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Household Debt and Economic Crises

Causes, Consequences and Remedies

Heikki Hiilamo

The trajectories of increasing household debt are studied in the contexts of the US and the UK, Germany, the Netherlands, Finland and Norway. Household Debt and Economic Crises examines remedies to prevent and alleviate the over-indebtedness epidemic, creating a conceptual framework with which to analyse the causes and consequences of debt. Hiilamo argues that social policies are needed to tackle the current borrowing crisis that endangers and prevents the full participation in society of individuals with excessive debts.
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Chapter 4: Consequences of over-indebtedness

Heikki Hiilamo


Individuals unable to meet their financial commitments have to fight serious deficits under varying institutional conditions, including legal statutes, creditor practices and existing – or non-existing – social security nets. This chapter discusses over-indebtedness as a measure of low socio-economic status (SES) and poverty, before analysing mechanisms linking over-indebtedness and its consequences. The first mechanism is attached to economic constraints caused by over-indebtedness, while the second is connected to the stigma of over-indebtedness. The social stigma concerning indebtedness and debt problems can be analysed, firstly, as an internalized psychological condition relating to the incidence of over-indebtedness and, secondly as a feeling relating to other people’s reactions to an over-indebted person. Both low SES and social stigma are analysed from individual and structural perspective research results and examples from six countries.

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