Over-indebted Swiss unpack: “Debt of 250,000 francs resulted in 2 million follow-up costs”

class=”sc-29f61514-0 fQbOYE”>

In 2022, more than 5,000 people sought advice from debt counseling because they were over-indebted. This means that they won’t be able to pay off their mountain debt anytime soon. Pascal Pfister, of the debt advisory umbrella organization in Switzerland, says the number has remained stable over the years. But behind every mountain of debt lies a personal destiny.

On Thursday, the debt advisory service presented its debt statistics for 2022 at a media conference. The average debt is CHF 67,138. Much of it remains with the government and ultimately with the taxpayers. “People who are over-indebted often have no chance of getting out of this situation,” Pfister says. Two of those affected describe how difficult this can be.

Personal bankruptcy as a last resort

One of them is Lilian Senn. She married a man who had a poor background and was already in debt. They had children, they bought a house. Everything was too much for Senn at one point – he suffered from burnout. Divorce followed. “I’ve lost everything—everything really,” said current retiree she.

He founded an NGO with his last remaining strength – with little success. “I was sitting on a mountain of debt of 120,000 francs, and that later doubled,” Senn says. It’s a hopeless situation. He managed to cancel part of the debt to creditors. He lived at the subsistence level for more than ten years.

He had reduced his debts in 2012, but the next blow followed. He quit his job, could no longer pay the rent, and was on the street for four years. Most of his debts were tax payments and health insurance money. “The state allows health insurance companies to make money off the backs of those affected,” Senn says.

The pensioner now has peace from his creditors of the remaining 100,000 francs debt as he has filed for private bankruptcy. But private bankruptcies are becoming rarer: “These have become increasingly difficult to access,” explains Pfister.

From entrepreneur to homeless

A private bankruptcy is not possible for Tito Ries. He lives on a subsistence level and has to contend with a mountain of debt of nearly 400,000 francs. It all started in 1996.

At that time, he founded his second company. He had successfully sold his first company. “I was a successful entrepreneur – until all of a sudden eight customers could no longer pay,” Ries explains. He was sitting on a mountain of debt of 250,000 francs.

For the next five years he tried to pay off the debt, but to no avail. He broke up with his wife and became addicted to alcohol. Ries was almost 40 at the time. To this day, he makes a living by odd jobs and lives on a subsistence level.

“I went into a downward spiral because of the drink. I was homeless for two years in 2011,” says Ries. The mountain debt rose to over 600,000 francs – the first part is now expired. Ries currently lives with his girlfriend.

“Out of 250,000 francs of debt, there were two million francs of follow-up costs,” explains Ries. This includes social costs such as debt advice. And these follow-up costs are borne by the state, or rather taxpayers. “With an unnecessary debt relief,” Ries says.

the solution is at hand

However, Switzerland no longer knows of debt exemptions or haircuts. Debts remain for life—even inheritable, unless creditors waive the money.

That’s why the debt advisory umbrella organization in Switzerland is now calling for a new restructuring process with debt exemption. “There is a possibility of a restart in the US and the rest of Europe,” Pfister says. Debt counseling sees the need for action. Because there is no solution for cases like Ries – he now lives on debts.

Even Lilian Senn doesn’t always arm herself with private bankruptcy against creditors. One thing is clear: Excessive debt can affect anyone. A solution is therefore in everyone’s interest – because ultimately taxpayers bear the costs.

Source :Blick