RCT evidence regarding the take-up and consequences of debt relief among over indebted individuals in Sweden

Around 400,000 individuals have debts registered for enforcement at Kronofogden (the Swedish Enforcement Authority), of which many have been overindebted for a long time. For overindebted individuals, debt relief may be the only way out of overindebtedness. In Sweden, debt relief is a five-year program, during which the overindebted individual pays as much as possible whilst living on the subsistence level. However, many of the overindebted individuals who are likely to qualify do not apply. The program´s design will potentially affect the take up of the program. Hence, knowledge about how the Swedish program works is important to understand its effectiveness in alleviating overindebtedness.

In this project, we investigate the Swedish debt relief program´s effectiveness with the following research question: Can the number of applications for debt relief - as well as number of approved requests and completed plans - be increased through targeted information campaigns?

We will make use of five different interventions which were carried out by Kronofogden during 2019-2022. These interventions consisted of attempts to contact overindebted individuals that likely qualify for debt relief, both by phone and in writing. The aim was to provide information about the program and guidance about how to apply and get assistance. Most of the interventions were designed as randomized control trials (RCTs). In the RCTs, individuals were selected based on inclusion criteria and then randomized to treatment (they got the intervention) and control (no intervention). The treatment groups varied in size from 200 to 2,000.

We study whether Kronofogden’s interventions were effective in increasing the individuals’ likelihood to apply for, and be granted, debt relief, as well as the probability to follow the 5-year plan. We examine if the effects differ between different subgroups of overindebted individuals, for example, among foreign-background individuals. We also examine the importance of geographical variation in terms of access to municipal debt counseling and welfare services, and characteristics of the local housing and labor markets.

Researchers

Matz Dahlberg
Mikael Lundholm
Linna Martén
Mattias Nordin