Every day we read in public opinion something about the expected number of bankruptcies or the shrinking government budget. Are our Belgian companies having a hard time? Then the Belgian citizens will feel it. But who has an eye for the group of poor that is constantly growing? Many Belgian people are experiencing financial problems due to the corona crisis. Also, people you might not expect. Our middle class, for example, is under increasing pressure. As a judicial officer’s office, Modero experiences this new reality from the front row. That is why we’re raising the alarm.
The middle class is disappearing
Last year, 20% of the middle class already spent more than they earned, according to the Organization for Economic Co-operation and Development (OECD). Even before the corona crisis, they were already making use of their savings worldwide and it was difficult to maintain their standard of living. Research by Decenniumdoelen and the progressive think tank Minerva shows that before the corona crisis, approximately 16% of Belgian citizens were considered poor and 18% of Belgian citizens as lower middle class. It seems obvious that these figures will increase in the future. After all, the new Flemish Poverty Barometer also paints a gloomy picture. In 286 of the 300 municipalities, the poverty risk has remained the same or even increased in recent years. In Belgium we see an increase in child poverty, the number of living wages, the demand for social housing and food packages. Meanwhile, the corona crisis acts as a catalyst that pushes people into poverty at lightning speed. For example, De Tijd reported that the corona pandemic will already push 88 to 115 million people into extreme poverty this year.
Without savings you build up debt faster
Due to the corona crisis fewer and fewer people can make ends meet. Saving becomes impossible for many. In June, De Tijd reported that 41% of Belgian citizens are currently unable to save and as many as 55% of Belgian citizens cannot bridge 3 months with the remaining savings.
Do you not have any savings? Then you will probably accumulate debt more quickly. After all, if you cannot pay a debt immediately, interest will be charged. Is payment not made? Then a creditor can eventually also start legal proceedings. This is a major cost for the debtor. An unexpected setback can therefore have major consequences.
A debt spiral must be avoided
Do your debts keep accumulating? Then the situation becomes hopeless and you end up in a debt spiral. As a judicial officer, we always try to avoid a debt spiral. When we receive a file from a client (creditor), we immediately calculate the solvency or payment option of the client (debtor). Our judicial officers also make home visits to test the theoretical score against living conditions. For example, it is possible that the person is solvent on paper, but has just experienced a major accident and is therefore struggling financially for a while. Based on all the information, a personal plan is proposed. As a judicial officer, we inform the client, discuss the payment plan and mediate between all parties involved. If necessary, we also refer the client to external debt counseling.
In addition, we try to avoid unnecessary costs at all times. For example, it makes no sense to start legal proceedings if you know that the other party cannot afford it. Such people are more likely to end up in a hopeless debt spiral and that is exactly what we want to avoid.
Moreover, when people with serious financial payment problems look for help, they experience many barriers. That is why Modero developed One, a digital communication and mediation platform, at the request of the social sector. Thanks to One, the thresholds are removed, they can be guided faster and they are automatically granted right. One also creates a better information flow between the Public Centers for Social Welfare (OCMW/CPAS) and judicial officers. This allows all information to be bundled in one file, regardless of the number of clients. The client gets one contact person and one adapted plan with one monthly payment. Because action can be taken more quickly, additional costs can be avoided and one can start paying off debts more quickly. Both client and contractor will therefore benefit. One was launched as a pilot project in the City of Antwerp. More than 70% of the people who used One already found a solution. In the meantime, One is available to all Belgian Public Centers for Social Welfare and judicial officers.
Discussing a solution? That takes courage!
As a judicial officer, Modero contacts a lot of people every day. Unfortunately, most of them respond far too late or not at all to our letters and emails. Since the corona crisis, we have noticed that our call center is receiving more and more calls. This is a positive trend.
Unfortunately, the average Belgian citizen still seems to be very ashamed of financial problems. Putting one’s head in the sand, however, is of no avail. On the contrary, the costs will only add up. Therefore, always contact the judicial officer as soon as possible and discuss a payment plan.
How do we avoid a social drama?
In recent years, more and more Belgian citizens have ended up in a precarious financial situation, while they fall outside of the existing aid framework. The corona crisis has meanwhile created an even greater breeding ground for payment problems. The need for additional protective measures is great. Our government needs to tackle the problem of over-indebtedness quickly. That is why temporary and structural debt assistance must be urgently expanded and improved.
How can we achieve this? On the hand by providing more solutions in the amicable phase. Solutions should be found out of court as much as possible. After all, once legal proceedings are started, the costs increase quickly. The legal proceeding itself also needs to be revised. On the other hand, the care providers involved must have the necessary information. Currently there is a great fragmentation of information. As a result, it takes too long beware a solution is found. An adapted, accessible and cheaper procedure is imperative.
In short, the financial future of both our companies and individuals looks bleak. Our government needs to take new measures to improve the temporary and structural debt assistance. As a judicial officer, Modero focusses (even more than ever before) on mediation. Our digital communication and mediation platform, One, is available to all Belgian Public Centers for Social Welfare and judicial officers. Together we can help people out of the debt spiral.