Cabinet ready to shorten duration of municipal debt relief down to 1.5 years

Poverty Policy Minister Carola Schouten wants to the duration of the debt relief programs run at the municipal level to be cut from three years down to 1.5 years. The program sees municipalities taking over the income streams of someone in financial trouble, and using the money to pay off creditors while the person receives a living stipend. At the end of the program, the remaining debt is discharged.

By cutting this duration in half, the minister hopes to also lower the threshold, making it easier for more households to apply for assistance if they have problematic debt levels.

In the coalition agreement, the Cabinet promised to reduce the duration of debt relief programs and is now giving concrete policy about the concept. Schouten wants to ensure that debts are paid off more quickly, for example by having municipalities use debt consolidation loans. People then would only have to pay off their debts with the municipality or credit bank, and then no longer have to deal with bills from multiple companies or government organisations. According to the minister, this gives peace of mind and also helps to shorten the duration of the debt relief program.

"I want us to be available earlier with money concerns and that people can get on with their lives as soon as possible," said Schouten. Figures from Statistics Netherlands for 2020 show that more than 600,000 people have problematic debts.

The minister also wants to investigate whether people who are deeply in debt can be approached proactively. This could be done, for example, by contacting people who cannot afford their health insurance. Their data is already kept by public health authority CAK.

The Cabinet is taking into account that more households will be confronted with high debts due to the energy crisis. That is why Schouten wants to ensure that people with growing debt can be found more quickly by those who can help. Last year, the Cabinet made more money available for this program.

Earlier this month, the Tweede Kamer also decided to halve the debt relief program to one and a half years. Courts can decide to do this if the debt settlement arranged by the municipality has not resulted in wiping out the debt.