We once again raise the issue of over-indebtedness of individuals: why it is important for Bulgaria and why has it remained unresolved for so long? What is the experience of other European countries in addressing this socially and economically significant issue? Why is it important for people to have access to free advisory services and what is the way to build an independent debt advice network in Bulgaria?
About the experience of the Temida Foundation in this regard and the importance of financial literacy in solving the problem of over-indebtedness — a conversation on “Our Day” with banking experts Elena Bakalova and Willy Pierre Abbal.
“In the last few decades, bank credit, financial credit, from a necessary service became a commodity that is offered, and our clients cannot understand that credit is not simply bought, but must be thoughtfully and consciously considered — how it will be serviced and whether it will be used for useful purposes,” states Bakalova.
Abbal, for his part, describes the model in France, where a free advisory structure exists to support people in financial difficulty.
According to the budget support mechanism, energy suppliers, telecoms, and landlords themselves identify vulnerable households at the first unpaid bills and direct people to one of the free budget advisory points, where the problem can be resolved. This mechanism is part of the new EU Consumer Credit Directive.
According to Bakalova, without support, people cannot exercise the rights created through legal norms. This is due not only to financial but also to functional illiteracy, she adds.
Since banks are commercial entities, they cannot pay attention to the individual characteristics of each case, nor to the mental state of the debtor and additional aggravating factors, Bakalova emphasizes.