Debt Settlement | Instructions for Economic Imbalances

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Sometimes in life, things don’t go as well as you’d like. For example, unemployment or sudden illness or other causes can push the economy into such an imbalance that it no longer seems to be a good way out.

In most cases, this is a brief imbalance that can be tackled by, for example, setting up an Excel budget and starting to plan your spending more carefully. Often these can be remedied.

However, if the situation is prolonged or otherwise threatens to be taken out, more severe measures can be taken. It is possible, for example, to enter into payment agreements with creditors, to pay debts through the enforcement or to apply for social credit from the municipality. At a time when there is already a long line of defaults and money is in short supply, one possible tool to balance the economy may be debt settlement.

What is a Debt Arrangement?

What is a Debt Arrangement?

Debt settlement is a bundle of various measures and means by which the debtor’s (individual) debt relationship can be modified. The debt settlement is determined by the court and is intended to bring the individual’s debts into line with his ability to pay.
Debt settlement usually takes 3-5 years. During this period, the debt is paid according to one’s ability to pay. Debts that could not be repaid under the debt settlement will be forgiven.


The FCA has set out eight steps to debt settlement:

debt settlement:

  1. The financial situation of the debtor applying for the debt settlement will be clarified. So let’s find out, among other things, income, assets, ability to pay and, of course, how much debt is total.
  2. It will be explored whether it would be possible to resolve the over-indebtedness by agreeing on a debt settlement with creditors.
  3. In the event of disagreement with the creditors, the application for settlement shall be submitted to the court. Debt settlement is always sought from the district court of the debtor’s domicile, through a debt settlement application approved by the Ministry of Justice. Applications may be obtained, inter alia, from the Legal Aid Offices and the judicial website. For example, help is provided by your municipal financial and debt counselor.
  4. Examine the conditions for debt settlement. If the conditions are met and there are no barrier grounds, the District Court will initiate the debt settlement procedure.
  5. The liquidator (appointed by the debtor or the district court) prepares a payment program proposal corresponding to the debtor’s solvency.
  6. The payment program proposal shall be afforded an opportunity for the parties to comment, that is to say, a statement. The parties are the debtor himself and the creditors and any co-debtor.
  7. The District Court will approve the payment program if the debt settlement and payment plan approval is in place.
  8. At the end of the payment program and upon the debtor’s payment obligations under the payment program, the debtor shall be released from his debts.

How do I apply for debt settlement?

How do I apply for debt settlement?

Any individual or small entrepreneur can apply for a debt settlement as long as they are domiciled in Finland. This is usually a last resort and a very difficult and lengthy process. And it’s not granted to everyone.

Obstacles may include:

  • the debtor is of working age and able to work and is temporarily insolvent, for example, due to temporary unemployment, study or sick leave
  • the debtor has a significant amount of recent consumer credit and the indebtedness is due to his own negligence
  • the debtor has significant criminal debts.

Obstacles, for example, can be that debt is perceived to be due to a frivolous lifestyle. For example, if the debt is due to the purchase of excessively expensive cars or jewelry, it can be considered as a barrier to debt settlement. On the other hand, it is worth remembering that debt settlement is always considered as a whole, and debt settlement can be achieved even if there are obstacles. The final decision puts much more weight on recent events (such as how you have recently paid your bills) than on things that have gone a long way.


In other words, it is important that you do your job well; work, pay off his debts and no more debt. This is considered a positive element in the debt settlement in order to qualify for the arrangement.

How to avoid debt settlement?

How to avoid debt settlement?

Indebtedness is becoming more and more typical today, with loans easily available from a variety of financial institutions. Repaying the loan as soon as possible is important so that the cost of the loan does not increase.

Payment order matters

Payment order matters

Debt ordering can have a major impact on one’s economy in one direction or another. Pay attention to the payment, especially when there are several debtors.

There are differences in the loans

The loans are not the same. When planning a debt repayment, keep in mind that a multi-loan repayment program can be modified and repaid with a different timeframe. Changing and planning the acronyms will help keep the economy balanced and also save money.


When considering various changes to your payment program, it is important to understand their potential additional costs. For example, moving a due date can sometimes be expensive.

Repayment plan for the loan

Repayment plan for the loan

Creating a plan for a loan is very important and the calculations must be realistic to succeed in your goal. In addition to regular expenditure, it is necessary to take account of unexpected additional costs and leave room for budgetary flexibility.

The payment schedule should not be made too strict to avoid the additional costs of changing the payment plan. If, on the other hand, you are able to pay off the loan faster than planned, that is only a good thing.


If there is more than one open loan, loan consolidation is one option called loan consolidation. You can negotiate with a lender to combine multiple loans into one loan. This can make it easier to repay a loan when there is only one loan, ie, only one installment to take care of. Loan consolidation is provided by several lenders.

Reduce your spending

Reduce your spending

In addition to extra income, you can increase your income by reducing your expenses.
Missing out on eating out, having a bar night, and going to the movies a few times has a surprising impact on spending. Reducing leisure spending is not easy, but for a while, anyone can do it.

If restaurant evenings and vacations are difficult to give up, savings can be made, for example, by competing on all existing contracts such as broadband, insurance, telephone, gym membership or bank loans.
It is worthwhile competing for a credit card, as many cards offer benefits and features that can save you money. A very significant benefit is travel insurance.


Additional Income

In addition to getting extra work, you can, for example, sell old items or clothing that you no longer use. It is easy to sell old items online that others might be interested in.

For example, can sell almost anything from cars to antiques. In addition, Facebook has many different buy/sell groups that easily reach buyers. Airbnb also provides a convenient way to earn money by accommodating travelers for the night or in their own apartment.

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