Dutch credit agency fears more people will face problematic debt levels

People who have just gotten out of problematic debt are not helped by a shorter registration at the Central Dutch Credit Registration Office (BKR). The foundation behind the debt register says this based on studies by a research agency. Large municipalities want to shorten the registration period to help people get rid of their financial problems more quickly, but according to the BKR Foundation, this increases the risk of new issues.

People who receive debt assistance from the municipality now have a special registration with the BKR for three to five years after repaying the debt. But a few of the municipalities, among them the four big cities, want to stop the registration prematurely because they think this would help people.

The BKR asked the bureau Zanders to research a shorter registration. This would show that the risk of new problem debts becomes much more significant for people who have been registered for a shorter period. For people who remain registered for five years after debt assistance, the risk of new debts is 12 times higher than for those who have never run into payment problems. If the registration is only kept for six months, the chances of new debt are 24 times as high, according to the BKR.

The year-long registration of debt assistance is meant to protect people with financial issues from new debt. This way, lenders can check whether someone can handle a new loan. But municipalities want to get rid of the registrations more quickly so the debt-free people can start with a clean slate.