Indebtedness among European households rose considerably during the economic crisis of 2007-2008. A 2016 study by Eurofound concludes that more than half of the Greek respondents, and over 30 percent of Croatians and Bulgarians, had outstanding payments in the past year. In Sweden, household debt has doubled in the last 20 years. Now, experts fear that the coronavirus crisis could lead to increased over-indebtedness for already vulnerable groups.
Davor Vuleta, PhD student in sociology of law and a former enforcement inspector at the Swedish Enforcement Authority (SEA), notes that immigrants constitute a group especially at risk of becoming over-indebted. This is visible in the SEA's debtor database, where people born abroad account for 28 percent of the cases while only making up 17 percent of the population.
Central to the issue are cultural and language barriers, which negatively impact financial literacy. “For example, many immigrants I met did not understand why they had to pay to view Swedish TV channels when they only watched channels from their home country,” Vuleta writes. “When the bill for Swedish broadcasting arrived, they did not bother paying and their debts ended up with the SEA, resulting in payment defaults.”
The financial system’s sensitivity to personal credit ratings entails the routine denial of loans, apartment contracts, and telephone subscriptions, in addition to rejections from certain jobs, and difficulties attaining Swedish citizenship during the three years a payment default is visible in the SEA’s public registry. In addition to risking property re-appropriation and possibly home eviction, a notation with the SEA can effectively exclude people from essential parts of social life.
“Inability to access the financial system is known as financial exclusion. This is part of the much more widespread problem of social exclusion. Ultimately, this has negative consequences for people in debt as the experience hurts their integration into Swedish society and their identification with the host country. Lack of money can prevent individuals from taking part in everyday activities, or cause them to live in socially excluded neighbourhoods,” Vuleta writes.
Davor Vuleta’s dissertation is planned for the first half of 2022. In the meantime, visit his personal page for more information about his work.