Abstract: The number of applications for debt management services in the Netherlands shows a steady increase of about 10 per cent each year, over the last few years. Municipalities, responsible for these services, at the same time need to cut back on expenditures. Our research shows that the (social) return on debt management is, on average, twice as high as the costs. These benefits are mainly found in the areas of social welfare and housing. Since debts are a reason for employers not to hire or not to continue employment, debt management increases the chance of (continued) employment and therefore helps reduce costs of unemployment and welfare benefits. Since housing corporations spend large sums of money on evictions, the prevention of evictions through debt management also reduces costs in that area.
The ratio between the costs and benefits is only partly influenced by the quality of execution. Social structure offers a better explanation, where a weaker social structure results in greater benefits. Our findings are based on extensive research of individual files combined with interviews with professionals. Only direct if-then relations were considered. This means that in reality the cost-benefit ratio may even be more favourable. Municipalities should therefore be careful in cutting back on debt management services. On the other hand, cross-linking debt management with welfare payments and co-operating with housing corporations could open up opportunities for co-financing debt management services.European Review of Private Law