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Counsellors fear debt pile-up as coronavirus bills come due

Some creditors have offered generous terms during the crisis, but debts will eventually have to be repaid.

En man och en kvinna sitter och tittar på finanspapper med penna och miniräknare i hand.
The coronavirus crisis has brought lay-offs and financial problems for many Finnish households. Image: Mostphotos

Financial difficulties caused by the coronavirus crisis have manifested in unpaid bills for many Finnish households, and experts are urging those in debt to contact their creditors as soon as they think they might have trouble making repayments.

Finland's Guarantee Foundation, which offers debt advice and guarantees repayment plans for individuals in difficulty, says the first and most important thing to do is to ask creditors to extend deadlines in plenty of time.

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Unpaid bills are piling up in some Finnish households. Image: Henrietta Hassinen / Yle

Finnish banks have been generous in offering repayment holidays for those who ask during the crisis. Insurance companies are generally happy to extend deadlines for those who have previously paid their bills on time.

"But if there are a lot of missed payments, it could be that extensions are no longer granted," says Hanna Salo of the Finnish Financial Ombudsman Bureau.

Even when flexibility is granted, those bills will eventually come due.

Could corona bills come due in the autumn?

The Guarantee Foundation now fears that financial difficulties caused by the crisis could come to a head in the autumn.

According to the foundation's Head of Development Minna Markkanen, debt counsellors are concerned about the number of bills currently put off until after the summer.

If the crisis is not significantly eased, and for example furloughed workers are laid off permanently, those bills may cause further problems..

"Can they be paid, if income levels don't rise to the same level as before coronavirus? That is of course a real risk, which hasn't been talked about much," says Markkanen.

"Extending due dates is not necessarily a permanent solution, it just moves the payment difficulties back."

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En hög med mynt ovanpå en räkning på 118 euro.
The Guarantee Foundation says it's important to contact creditors in plenty of time when money problems hit. Image: Ismo Pekkarinen / AOP

Markkanen says that she has already discussed with the foundation's debt counsellors about whether too many extensions have been granted, and if problems have simply been pushed back a couple of months.

"One danger is how many repayment holidays and other bills come due in the autumn," says Markkanen. "If this situation continues, it could be that the payment problems become concrete in the autumn."

Pay home-related bills first

If payment difficulties hit, it pays to consider carefully the order in which bills get paid.

"If there's not enough money for everything, it is important to pay rent, phone, phone and insurance bills first," says Markkanen. "Hopefully those deadlines haven't been extended massively already."

"For example home insurance and car insurance are ordinary household insurance policies, and they end if the bills aren't paid," said Markkanen.

Landlords often demand home insurance be taken out by tenants, and it could be difficult to get a new insurance policy if credit scores show previous payment difficulties.

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