Wealthy family to pay off all debts for 3,000 Rotterdam families, as Arnhem helps others

After the city of Arnhem announced plans to pay off all debts of approximately 50 households in Immerloo, which is listed as the most impoverished postal code area in the Netherlands, a family worth billions in in Rotterdam announced plans to do the same for their region. The Van der Vorm family wants to work with 1,000 families in Rotterdam over the next three years to wipe out their debts entirely.

Some 15,000 Rotterdam children grow up in families that are unable make ends meet due to debts, sometimes due to personal problems, and other times simply due to bad luck. “We can argue for a long time about how people are to blame for their own debts, but the fact is that children are suffering,” the family told AD.

This gift is specifically intended for families with at least one child who have experienced adversity in the past seven years. Anyone can register for it. Stichting Nieuw Vaarwater, part of the family’s philanthropic institution, will negotiate with the creditors on behalf of the households in financial trouble.

After that, the family’s Fonds de Loods will pay off the debt in one go. The families will not have to pay back the contribution to either the fund or the nonprofit institution.

The Van der Vorm family did not disclose the budget for this project, but according to the newspaper, the average cost of paying off all debts for one family is approximately 2,700 euros. Doing so for 3,000 families would amount to over 8 million euros.

The municipality of Rotterdam said it values the initiative. “As a municipality, we cannot do this alone,” Alderman Natasha Mohamed-Hoesein said about tackling problematic debts. “Poverty and debt are complex problems in our city, and the solution is unfortunately not that simple.” The municipality does not contribute to this project but will help families qualify for it.

Arnhem debt resolution for impoverished families

The Arnhem experiment hopes to demonstrate that once debts have disappeared completely, other problems like domestic violence, addiction, neglect, and unemployment are easier to tackle, according to NOS. So far, the municipality is aware of debts of up to around 18,000 euros in that neighborhood. The city will pay off those debts in one go.

Families with children will get priority at the start. After the debts are cleared, these households must get counseling for two years to tackle their other problems. They have to arrange that themselves.

According to the Arnhem mayor and aldermen, the Netherlands spends about 17 billion euros per year to resolve problematic debts, while the total debt value is much lower at around 3.5 billion euros. In most cases, it proves impossible to fully collect the debt amount.

“Debt has a devastating effect on people and hinders the solution of other problems or fuels them even further,” the mayor and aldermen wrote to the city council. “On the other hand, there is a dept and collection industry that makes a lot of money from debt and additional collection costs and fines.” So, it is time for a “radical solution.”

The city’s debt purchase fund results from a collaboration between the municipality, various welfare organizations, a housing corporation, and a health insurer. The fund will contain a maximum of 700,000 euros. The city hopes some creditors will help by partially canceling participating families’ debts.