Drowning in debt: the drama deepens

According to latest data, of the 17.372 appeals to DECO for help and advice, only 2.837 families saw a case file opened for them – that’s only 25 more cases than DECO dealt with in 2009.

Another 2.825 people were seen for personal consultations, 3.227 received written information and 8.483 got help over the telephone.

“When a family is confronted by a situation of unemployment, for example, instead of asking for help straight away, or contacting the bank, they use their credit cards, and ask for more credit – in order to maintain the same lifestyle”, DECO coordinator Natália Nunes explains.

In most cases, the people defaulting on credit payments are already on the Bank of Portugal’s “blacklist”.

Families supported by DECO in the renegotiation of credit terms have “on average, five loans: a mortgage, car payment installments and personal loans”.

Of the case files opened by DECO, 32.7% apply to families with income of between €500 and €1000 per month, and 29.5% to families earning between €1.500-2000 per month.

Nonetheless, “there are more and more families with earnings in excess of €2.500 per month who come to us for help”, Nunes admits, because they’ve “organised their family budget in accordance with their high salaries. They’ve bought a more expensive house, a more expensive car and, when faced with economic difficulties, find themselves in bigger trouble” when it comes to paying off their debts on time.

“In these cases, we’re talking more about superior technicians, doctors, teachers, lawyers. More and more these kind of professional classes have been seeking us out”.

“Only a few days ago, we saw the case of a family that faced debt payments of more than €100.000”, she concluded.

Unemployment has been the principal cause of economic difficulties for 32.4% of families helped by DECO. Health issues are a second cause. The breakdown of working conditions (reduced family incomes) also caused 18.2% of case files – while divorce was at the root of 10.5%.

Between 2008 and 2010, appeals to DECO for help have almost doubled. The consumer watchdog association forecasts even more difficulties for 2011.