Today in Sweden, around 440,000 people have debts registered with the Enforcement Authority (Kronofogden). Of these, approximately 90,000 are considered "long-term over-indebted," meaning they have been trapped in financial dead ends for years, sometimes decades. A recent report from the think tank Arena Idé, authored by Elin Molin and Paula Roth, reveals just how unreasonably difficult it is to escape this debt trap, despite existing regulations for debt relief. The report is not just a collection of numbers—it is an alarm bell about a system failing those in need.
Debt Often Stems from Crisis, Not Excess
One of the report's most striking insights is that over-indebtedness rarely stems from luxury consumption. Instead, it is life crises that lie behind it: unemployment, divorce, illness, or the death of a loved one. Life's unexpected turns—events that could happen to anyone—often lead to people falling behind on payments. Suddenly, you're not just sick or unemployed—you’re also stuck in a debt trap with no way out.
This is where society should step in with support. Instead, the indebted person is often met with bureaucratic obstacles, suspicion, and demands that make an already precarious situation even worse. Only about a quarter of those who apply for debt relief are granted it. That means 75 percent, despite actively seeking help, are denied.
Debt Relief That Doesn’t Help Everyone
Debt relief is meant to provide a breathing space, a second chance for those stuck in a hopeless financial situation. In reality, it often becomes a new kind of prison—with five years of extremely strict financial limitations, sometimes leaving no room for unexpected expenses or even necessary medication. For many, it’s not a step toward freedom, but another proof of a harsh system.
The report proposes several concrete reforms:
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A shorter debt relief period, for example three years instead of five.
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A fixed monthly repayment amount, regardless of income increases.
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Inclusion of more groups, such as people with mental health issues or elderly individuals already living on subsistence levels.
"Perpetual Debtors" – A Political Responsibility
The government has recently appointed an inquiry focused on "perpetual debtors," people who never seem to escape their debt spiral. The investigation will consider, among other things, the possibility of an absolute statute of limitations for debts—something that effectively does not exist today. This means that debts can follow a person for life and even be inherited if debt relief is not granted in time.
Such a reform would not only be humane—it would also make economic sense. Allowing people to work, contribute, and live with dignity yields far more value than letting them suffocate under debt mountains and lost hope.
A System That Breeds Mental Illness
Over-indebtedness is not just an economic issue—it is a matter of life and death. Studies show a strong link between debt and mental health problems, including depression, anxiety, and suicidal thoughts. When people lose hope for the future, their entire life situation deteriorates: relationships, health, and work ability.
Living with the constant threat of wage garnishment, not daring to answer the phone or open the mail, is a strain that wears down both body and soul. It is a form of social exclusion that is rarely acknowledged as the structural problem it actually is.
Why This Affects Us All
It’s easy to think this doesn’t concern "us"—that only others fall into debt. But the pandemic, inflation, rising interest rates, and increased living costs have shown that no one is completely immune. Many who once had stable incomes have quickly found themselves in financial distress. Today’s middle class may be tomorrow’s debtors.
Moreover, it’s not just the individual who suffers. Society loses in productivity, tax revenue, and social cohesion when people are trapped in debt. Growing economic inequality threatens trust in institutions and the fabric of society.
We Need to Change Our View on Debt
We need to start talking about debt in a new way. Not as a sign of personal failure, but as the result of structural shortcomings. We must show that we, as a society, care for those who have fallen—and that we believe in recovery. Because no one recovers through shame. No one gets back on their feet by being pushed further down.
Debt relief should be the beginning of a new life, not the continuation of a punishment. The system must be designed to help people rise—not to keep them down.
A Hopeful Society is a Just Society
When we reform our debt relief systems, we also send a powerful message to all citizens: that we do not abandon one another. That a life is not lost just because someone went astray. That there is a way back, no matter how dark it has been.
We must create an economic policy based on empathy and long-term thinking. One that puts the human being at the center, not bureaucracy. One that recognizes that investments in debt-free lives are investments in a better society.
Because if we can’t give people the chance to start over—what does that say about us as a society?
The report from Arena Idé is a wake-up call. Let’s not go back to sleep.
By Chris...
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