When Mehmet got a psychosis six years ago, his life changed, says the 30-year-old Amsterdammer, who works at an IT company. “My way of thinking changed completely, I kept pushing problems away,” he says. ‘I started buying all kinds of things, electronics and stuff. You end up in a circle. In order not to make matters worse and to calm my mind, I tried to pay off something. But you pay one debt with another. I couldn’t figure it out.’
At the beginning of March last year, Mehmet, who does not want his real name in the newspaper, reported to debt counselor Christy de Ruiter of Buurtteam Amsterdam-West. At the time, he had a debt of 20,000 euros outstanding with nine creditors, including the tax authorities, the health insurer, the energy company, the housing corporation, Wehkamp and Vodafone.
Shame
‘Mehmet had a lot of shame about his debt problems,’ says De Ruiter. “I immediately turned on the pause button, already in mid-March, which freezes debt. We then request creditors not to send any new direct debits or reminders for a period of four months. During that period we were able to work on a debt settlement in relative peace.’
The pause button is a new instrument in the world of debt counseling that has been used in Amsterdam on a trial basis for more than a year. Due to the temporary collection stop, the debtor is given the peace and space to focus on a financial solution. Because people with debts can receive free help through the municipality, but a possible debt restructuring can take many months or even more than a year.
‘You have to find out a lot: have all the allowances been received, has it gone well with income tax?’, says De Ruiter. ‘All debts must be mapped out. In the meantime, the collections, reminders or fines continue to fall on the doormat and the mountain of debt continues to grow. This in turn causes additional stress for the client. That pause button gives some debt peace.’
In the past year, Buurtteam Amsterdam submitted a successful application for fifty Amsterdam residents with problematic debts for the use of the pause button. They had an average of eight creditors. On average, two out of three creditors cooperated with the temporary collection stop. Experiments have also been carried out in The Hague and Eindhoven with a prototype of the pause button, called the red button in these cities.
Aid workers and clients in the three cities are generally enthusiastic about the pause button, which already creates much-needed ‘debt peace’ during the sometimes difficult search for a final financial solution. That is why the aldermen of Amsterdam, The Hague and Eindhoven, together with the NVVK, the industry association for debt counseling, made an urgent appeal to her on Thursday in a conversation with Minister Carola Schouten for Poverty Policy to support the introduction of a national pause button. Other municipalities and a diverse group of creditors are also being asked to cooperate. ‘With the efforts of a broad coalition, the introduction of a national pause button is possible before the end of this year,’ say the initiators.
Bald chicken
Creditors can also benefit from the pause button. Because continuing to send reminders to someone who is already deeply in debt does not work. In other words: you cannot pluck from a bald chicken. In a debt settlement, they can in any case still look forward to part of the receivables.
‘Continuing to collect while someone has problematic debts that require help is wasted time for creditors,’ says NVVK spokesperson Auke Schouwstra. ‘The collection activities also cost them money, which they often don’t see again.’
Debt counselors who are affiliated with the NVVK receive 80,000 requests for help every year. According to figures from Statistics Netherlands, at the beginning of 2018 more than 650 thousand households in the Netherlands (or more than 8 percent) had to deal with ‘registered problem debts’.
In the end it turned out well with Mehmet, he says. “You were constantly worrying about all those letters coming in. Or then you were called again by a collection company. With that pause button I finally got four months of rest, while the debt counseling team worked on a solution with me’, says the Amsterdammer.
According to debt counselor De Ruiter, not all creditors even cooperated with the temporary collection stop for Mehmet: three companies or agencies were not willing or unable to participate. In general, the Amsterdam trial also revealed ‘more awareness among creditors’ as an important point for improvement. ‘Make sure that as many creditors as possible participate, starting with government creditors’, is also one of the points for attention in the experiment in Eindhoven and The Hague.
All nine creditors of Mehmet eventually agreed to a debt restructuring. His debt of 20 thousand euros has been bought off for 7,500 euros by the municipal Kredietbank. Through a budget manager, Mehmet repays that loan of 7,500 euros to the credit bank in three years.
Peace and space
‘Turning on the pause button clearly lifted a burden on Mehmet’, says aid worker De Ruiter. ‘He has found peace and space to work on other matters.’
Without such a temporary direct debit stop, you sometimes see that clients simply give up, she emphasizes. ‘These people then say: shit, I sought help after all. But those letters keep coming in, the debts keep mounting. Then they just drop out.’
Mehmet now receives a monthly living allowance from his budget manager. “I feel a lot better than I did a year ago,” he says. “I was making impulse purchases. There were also so many temptations, such as paying in three installments. There was no structure, it was not the smartest way to live. I now spend my money more wisely.’