713
4. Ministerie van Sociale Zaken en Werkgelegenheid: Gemeentelijke Schuldhulpverlening: onderzoek door de rijksconsulenten Sociale Zekerheid naar de schuldhulpverlening in 86 gemeenten. Den Haag: MIN SZW, 1996. - 32 p.
5. M. Scholten en B. van Splunteren: Wegen en Overwegen, Handleiding intake maatschappelijk werk. NIZW, Utrecht
6. F.L. Martens, H.D.L.M. Schruer: Schuld of geen schuld: over schuldhulpverlening inclusief de Wsnp. 3e herziende druk, Den Haag: Elsevier Bedrijfsinformatie, 2002. - 300 p. ISBN 9052504784

20. Poland

History and Development
In Poland, the job of a debt adviser is not defined by law. Therefore overindebted people have to make use of the advice provided by lawyers and tax advisers or by some organisations and/or public authorities working in the field of consumer protection. Until recently Polish law has provided for bankruptcy proceedings exclusively for businessmen. Private consumers had no such opportunity.
However, in recent years the corresponding legislation has been revised and the result is a bill on consumer right to bankruptcy proceedings. According to this bill no more interest will be charged once bankruptcy proceedings have started. By law, consumers can only commence bankruptcy proceedings once in their life.
However, it has to be emphasized that this bill will not come into force in the near future because of the Polish judiciary being very insufficient.

At present debt counselling in Poland is not well developed and so consumers have to turn to various organisations or public authorities providing general consumer advice. Since 1 January 1999, municipal governments are entitled to appoint an authorized representative for c
onsumer rights (Rzecznik Praw Konsumenta). The main task of this representative, besides watching consumer rights, is to offer free legal advice in the field of consumer protection. Often representatives are also responsible for mediation.
The Consumer Federation (Federacja Konsumentów) is very effective in its work. It is the largest consumer protection organisation in Poland not affiliated to the government.
The Government Inspectorate for Commerce (Panstwowa Inspekcja Handlowa) is a controlling body protecting consumer interests and rights as well as the economic interests of the state. Mediation is also one of the main tasks of this authority. The Inspekcja Handlowa is a body of the government administration.
There are also some private companies that offer debt counselling (f. i. CONSULTO Sp. z o.o. - Consulto GmbH) and, among other activities, negotiate with the banks in order to come to an agreed ruling (f. i. change of loan conditions) .

Federacja Konsumentów, Rada Krajowa (CENTRALA)
Plac Powstanców 1/3,
00-030 Warszawa,
phone/fax: +(48 22) 827 51 05,

Federacja Konsumentów, Klub Krakowski
Rynek Gl. 29/56, 31-010 Kraków,
phone: +(48 12) 422 64 62,

Inspekcja Handlowa
Pl. Powstanców Warszawy 1
00-950 Warszawa
skr. pocztowa 247
phone: (+48 22) 826-23-30, 827-22-89

Federacja Konsumentow
Inspekcja Handlowa

Documents and Sources
Bill on the consumer right to bankruptcy proceedings (in Polish language)

21. Portugal

History and Development
In Portugal, the attempt to find regulations for overindebtedness and insolvency found its expression on one hand in a bill only meant for private individuals and on the other hand in a code on corporate insolvency ( Código da Insolvência e da RecuperaÇão de Empresas, CIRE) some provisions of which are also applicable for private individuals .
In 1999, the Ministry of Consumer Protection (Ministèrio pela defesa do consumidor) introduced a first legislative initiative, resulting from the Consumer Code ( Cà²digo do Consumidor ) in preparation, on overindebtedness and insolvency proceedings of an individual person.
But the initiative did not find a positive echo, mainly due to a lack of public need and the absence of a prior hearing of the corresponding participants (financial institutions and consumer associations) and to the complexity of the project described. In 2000, a new version of the project was introduced that laid more emphasis on prevention (transparency regulation with granting loans and prohibition of misleading advertising).
This version also provided for cooperation with administration authorities, however, the proposals were mostly based on court settlements and therefore conflicted with the political will to aim at out-of-court settlements and deregulation in the context of the judicial reform.
In 2001, a second initiative was prepared, this time by the Ministry of Justice ( Ministèrio da JustiÇa ). It had two axes: prevention by information and settlement of overindebtedness by means of a preceding out-of-court mediation with courts acting as appellate courts.
In 2003, the Socialist Party parliamentary fraction introduced the bill on prevention and settlement of individual persons' heavy debts ( Projecto de Lei 291/IX/1 sobre a PrevenÇão e Tratamento do Sobreendividamento das Pessoas Singulares) which has not yet come into force (on 31.12.2004)

Development of the Code on Corporate Insolvency (Código da Insolvência e da RecuperaÇão de Empresas)
The Código da Insolvência e da RecuperaÇão de Empresas (CIRE) was passed on 18 March 2004 (Decreto-Lei n.º 53/2004) and entered into force in September 2004. It is the current and only legal basis for the regulation of family insolvencies even if it is mainly designed for corporate insolvencies.
There are provisions applicable to private individuals in several articles of the CIRE with a main part in section I and II of title XII, art. 235-248 (relief of remaining liabilities) as well as 249-263 (debt repayment to creditors), respectively.
Private individuals can consider two options: one is based on winding-up the debtor's property with debt relief being a possibility, the other is based on allowing a plan for debt repayment.
The debtor or third party filing for insolvency has to present the plan to the relevant court of competent jurisdiction. The proceeding is also applicable to private individuals owning small companies, under the condition that pay and social security contributions have been paid, that liabilities do not exceed 300,000 € and that there are no more than 20 creditors.
Some special debts, such as alimonies, tax debts or fines, are excluded from such relief.
The plan includes a 5-year probationary period after winding-up the debtor's property during which debtors link their repayment to the existing income. After successful completion of the probationary period debtors are entitled to apply for waiving of the remaining liabilities which represents official forgiveness.

Projecto de Lei 291/IX/1sobre a PrevenÇão e Tratamento do Sobreendividamento das Pessoas Singulares
The Projecto de Lei 291/IX/1 sobre a PrevenÇão e Tratamento do Sobreendividamento das Pessoas Singulares has tow axes: prevention and advice as well as settlement via restructuring private individuals' liabilities.
Those affected are private individuals resident in Portugal and having run bona fide into excessive debts in the country. Bona fide is assumed in following cases:
- unemployment
- insecure or temporary jobs
- temporary or permanent inability to work
- separation, divorce, death of spouse or lifetime companion
Creditors of a private individual are equally entitled to appeal to the responsible authorities in order to bring about restructuring of liabilities.
• Prevention and advice
Consumer information centres (Centros de InformaÇão Autárquicos ao Consumidor [CIAC]) are responsible for prevention and advice. However, legal bodies under public law and associations may be founded with the purpose of providing such information and advice, too. Topics are: individual household planning and management, information on the mechanisms in the credit market, evaluation of creditworthiness and the resulting liability as well as the resulting consequences.
• Restructuring of private individuals' liabilities
Professional debts are usually not included in the process of restructuring private individuals' liabilities. Alimonies and fines are excluded as well. However, in exceptional cases when professional debts represent only a small part of total debts they may be included in the restructuring if creditors don't voice their official opposition against it.
Responsible authorities deciding on liability restructuring are the "Justices of peace", the Julgados de Paz. Private
individuals first have to appeal to the mediation authority which is performed by the departments of the Julgados de Paz. Mediation is both an inevitable proceeding and a condition in case of reference to the courts.
Opening of mediation proceedings will prevent any other out-of-court or court solution until the proceedings are completed. During proceedings debtors are obliged not to raise new credits without the mediator's authorization and to avoid anything that could reduce their assets.
At their first appeal (requerimento inicial - vgl . artigo 43.º da Lei n.º 78/2001, de 13 de Julho) debtors have to present every information necessary to evaluate their financial situation as well as further documents (income, assets, personal and family-related monthly expenses, existing loans etc.) and a list of creditors including addresses.
The mediator (mediador de dividas) will check the information and can request additional information from the debtors. The mediator has to contact the creditors to obtain either confirmation or supplementary information within seven working days. In case the creditors do not meet the deadline, the information given by the debtors is regarded as decisive. If the mediator establishes that debtors have not given their information bona fide he will enter it into the files and inform creditors and debtors about it.
The mediator will see to it that a liability restructuring plan is presented to the parties in order to reach a settlement. When the mediator realizes that such a plan is useless he will stop proceedings, notify the parties and the competent authority ( Julgados de Paz ) and inform the debtor that he can declare himself insolvent according to the law (declaraÇão de insolvência ). If no agreement or only a partial agreement is reached, the mediator will notify the competent authority (Julgados de Paz) which then will fix the date for a court hearing.
Once the parties have agreed to the restructuring plan it is binding to them. If one or more creditors do not agree to the plan although the part of creditors representing at least 75 % of the loan amount accept it, the plan will nevertheless be regarded as binding. The same is applicable to creditors who did not respond to the mediator or did not voice their opposition before conclusion of the written agreement. As soon as the competent authority (Julgados de Paz) homologates the plan, it is regarded as a decision and will be handed over to the Bank of Portugal to be entered into a central credit register (central de riscos de crédito).
Debtors who are unable to meet their obligations arising from the plan and give adequate reasons for it can contact the mediator a second time and apply for their assessment to be revised. They have to submit their application within a maximum of 10 days after the cause has occurred. However, if the reasons given are considered inadequate, the plan is regarded as failed.
The Julgados de Paz are also entitled to modify the plan or to set up a new plan which is binding to creditors and debtors. If they consider the debt relief plan as unstable they will stop proceedings. Then creditors can reassert their rights to debt collection and every party can apply for an insolvency declaration.

Instituto do Consumidor
PÇ. Duque de Saldanha, 31, R/c, 1º, 2º, 3º und 5º
P- 1069-013 Lisboa
phone: (351) 21 356 46 00
fax: (351) 21 356 47 19
email: or

Centro Europeu do Consumidor
Duque de Saldanha, 31, 1°
P - 1069-013 LISBOA
phone: +351.21.356.46.60
fax: +351.21.358.25.73

Consumer association "DECO Proteste" (AssociaÇao portuguesa para a defesa do consumidor)

22. Romania

History and Development
Until 1989 Romania was a socialist country and the Communist Party controlled everything. You could not even dream of market economy. Credits, loans or leasing were not allowed and therefore the problem of overindebtedness did not occur.
Since 1989, Romania has been endeavouring to reshape its economy. However, people can hardly perceive any success. Elder people living in the country, single parents, Roma, young people from childcare facilities are most affected by economic hardship. The local authorities are responsible for welfare benefits but they do not have the money. A lack of capital expenditure for social welfare is one of the country's biggest problems. This way the already difficult economic situation gets even worse.
The Romanian legal system does not provide for independent debt advice institutions. Debtors have to turn to lawyers, tax advisers, authorities or aid agencies for advice and/or economic support.
Legal provisions on insolvency proceedings (Insolvency Act No. 64/1995, amended on 7 June 2004) apply for both economic agents, legal bodies and individuals engaged in a business.
Competent local courts at the company's place of business carry out composition and bankruptcy proceedings. As an innovation to the Romanian insolvency law, costs of court proceedings are paid for by a liquidation fund, so debtors do not need to pay for them. Financial means for the liquidation fund are provided by a 10% increase of the charges raised by the commercial register.
Social services are developing and improving but cannot compensate for failing social and economic policies. Romania’s gross national product per capita is 1,710 Dollar whereas, for example, Germany’s gross national product per capita is 23,700 Dollar.
In Romania, people getting into the debt trap often resort to their social net. In most cases they are supported by their families.
There are loans offered by the banks but interest rates are relatively high. Furthermore many Romanians (still) feel the psychological threshold of "public shame" when it comes to turning to a public institution for support, a threshold which is hard to cross.

As already mentioned above the local authorities are responsible for welfare benefits.
In Romania there are no official debt advisers with a legally defined job profile. Therefore, debtors can only choose one of the following options:
They turn to the social office of their place of residence
Usually these offices work as part of the local administration. A social worker will be authorized to examine the situation of the person who has run into difficulties. In some, more difficult and complex, cases a whole team will examine the situation and cover the debtor's most urgent needs.
The team consists of a social worker, a psychologist and medical staff. Debtors receive psychological treatment and (if necessary) medical treatment. Then the team will try to find a solution for the financial problems.
The team acts on the basis of the following two laws:
the Guaranteed Income Act No. 416/2001 and the Government Decree No. 86/2003 on social work.
They contact one of the NGOs that offer social services.
Also in this case a specialist team consisting of physicians, psychiatrists, psychologists and social workers will examine the emergency. These organisations offer participation in self-help groups, pay for due energy and phone bills, offer medical care etc.
Several sponsors, private donators and the state finance the activities of these organisations.
If debtors are ill or disabled they can turn to the social services' main
office (Directia Generala de Asistenta Sociala).

The office will provide care for them and bear several costs. Nursing homes will care for old people and specialized hospitals for the ill and/or disabled.
The general framework is set by the Government Decisions Nos. 102/1999 and 329/2003.
There is also the possibility to obtain advice from a lawyer's office specialized in this field of law. However, this may be quite an expensive option.
On the one hand, the new government is active in fighting the basic social causes, i. e. economic, cultural and political, and on the other hand it is dealing with the different forms of social exclusion such as poverty, unemployment, homelessness, delinquency, etc.

Social service offices working as part of the local administration (Serviciile de asistenta sociala din cadrul primariilor)
Ministry of Economics and Commerce (Ministerul economiei si comertului) Address: Str. Calea Victoriei, Nr. 152, sector 1, 010096 Bucuresti email :
email :

Ministry of Justice (Ministerul Justitiei)
Address: Str. Apolodor, Nr.17, sector 5, Bucuresti
phone.: 004021/ 312 36 86

Chamber of Lawyers Bucharest (Baroul Bucuresti)
Address: Str. Dr. Rà¢ureanu, Nr. 3-5, sector 5, 050047 Bucuresti
phone: 004021/ 315 45 38

International office
phone: 004021/ 315 45 37

Consumer protection head office (Autoritatea nationala pentru protectia consumatorilor)
Address: Str. Elev Stefanescu Stefan, Nr. 9, Sector 2, 021683 Bucuresti
phone: 004021/ 250 54 47
004021/ 250 55 50

Ministry of Justice
Consumer Protection Head Office

23. Russia

History and Development
The Russian legal system does not yet provide for independent debt advice institutions. Therefore overindebted people turn to lawyers or tax advisers for help. They can also make use of the advice given by consumer protection organisations and/or public authorities.
Bankruptcy proceedings for consumers present a new development within Russian legislation. The Russian Civil Code (section 25) and the former Insolvency Act only provided for bankruptcy proceedings for entrepreneurs. The new Insolvency Act of 26.10.2002 does contain the rules of law for consumer bankruptcy proceedings (section 10) but in default of corresponding amendments of the Russian Civil Code they are not yet applied.
According to the new Insolvency Act also consumers themselves can make an application for bankruptcy proceedings. Once bankruptcy proceedings have been commenced no more interest will be charged (§ 208). However, consumers can only use their right of bankruptcy proceedings twice in their life and second bankruptcy proceedings can only be opened after 5 years.

In Russia, there are no debt advice centres and so consumers can only turn to organisations providing consumer protection and counselling in general. The Ministry of Antimonopoly Policy of the Russian Federation (MAP RF) is a controlling body in the field of consumer protection, protecting consumer interests and rights as well as the economic interests of the state. It is a body of the government administration and has its own regional administrations. Consumer protection administration is part of this ministry.
According to the consumer protection law that came into force on 7th January 1992 also local governments can establish authorities offering free legal advice in the context of consumer protection. Furthermore, private businesses and citizens have the right to work at debt counselling too. In December 1990 a consumer association of the Russian federation was founded comprising more than 100 different consumer protection organisations today.

Rossiiskii Fond zashiti prav potrebiteliy
Russia , 121205 Moscow
Novii Arbat 36/9 zdania moscowskogo prawitelstwa
tel./fax: 007- (095)290-9009

Federalnaia sluzhba po nadzoru v sfere zashiti prav potrebitelei i blagopoluchia cheloweka
Onishenko Genadiy
tel.: 007 (095) 973-2744
Moscow, Wladkowskiy pereulok, dom 18/20
Zentralniy apparat razmeshen takzhe po adresu:
Miasnizkaia- 47; Staraia Basmannaia-11?; Warwarka- 14

Sojuz potrebiletei RF (SPRF)
193124 Sankt-Peterburg

Federalnaia antimonopolnaia sluzhba
Moscow, 123995
Sadowaia Kudrinskaia, 11, D-242, GSP-5
tel.: 007 (095) 252-76-53 (obshestwennaia priemnaia)
fax: 007 (095) 254-83-00

Ministry of Antimonopoly Policy of the Russian Federation: or
Governmental controlling body of consumer protections
Russian consumer protection fund

Documents and Sources
1. Consumer Protection Act (in Russian language)
2. Member organisations of the consumer association of the Russian federation (in Russian language)
3. List of consumer organisations (in Russian language)
4. Insolvency act (in Russian language)

24. Slovakia

History and Development
In Slovakia there is no long tradition of legal aid in general. That is why debt counselling still does not exist as a separate domain of advice.
Since 1990, the "Association of Slovakian Consumers" (ZSS) has been offering free advice in the context of consumer protection. The organisation was founded on 10 February 1990 in former Czechoslovakia. Between 1993 and 1995, the coordination centre in Bratislava and 4 regional consumer advice centres started work. A common project with the German consumer advice centre (AgV) dates back to this time. At present 12 major advice centres are operating supported by the AgV and with financial aid from the ministries of economy of both countries.
Since 1999, the Ministry of Justice has also offered free advice to citizens. It has established 7 advice centres at the courts of several administrative districts. Since 2000, also law students take part in the counselling due to a contract concluded between the Ministry of Justice and the Komenius University in Bratislava. This free advice is only available to Slovakian citizens and takes pla
ce in Slovakian language.
Another option is to contact a lawyer's office specialized in this specific field of law. However, this advice is not free of charge.

The ZSS comprises natural persons, consumer groups or regional organisations. Some of them have legal capacity, others have not. Major representations have been established in more than half of the districts of the SR. The assembly and the council of the ZSS are the organs of the board. The ZSS has been a member of CI - Consumers International since 1994

Zdruzenie slovenskych spotrebitelov (ZSS)
Palisády 22
81106 Bratislava
phone/fax: 00421-2/54411148

Contact in English language: Mr Miro Tulak
mobile: 00421 905 719874

Ministerstvo spravodlivosti SR (Justizministerium)
Zupné námestie 13
813 11 Bratislava
phone:00421 2 59353315
fax: 00421 2 59353600

Ministry of Justice (Ministerstvo spravodlivosti SR)
Local offices of Federacja Konsumentow - Association of Slovakian consumers (Zdruzenie slovenskych spotrebitelov - ZSS)

Documents and Sources
Short information on Slovakian insolvency law

25. Spain

History and Development
In Spain, the organisation similar to a debt advice agency is the "Fondo de Garantía Salarial" (F.O.G.A.S.A.). Its origin is the "Social Protection" Act of 8 April 1976 that finally came into force through the 8th Act (R.D. 505/85) of 10 March 1980.
F.O.G.A.S.A. is an independent organisation attached to the Labour Ministry and Social Services Ministry. It is a legal entity of administrative nature and with legal competence to guarantee continued pay for employees in case of insolvency, bankruptcy, suspension of payments or excessive debts.
F.O.G.A.S.A. protects both employees and employers. Today its existence is very important because there are huge social problems in Spain. In times of troubled economy and crises continued pay is of assistance especially to employees who are prevented from getting into debt.
In practice there is a problem for personal debtors who face complicated proceedings. One option is "Renegociación de deudas", the so-called "second chance" (segunda oportunidad). According to § 1912 of the Spanish Civil Code, a debtor may ask his creditor for removal and deferment of this debt (Code of Civil Procedure).
Another option is the "Concesión de Creditos" (credits granted to debtors) which is always effected by private organisations. However, one should not forget Spain's good social system.
It contains systematic protection for unemployed persons having to pay their debts (BOE de 13 de diciembre de 2002). The system comprises income support, unemployment benefit and social security (Ley General de la Seguridad Social [Título III]. Ley 45/2002, de 12 de diciembre).

The "Fondo de Garantia Salarial" is managed by the council of managers and the "Secretaría General" (~ General Secretary). Its activity is regulated by several laws and regulations, especially by the "Estatuto de los Trabajadores" (~ works council constitution act), the "Ley del regimen jurídico de las entidades autonomas" of 26 Dec1958, by the law 11/1977 "General Presupuestaria" and by the "Real Decreto 505/85. Renegociacion de deudas".
Proceedings always stay with private individuals or public organisations like "defensor del pueblo". There will be negotiations between debtors and creditors supported by a social mediator ( (Auxilio judicial. Ley 1/2000, de 7 de Enero de Enjuiciamento civil. Cap.IV. Art. 169) or a private mediator. Together they try to find a solution considering the interests of both parties (concesion de creditos).

State organisations
Secretaría general, Madrid
Juan Pedro Serrano Ar royo
C/ Sagasta, 10 /28004-Madrid
phone: 91.363.82.00
fax: 91.363.82.44

Miguel àngel García Vega

Plaza de Catalunya, 20 / 08002-Barcelona
phone: 93.342.85.60
fax: 93.342.85.74

Mª Vicenta Gallart Serna

C/ Angel Quimera /46007-Valencia
phone: 96.382.00.66
fax: 96.382.00.84 33
Private Organisations: Renegociación de deudas
Private Organisations: Concesión de Créditos (private companies granting credits to debtors)

Renegociación de deudas

Concesión de Créditos
Oferta Euro Crédito,
Cofidis - Dinero rápido,
Franquicia CreditServices,
Crédito aquí y pronto,
Hipoteca Naranja ING,
Hipoteca Facil,
Financiacion a medida,

Documents and Sources
1."La segunda oportunidad"
1. Brosa, P. (1994). Suspensión de Pagos y Reestructuración Empresarial. Bilbao, Ediciones Deusto S.A
2. Freixas, X. (1991). El Mercado Hipotecario Español: Situación Actual y Proyecto de Reforma. Madrid, Fundación de Estudios de Economía Aplicada
3. J. Castan Tobeñas (1998), Derecho Civil Español, común y foral (Ed. Reus, Madrid).

26. Sweden

History and Development
In the middle of the 1980s there was a distinct increase in private Swedish households' net borrowing (Schwarze, 1998). It was only then that communal budget and debt advice centres evolved at some places. Country-wide advice offers were only established on introduction of the Debt Rehabilitation Act in 1994.
§ 1 of the law obliges every municipality to offer free advice for indebted or overindebted individuals. Just a few years after the law came into force debt counselling has turned into a "country-wide, highly specialized and professionalized advice service" (Schwarze, 1998).

Municipal social services, c
onsumer advice centres (”Konsumentverket”) and sometimes also other municipal authorities are responsible for communal budget and debt advice centres. In 2001, 281 municipalities, representing 97 % of Swedish municipalities, offered budget and debt advice. 471 advisers shared 239 full-time jobs.
In Stockholm two expert advisers (”skuldradgivningskonsulterna”) work on further development and coordination of working methods, provide information and realize further training on behalf of the Konsumentverket.
In May 1996, the professional association of budget and debt advisers was founded and counts about 300 members at present. The association aims at strengthening job-profile as well as competence of budget and debt advisers, facilitating opinion-forming and offering a forum for exchange of experiences. The debt advice centre as a state institution for consumer issues and budgeting offers further training for communal budget and debt advisers.

Marie Rà¥by
Swedenborgsgatan 20
106 64 Stockholm
phone: 08 - 508 25 455

Rosenlundsgatan 9
118 87 Stockholm
phone: 08 429 05 00
fax: 08 429 89 00

Swedish consumer department (Konsumentverket)
List of addresses of the Konsumentverket
Search function of the Konsumentverket for communal budget and debt advice centres -
Enforcement agency of the Ministry of Finance (Kronofogdemyndigeten)

Documents and Sources

1. Schwarze, Uwe (1995): Privatverschuldung und soziale Hilfen für Ver- und Überschuldete in Schweden - ein Forschungs- und Praxisbericht aus Malmö, in: Archiv für Wissenschaft und Praxis der sozialen Arbeit, 26. Jg.: 308-329
2. Schwarze, Uwe (1998): Das Schuldensanierungsgesetz in Schweden und die Gründung eines Berufsverbandes der Budget- und SchuldnerberaterInnen, in: BAG-SB-Informationen, Fachzeitschrift für Schuldnerberatung, Bundesarbeitsgemeinschaft
3. Schuldnerberatung e.V., Kassel, 13. Jg., 2/1998: 29-32.

27. Switzerland

History and Development
The first debt advice centres were established in the mid-80s. Since then, about 20 more advice centres have been opened, however, they do not cover all cantons. Additionally, the Caritas (charity) and the Red Cross have set up further advice centres.
In 1997, the umbrella organisation for debt advice "Dachverband Schuldenberatung" was founded having its headquarters in Bern.

At present, 25 advice centres and organisations are members of the "Dachverband Schuldenberatung". Mostly they are organised as charitable organisations, however, financing may differ considerably because debt counselling is not a standard benefit provided for by the Social Welfare Law.
Advice centres have adopted common criteria for their work such as employing staff qualified in financial/legal and psycho/social fields, providing debtors with overall information and explanation on their possibilities for action, and working on a non-profit basis.

Jürg Gschwend
Präsident des Dachverbandes Schuldenberatung
Co-Leiter Fachstelle für Schuldenfragen Aargau FSA Dachverband Schuldenberatung
Laurenzenvorstadt 90
5001 Aarau
phone.: +41 (062) 8228211
fax: +41 (062) 8228220

Mario Roncoroni
Verein Schuldensanierung Bern
Monbijoustraße 61
Postfach 1106
3000 Bern 23
phone: +41 (031) 3718484
fax: +41 (031) 372 30 48

Umbrella organisation "Dachverband Schuldenberatung"(Westschweiz:
Verein Schuldensanierung Bern (debt rehabilitation association)
Caritas Schweiz
Debt advice centre Aargau (FSA) - Fachstelle für Schuldenfragen Aargau
Information on the social system in Switzerland

Documents and Sources
Gesetzestexte Schweiz - Online-Platform with Swiss law texts including a cue search function, run by the Swiss Bundeskanzlei

28. Turkey

History and Development
In Turkey there is no state-financed debt counselling as such nor does Turkish law provide for it.
There is the Enforcement and Insolvency Act (icra ve iflas kanunu, IIK) that had been developed from the adoption of the Swiss civil and debt law in 1929, however, it varies from the Swiss law in various points. The decision-making structure of the Swiss cantons does not exist in Turkey, so it is difficult to adopt Swiss law.
In 1929 overindebtedness as an unlawful act (punishable by imprisonment) was abolished. However, after three years of heavy criticism that the law would protect debtors the Enforcement and Insolvency Act was amended.
In 1940 a law was passed that permitted out-of-court debt collection .
Although the Turkish Civil Law is based on the Swiss Civil Law Turkish and Swiss courts often pass different sentences on the basis of the same facts and with reference to the same law texts.
The law 4949 of the IIK has come into force with some final changes on 30 July 2003. Since 1932 it had been subject to at least 10 fundamental amendments.

Debtors have to care for the organisation themselves. In case of indebtedness they can get fee-based professional legal aid or, if they can prove their poor financial situation, can ask for free advice at consumer protection organisations, district administrations and some lawyers. However, debtors have to undergo insolvency procedures on their own.
There are statistics on indebted households in Turkey, but probably these are not very reliable because they don't consider family structures as an important factor. Usually, the family supports any family member in a difficult economic situation and tries to solve the problem.

Assoc. Prof. Dr. Vahit DOGAN (International Law, Sokrates)
phone: +903122126756/146

Chamber of Lawyers (Avukatlar Barosu)
Law text of the Enforcement and Insolvency Act (Icra ve iflas kanunu)
List of appeal reasons
Forum for Turkish living in Germany fellow citizen inside. Law list, forum etc. in Turkish and German language.

Quellen und Dokumente
1. Information History of the Turkish Civil Law
2. Literature 2004 Icra ve Iflas Kanunu, I. Dündar Özbil, Nesrin Özbil 2004
(laws, rights, obligations and possible ways for debtors) -

29. Ukraine

History and Development
There is no state-financed debt counselling in the Ukraine until today, Ukrainian law does not provide for it. The new Insolvency Act that came into force in 1999, does not contain any regulation relating to bankruptcy proceedings for consumers. Debtors can turn to lawyers or make use of the advice given by consumer protection organisations

In default of organised debt counselling in the Ukraine consumers can turn to several organisations or authorities generally working in the field of consumer advice. In 1991, the Consumer Protection Act entered into force and as a result the State Department of Consumer Protection was established. The Gospotrebstandart has been the main administrative body in the context of consumer interests' and rights' protection since 2002.
According to section 3 of the Consumer Protection Act also local governments are entitled to set up institutions providing, amongst other services, free legal advice in the context of consumer protection. Furthermore, private businesses and citizens have the right to work at debt counselling too. There are, for instance, the Ukrainian Consumer Association, the consumer protection association "Zakon" (Law) working in cooperation with Consumers International in London, or the consumer protection association "Zahist" in Odessa.

OGOP „Zahist”
Ukraina, g. Odessa
tel.: +38 (050) 249 51 71; 714 79 17
email: ;
Kuznecova Ninel

Agenstvo arbitraghnih upravljaushih
01033, Ukraina, Kiev
ul. Vladimirskaja 69
+38 (044) 451 59 90; 227 60 54; 227 40 42

Obshestvo po zashite prav potrebitelei "Zakon"
01348 Kiev-148
ul. Gnata Juri 9-203
phone: +38 (044) 475 24 09

Goskom Ukrauni po tehnicheskomu regulirovaniju i potrebitelskoi politike
99008 Sevastopol
ul. 6-ja Bastionnaja 32
phone: +38 (0692) 55 90 01
fax: +38 (0692) 55 07 12

Agency of the bailiff at the court of arbitration (Agenstvo arbitrazhnih upravljaushih)
State consumer protection association "Zakon" (Gosudarstvennoe obshestvo zashiti prav potrebitelei "Zakon")

Documents and Sources
Text of the Ukrainian Civil Code
Text of the Ukrainian Insolvency Act
Text of the Ukrainian Consumer Protection Act