Credit Counseling Research Articles

‘What’s important to me is to get people moving.’ Fostering social resilience in people with severe debt problems

ABSTRACT Resilience is considered an important solution to problematic personal debt. European debt policy and research generally focuses on the financial resilience of individuals against life events that may generate debt problems. However, many studies overlook the social dimensions of resilience with regards to tackling problematic personal debt. In this article, we therefore explore the meaning and practices of fostering social resilience in people with severe debt problems, from the perspective of social workers, debt counsellors and volunteers working in a disadvantaged urban community in Rotterdam, the Netherlands. We conducted a case study and used qualitative research methods. The findings reveal that debt problems may lead to a state of inertia in people; an incapability to move, act on or change direction within a given situation. Social workers try to foster social resilience by generating a form of movement in this inert state, and by moving along with people as they work on their debt problems at their own pace and in their local environment. This endeavour involves three interactive practices: taking the lead, activating and connecting. We conclude that fostering resilience is less about tackling debt problems head-on, and more about nurturing positive change in people’s everyday lives and actions.

ENFORCEMENT OF A CREDIT AGREEMENT WHERE THE CONSUMER HAS APPLIED FOR DEBT REVIEW IN TERMS OF THE NATIONAL CREDIT ACT 34 OF 2005 First Rand Bank v Smith (unreported case number 24208/08 (WLD))

Section 86 of the National Credit Act 34 of 2005 (NCA) provides for the debt relief mechanism envisaged in section 3(g) of the Act by affording the overindebted consumer the opportunity to apply to a debt counsellor for a review of the credit agreements to which he or she is a party and eventually to be declared over-indebted by the court. The effectiveness of the debt review process obviously depends on a positive working relationship between all role players, namely the over-indebted consumer, credit providers and debt counsellor, but also on the extent in which the legislator has succeeded to regulate all aspects of the said process properly. According to a recent newspaper report more than 58 000 consumers have applied for debt review in terms of section 86. However, hardly any of these cases have managed to proceed through our courts. Apart from the lack of co-operation between the said role players, it iscommonly accepted that legislative gaps contribute to the ineffectiveness of the debt counselling process. In First Rand Bank v Smith (unreported case no 24208/08 (WLD)) the court, however, indicated a lacuna in the Act which, it is submitted, was not in actual factpresent in the Act.

Management Innovation for Public Institutions : Customer-Focused Management Innovation Case Study by the Credit Counseling and Recovery Service

Management Innovation for Public Institutions : Customer-Focused Management Innovation Case Study by the Credit Counseling and Recovery Service

Spectrum, rate and unmet needs of sociomedical interventions in outpatient psychotherapy.

Psychological disorders often take a long-term course, resulting in impairment in daily life and work. Treatment must therefore target not only symptoms of illness but also capacity limitations and context restrictions, as outlined in the International Classification of Functioning, Disability and Health (ICF). This includes sociomedical and interdisciplinary interventions like coordination with other specialists, contact to employers and employment agencies, social support agencies, debt counselling, self-help and leisure groups. There are no data on the spectrum, rate and unmet needs of sociomedical interventions in outpatient psychotherapy. Following a semistructured interview schedule, 131 psychotherapists in private practice were asked to report on unselected patients. The interviewer assessed to what degree 38 predefined sociomedical interventions were applied so far or should be considered in the future. Reports for 322 patients were gathered. All sociomedical interventions were applied, depending on the sick leave status and course of illness. Cognitive behaviour therapists used more sociomedical interventions than psychodynamic therapists. The data show that sociomedical interventions are a frequent part of psychotherapy. They are used preferably in patients with participation restrictions. Psychotherapeutic concepts and education should include sociomedical aspects.

The Bidirectional Relationship Between Debts and Common Mental Disorders: Results of a longitudinal Population-Based Study.

Researchers and politicians have regularly expressed their worries about a widening of socioeconomic inequalities in physical and mental health. Debts have been relatively understudied as a specific aspect of socioeconomic disadvantage contributing to poor mental health. This study examines the bidirectional association between debts and common mental disorders (CMDs) in the adult population of the Netherlands. Data were obtained from the second (‘baseline’) and third (3-year follow-up) wave of the Netherlands Mental Health Survey and Incidence Study-2, a representative cohort of adults. Questions were asked about debts and difficulty in repaying debts in the past 12 months. The answers were combined into one variable: no debts, easy, difficult, and very difficult to pay back debts. Twelve-month CMDs were assessed with the Composite International Diagnostic Interview version 3.0. Increasing levels of difficulty in repaying debts predicted onset of CMD at follow-up in those without 12-month CMD at baseline, and persistence of CMD at follow-up in those with 12-month CMD at baseline. Conversely, CMD was not linked to onset of debts at follow-up in those without 12-month debts at baseline, but was associated with persistence of difficulty to pay back debts at follow-up in those with 12-month debts at baseline. These associations remained significant after adjustment for baseline sociodemographic variables, negative life events and physical health. Health professionals and debt counsellors should pay more attention to patients’ debts and clients’ mental health respectively in order to refer those with financial or mental health problems to the appropriate services.Supplementary InformationThe online version contains supplementary material available at 10.1007/s10488-021-01131-9.

The impacts of emotions and personality on borrowers’ abilities to manage their debts

This paper examines the impacts of retail borrowers’ emotions and personality traits on their abilities to engage in appropriate responses when things unexpectedly go wrong and they get into debt repayment difficulties. We establish several scenarios where borrowers are hit with unforeseen circumstances that affect their abilities to make their loan payments and we classify and evaluate the riskiness of the strategies they state that they would adopt in those situations. Via an extensive on-line survey conducted in the UK, we show that borrowers who were most comfortable about taking on debts in the first place, those who show neurotic tendencies, and those who believe that they have control over events rather than being controlled by them, are more likely to undertake high risk strategies when faced with unforeseen issues that affect their ability to meet their debt interest and repayment costs. We also find that respondents who identify as feeling excited, alert or guilty, as well as younger borrowers and those who are single or renters, are more likely to opt for risky approaches. Our findings have potentially important implications for lenders, regulators and debt counselling services regarding the types of people who are most likely to get into debt troubles.

Perspective of counselling in social services: the case of Republic of North Macedonia

This paper provides an overview of the need of counselling in social services in the Republic of North Macedonia. Specifically, the research aims at assessing any important differences in the size of the particular counselling need across settlement type (rural/urban) and regions. The following basic social services are considered: counselling for working age inactive poor, debt counselling and day care for children and elderly. The main source of information is the SILC survey of 2016, which provides data on a large representative sample of Macedonian households. Based on the findings the paper presents some recommendations related to the government services implying to improvements of the current social services provided. In other words, the government should promote: 1) less formal types of institutions to provide childcare; 2) the expansion of early childhood development centres that offer parental advice as well as part-time childcare.

Perspective of counselling in social services: the case of Republic of North Macedonia

This paper provides an overview of the need of counselling in social services in the Republic of North Macedonia. Specifically, the research aims at assessing any important differences in the size of the particular counselling need across settlement type (rural/urban) and regions. The following basic social services are considered: counselling for working age inactive poor, debt counselling and day care for children and elderly. The main source of information is the SILC survey of 2016, which provides data on a large representative sample of Macedonian households. Based on the findings the paper presents some recommendations related to the government services implying to improvements of the current social services provided. In other words, the government should promote: 1) less formal types of institutions to provide childcare; 2) the expansion of early childhood development centres that offer parental advice as well as part-time childcare.

Factors Influencing the Psychological Well-Being of Women Entreprise Fund Beneficiaries in Njoro Sub-County, Kenya

The study determined the influence of credit counselling, household debt, and socio-demographic factors on the psychological well-being of the beneficiaries of Women Enterprise Fund (WEF) in Njoro sub-county of Nakuru county in Kenya. The study employed an ex-post-facto research design. The target population was 380 women in Njoro Sub-County who had received WEF loans. A stratified random sample of 190 respondents was selected, 95 women who were current in their loan repayment and 95 who were unable to repay their loans. Data were collected by the use of a structured questionnaire, the 42 item version of Ryff’s Psychological Well-Being Scales (Ryff, 1989) clustered in six dimensions: autonomy, environmental mastery, purpose in life, positive relations, personal growth, and self-acceptance was included. Descriptive and inferential statistics were used to analyse the data at 95% level of confidence. The psychological wellbeing for the women entrepreneurs was found to be (M = 3.91, SD = 0.72) on a scale of 1 to 6. Psychological wellbeing of WEF beneficiaries was positively influenced by credit counselling (β = 0.714, t = 15.08, p < 0.001) and age of household head (β = 0.174, t = 1.94, p < 0.050). Negative statistical significant influences were found between household debts (β = -0.391, t = -2.66, p = 0.008) and psychological wellbeing. Inclusion of credit counselling services in the WEF loaning procedures was recommended.

The Impacts of Emotions and Personality on Investors’ Abilities to Manage Their Debts

This paper examines the impacts of retail borrowers’ emotions and personality traits on their abilities to engage in appropriate responses when things unexpectedly go wrong and they get into debt repayment difficulties. We establish several scenarios where borrowers are hit with unforeseen circumstances that affect their abilities to make their loan payments and we classify and evaluate the riskiness of the strategies they state that they would adopt in those situations. Via an extensive on-line survey conducted in the UK, we show that borrowers who were most comfortable about taking on debts in the first place, those who show neurotic tendencies, and those who believe that they have control over events rather than being controlled by them, are more likely to undertake high risk strategies when faced with unforeseen issues that affect their ability to meet their debt interest and repayment costs. We also find that respondents who identify as feeling excited, alert or guilty, as well as younger borrowers and those who are single or renters, are more likely to opt for risky approaches. Our findings have potentially important implications for lenders, regulators and debt counselling services regarding the types of people who are most likely to get into debt troubles.

Beyond technical skills training: The impact of credit counseling on the entrepreneurial behavior of Ugandan youth

AbstractThere is low take‐up of financial credit among youth in Uganda because potential beneficiaries perceive associated risks as high. This study assesses the determinants of entrepreneurial risk tolerance among Ugandan youth using experimental data from a randomized control trial and a real‐life investment‐risk experiment. Credit counseling was provided to young men and women aged 18–35 who owned a business to educate them about the obligations and commitments associated with financial credit. The intervention had a significant impact on demand for credit and related intermediate outcomes such as ownership of a bank account and investment in assets. The study finds that youth exhibited lower demand for credit after business training because of increased awareness regarding the actual risks associated with receiving credit. Our findings reinforce national strategies to promote soft skills for business entrepreneurship that extend beyond standard business training.

Association between over-indebtedness and antidepressant use: A cross-sectional analysis.

Burden of disease caused by depression and its association with socioeconomic status is well documented. However, research on over-indebtedness is scarce although millions of European citizens in all socioeconomic positions are over-indebted. Prior studies suggested that over-indebtedness is associated with poor physical and mental health. Investigate the association between over-indebtedness and antidepressant use in Germany. A cross-sectional survey among debt advice agencies' clients was conducted in North Rhine-Westphalia, Germany, in 2017 (OID). Data were merged with the first wave of the German Health Interview and Examination Survey for Adults (DEGS1). Descriptive statistics and logistic regression analysis were used to examine antidepressant use in the previous 7 days (OID: n = 699; DEGS1: n = 7115). Prevalence of antidepressant use was higher in the over-indebted (12.3%) than the general population (5.0%). The over-indebted were significantly more likely to use antidepressants than the general population even after controlling for other socioeconomic, demographic and health factors (adjusted odds ratio 1.83; 95% confidence interval 1.35-2.48). Stakeholders in health care, debt counselling, research and social policy should consider the link between over-indebtedness and mental illness to advance the understanding of health inequalities and to help those who have mental health and debt problems.

The making of the indebted wo/man: gendered constructions of fiscal identities and help-giving technologies in Swedish budget and debt counselling

ABSTRACT In parallel with increasing levels of household over-indebtedness, dominant discourses position debt problems mainly as resulting from financial mismanagement and character failings on the individual level. The ‘fiscal identity’ of over-indebted is thereby constructed in opposition to current ideals of financial competence and rationality. This article seeks to investigate how these dominant discourses interact with notions of gender in the debt-managing institution of Swedish budget and debt counselling. The aim was to examine the fiscal identities that are constructed in budget and debt counsellor’s talk and written documentation about male and female clients, and the implications these constructions may have for the help-giving technologies implemented. The empirical material consists of 11 focus group interviews with budget and debt counsellors and analysis of documentation. The results show that gendered fiscal identities are constructed, with masculinity being associated with financial competence, autonomy and less need of emotional support and femininity with a lack of financial competence and a need for comprehensive counselling contacts. These gendered constructions implicitly motivate different help-giving technologies for women and men, although the counsellors claim that gender does not influence the help they provide. Age and ethnicity are found to affect these gendered constructions to varying degrees. The results are discussed in relation to the ideals that are (re)produced through the construction of these gendered fiscal identities and help-giving technologies and how debt-managing welfare institutions contribute to the making of the indebted woman and man.

DOES FINANCIAL LITERACY REALLY MATTER FOR MALAYSIANS? A REVIEW.

Malaysians lack financial literacy but are generally unaware of the fact. The national level of financial literacy measured in terms of financial knowledge is still low among Malaysians. A survey by the Credit Counselling and Debt Management Agency (AKPK) found that 1 out of 3 Malaysians rated themselves as having a low level of confidence about financial management. Research on the issue has made some attempt to examine the cause of lower financial literacy and its effects on decision making, but studies have been limited. This paper examines studies on the topic compiled between the years 2017 and 2019 and some surveys made by organizations in Malaysia to see the current scenario of financial literacy in Malaysia. Up to the present, it is clear that current approaches and strategies toward financial literacy have been ad-hoc. The latest initiative from the Financial Education Network concerned with empowering financial literacy is the National Strategy for Financial Literacy 2019-2023. Each of the organizations involved is committed to improving financial literacy among Malaysian by organizing financial education initiatives such as carnivals, clubs, and seminars. The present study will benefit other researchers and maybe a reference for any organizations that will benefit from the updated statistics and information.

Riesgo de crédito y morosidad, en la cooperativa de ahorro y crédito Qorilazo

El estudio empírico determina la relación existente entre el riesgo de crédito y la morosidad, en la cooperativa de ahorro y crédito Qorilazo, bajo el desarrollo de un enfoque cuantitativo con un diseño no experimental-transaccional a fin de determinar si las variables están relacionadas mediante un patrón predecible. Para la obtención de resultados se consideró el total de la población, conformada por 35 asesores de otorgamiento de créditos; utilizándose como técnicas, tanto la encuesta para determinar la medición del riesgo de crédito que evalúan los asesores antes del otorgamiento de créditos, como la sistematización de información para la determinación de los índices de morosidad de los créditos otorgados por los 35 asesores. Los resultados muestran que el riesgo de incumplimiento obtuvo un valor promedio de 3.09, el cual de acuerdo a la baremación alcanza un nivel regular, así mismo el riesgo de exposición, alcanzó un nivel de riesgo alto (promedio=2.46); finalmente, la medición de riesgo de recuperación se encontró en un nivel muy bajo (promedio=4.66). En consecuencia, la evaluación de riesgo de crédito en la entidad de estudio está en un nivel regular; asimismo, el índice de morosidad acumulado fue de 7%, encontrándose en el límite del margen aceptable pero alto en relación a lo esperado; de allí que existe relación significativa directa y alta entre el riesgo de crédito y la morosidad con un nivel de confianza del 95% (r = 0.92).

Over-Indebtedness and Problem Gambling in a General Population Sample of Online Gamblers.

BackgroundOnline gambling has increased in recent years, including online casino games and live sports betting which constitute rapid gambling activities with significant potential for gambling-related harm. There is a paucity of research examining whether specific gambling patterns are related to problem gambling and over-indebtedness, when controlling for psychological distress, gender, and other risk factors.MethodsA general population-based web panel of 1,004 online gamblers were examined in an online survey addressing problem gambling symptoms (the PGSI), psychological distress (Kessler- 6), past 30-day gambling activities, past 30-day gambling losses, history of subjective over-indebtedness and expected over-indebtedness in the near future, as well as socio-demographic data.ResultsIn logistic regression analyses, problem gambling was associated with psychological distress, recent online casino gambling, and recent combined online casino gambling and live sports betting. History of over-indebtedness was associated with recent combined online casino gambling and live sports betting, and expected over-indebtedness was associated with online casino gambling. Problem gambling, and a history of having borrowed money for gambling, were markedly higher in online casino gamblers, compared to subjects not reporting this gambling activity. Problem gambling was markedly more common in women, but was not associated with gender in the adjusted analysis.ConclusionsIn online gamblers, high rates of problem gambling and over-indebtedness were seen, and online casino gambling (alone or in combination with live sports betting), was associated with remarkably increased risk. Gender distribution of problem gamblers was clearly in contrast to that found in previous problem gambling literature. These findingsa suggest regulations in the market of online casino gambling, and prevention of over-indebtedness in gambling-related borrowing, in consumer credit counselling and in mental health care. In particular, female gender may need to be addressed as a stronger risk factor than previously described.

Recent Trends in Debt Settlement and Credit Counseling

Recent Trends in Debt Settlement and Credit Counseling

Poverty Alleviation Fund in Financial Inclusions of Nepal

This research was an attempt to take a deeper look at people’s experience of existing financial services and their providers. In addition, it aimed to identify definitive indicators that would help to create a roadmap for the delivery of effective financial services in Nepal. The study emphasized that ensuring financial inclusion is an arduous task and requires a holistic approach encompassing strategies for awareness raising, financial education, technical advice on different dimensions of money management, debt counseling, saving mobilization, provision of affordable credit services, research and development. In order to promote financial inclusion, there is a need to develop and apply specific strategies to expand the outreach of their services using combinations of lending methodologies, market led approaches to new product development, fostering linkages with local communities and promoting the use of technologies. This paper is basically descriptive and analytical in nature and based on a number of policy models and provisions formulated in recent years for promoting financial inclusion in Nepal. Secondary data is used, drawn primarily from, Poverty Alleviation Fund, Department of Co-operatives and different departments. Micro finance institutions should give equal priority for non-financial services such as financial literacy and provision of entrepreneurship skills through government and non-government organizations that ultimately helps to utilize micro-credit into productive sectors.

Value and understanding of numeracy practices in German debt counselling from the perspective of professionals

In dealing with over-indebtedness and poverty, numeracy appears necessary for affected persons, in order to use the scarce money available with foresight and to avoid financially negative decisions. However, numeracy as an essential part of (financial) basic education for adults has not yet been systematically taken into account in German debt counselling. Nor are the difficult conditions concerning over-indebted life situations considered sufficiently in theoretical models of numeracy or financial literacy. There is a lack of knowledge in adult mathematics education about the mathematical requirements in the context of over-indebtedness and the numeracy practices of persons affected. In this paper we therefore intend to clarify the understanding and significance of numeracy practices in over-indebted life situations from the perspective of German debt-counselling professionals. The empirical basis comprises qualitative data of two group interviews with debt-counselling professionals (n = 11). Amongst other things, our findings show the complexity of contextual factors in mathematical demands and numeracy practices in precarious living situations, which can help to develop current thinking on numeracy and financial literacy.

Ernst van financiële problemen

Abstract Severity of financial problems: The role of financial knowledge and competences, financial behaviour, financial self-efficacy and motivation of ‘Thuisadministratie’ clientsIn this study we examine if and how self-evaluated financial knowledge and competences, financial behaviour, financial self-efficacy, and motivation are associated with the severity of financial problems of clients in ‘financial self-management projects’ (Dutch: Thuisadministratie). These projects involve support provided by volunteers. Our data included 249 respondents who filled out a questionnaire at the start of the support. The results indicate that particularly unhealthy financial behaviour and lower levels of financial self-efficacy relate to more serious financial problems. Volunteers support people with serious financial problems in getting access to formal debt counselling. Besides this, volunteers should not only focus on improving financial knowledge and competences, but also on contributing to higher levels of financial self-efficacy and healthier financial behaviour of their clients.