There are many natural persons who can no longer meet their debt obligations in the Baltic states. For them, overindebtedness is not just a temporary problem – various factors have led to an increase in the number of insolvent natural persons. As shown by economic examples, the insolvency of natural persons is caused by excessive
borrowing for consumption, housing, investment, private business needs, farming, taxes, and inflation, as well as
the development of the credit market which stimulates consumption. On the one hand, the number of borrowers is
decreasing due to the improvement of the payment administration system and the strengthening of payment
discipline. On the other hand, however, the rapid growth of lending and borrowing for both consumption and
business inevitably increases the number of borrowers.

Our colleague Edvīns Draba is a co-author of this article.

The full article is available here.