Low income the greatest risk factor for loans leading to debt with the Swedish Enforcement Authority

This analysis is the first of its type and the authorities investigate how loans influence the risk of having financial difficulties. Repayment problems are divided up into different stages – early problems as repeated reminders and collection notices, and later problems as injunctions to pay and debts with the Enforcement Authority – and shows how many borrowers there are in each category. The supporting data are statistics from the Enforcement Authority, loan data from FI's investigations and surveys, and a questionnaire from the country's budget and debt advisers.

Over the course of one year, 3.2 per cent of all borrowers, or 180,000 individuals, receive at least one new injunction to pay from the Enforcement Authority. Of these, 39,000 people still have a debt with the Enforcement Authority the following year. Loans account for around one fifth of the total debt people who are resident in Sweden have with the Enforcement Authority, or SEK 14.4 billion of a total of SEK 74 billion.

People with low incomes are most vulnerable to suffering repayment problems, and this is the case for both loans and other debts. In Sweden, around 35 per cent of the adult population have less than SEK 14,000 left each month after taxes. However, they make up more than half of all those who have a debt with the Enforcement Authority.

Loans play a major role in why people suffer financial difficulties. However, other debts such as unpaid telephone bills and maintenance support, tax debts and vehicle-related debts are also common at the Enforcement Authority. The analysis shows that repayment problems often start with life events such as unemployment or illness.

Young borrowers, 18–25 years old, more frequently have repayment problems such as reminders and collection notices from debt collection agencies. However, it is more common for middle-aged borrowers to have a debt that ends up with the Enforcement Authority. This may be because young people are more likely to receive help from parents or those close to them when this is actually needed. Nevertheless, there is a risk involved if a large number of young people are not paying their bills. They may suffer more serious problems when they get older and have more debt if they do not change their behaviour.

Smaller loans more frequently lead to early problems, while borrowers with one or more large loans more frequently have debts with the Enforcement Authority. A contributory cause may be that borrowers are paying off small loans with other, larger loans, and that it is these loans that are leading to debts with the Enforcement Authority.