More and More Icelanders Go into Default Skip to content

More and More Icelanders Go into Default

The number of individuals in default has increased rapidly since the banking collapse last fall. Currently, around 20,000 people cannot afford their down payments and 7,500 other individuals will join that group in the next 12 months if no actions are taken, an estimate from Creditinfo Iceland states.

Copyright: Icelandic Photo Agency.

According to Creditinfo, most of the people facing default are aged between 30 and 49 and have children to support, Morgunbladid reports.

Hákon Stefánsson, acting chairman of Creditinfo Iceland, said it is useless to look at the debt situation of individuals at a certain point in time, like the Central Bank does, and use that information to decide whether loans should be written off.

“When write-offs are being planned, people’s future ability to pay must be considered,” Stefánsson said.

Magnús Norddahl, manager of the legal division at the Icelandic Confederation of Labor (ASÍ), said severely indebted households cannot wait for actions any longer.

“We at ASÍ have emphasized that the actions taken must be easy to execute, accessible, effective and ensure that debts be cut down or changed so that they don’t have to be repaid in the foreseeable future,” Norddahl said. “It can only happen if the current legislation is changed so that it will focus on debtors.”

The Interest Group of Households (Hagsmunasamtök heimilanna – HH) released a statement published on yesterday, claiming that the households in this country are incapable of coping with higher taxes, asking:

“Why is the only solution the government can come up with to burden the households with higher taxes when all of the households’ funds have already run dry?” and “Why is it necessary to save three banks when this society only needs one bank?”

HH protests the government’s efforts to “restore the traitor banks’ offspring instead of meeting the needs of the households in this country.” The restoration of the banks shouldn’t cost the public anything, the statement reads.

In protest of lack of actions taken to help indebted households while so-called “bullet loans” of bankers are being written off, HH is calling for a series of payment strikes. The next strike will take place between October 1 and 15.

Click here to read more about indebted households.

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