According to Law 3/2012 over-indebtedness is defined as a situation in which there is a. persistent imbalance between obligations and assets that can be easily liquidated, as well as an inability to fulfil the obligations regularly.

What does over-indebtedness mean?

An over-indebted household is, accordingly, defined as one whose existing and foreseeable resources are insufficient to meet its financial commitments without lowering its living standards, which has both social and policy implications if this means reducing them below what is regarded as the minimum acceptable in the ...

What causes over-indebtedness?

The results suggest that over-indebtedness is driven by, among others, lack of credit literacy, cross-borrowing and a lack of income. The results also suggest that over-indebtedness is likely to impoverish the indebted.