Households

A household or a company finds itself in a state of indebtedness as soon as they have a loan, credit or leasing they have to repay or are repaying. This debt can be private, when the loan is meant to meet needs in the household or professional, in case of outside capital in a company. It is possible to have both private and professional debt.

Indebtedness doesn’t automatically means you’re in a financially difficult position. Over-indebtedness however is a more problematic situation.

In the research note published by the European Commission an over-indebtedness household is described as follows: “a household that is insufficient to meet its financial commitments without lowering its living standards” or “a household that has difficulties meeting mortgage or rent commitments and/or paying utility and other regular bills or that they are unable to make ends meet.” This definition however isn’t agreed upon by the European countries. This makes that every member state handles a different definition which makes it rather difficult to compare statistics.

Although there isn’t a European consensus about the definition of over-indebtedness, the definitions that are used by the Belgium institutions concerning debt are comparable to the definition found in the note published by the European commission.

The Belgian federal public service economy describes over-indebtedness as the built-up of debt leading to an inability to pay them, and thus includes a great imbalance between income and financial expenses. Over-indebtedness derives from structural problems and cover a rather long period.

The Belgian parliament defined over-indebtedness as “a lasting and structural inability to overcome financial obligations or repay loans”.