The pandemic continued to have an impact in 2021, in that part of the year the office of the Office was closed to the public because of the government’s quarantine measures. Telework by employees was widely used during the year and this arrangement was successful. Communication with applicants is generally electronic or by telephone, and therefore the change in working arrangements and the closure of the office had no significant impact on the Office’s services. The Office also plans to improve digital services even further by offering a special website for applicants, known as “middle area” and is on the agenda to implement it next year. On the website, applicants can communicate with the Office, receive and send documents and monitor the situation.

During the year, 773 applications for assistance were received due to financial problems, which is slightly lower than the number of applications in 2020. It can therefore be said with certainty that the effects of the pandemic did not lead to an increase in payment difficulties at the Office. In this connection, it should be mentioned that individuals usually state the reasons for payment difficulties in their application and the Office therefore has generally a good overview of what has led to financial problems for applicants.

The production of the podcast, Leitin að peningunum, continued in full force during the year, but there were X episodes in total during the year. It was really pleasing how well the show was received, but listening has been ahead of all hopes. Educational matters occupy an important place in the office’s operations and I have therefore focused on concrete ideas on ways to improve and promote education to the public, both to increase financial literacy as well as awareness of the office’s resources. The goal is to continue publishing education in various forms, whether it be educational videos, brochures, episodes etc. It is also important to continue to cooperate with professional parties that deal with welfare issues and provide support to them.

One of the most important tools of the Office for resolving financial problems is the statutory remedy for payment adjustment, which, in the opinion of the undersigned, needs to be made necessary legal reforms. It is clear that individuals who seek assistance from the Office often struggle with various difficult social situations and it is important that the remedy develops in accordance with the needs of that group of applicants. The Office would also like to examine more closely how solutions to financial problems could be improved, in relation to claimants who are outside payment adjustment, which are usually state claimants. Their share has been growing and the Office sees a great need for a review of the legal powers of public institutions regarding the handling of claims from individuals in financial difficulties.

It is clear from the number of phone calls registered during the year how important a role telephone consultation plays at the office. Individuals can call the office between 9 and 15 every working day and get in touch with a consultant. At the same time, a request can be made for a consultant to call, on the website of the office. Individuals who call are often curious about the resources and assistance of the office, but also receive many questions about the process of bankruptcy, the expiry of claims, registration in the default register, the district commissioner's financial process and many other things. Are individuals generally very grateful for being able to receive answers to general questions in relation to debt issues.

In the opinion of the undersigned, the service of the Office has been successful in this special year and I would like to thank the staff of the Office for their work and flexibility in changing the working arrangements. In addition, I would like to extend special thanks to our partners who have worked on the podcasts for their excellent cooperation.

The office is primarily a service where individuals can receive free assistance from experts in resolving financial problems.

Main projects:

• Advice

• Call inquiries and telephone consultation

• Education about household finances

• Type of maintenance criterion

The Office also implements the following resources:

• Implementation

• Granting financial assistance to

The objectives of the Debtors Ombudsman

• Always provide the best service possible and the emphasis is on constantly looking for ways to improve it.

• The Embassy maintains a strong telephone consultation where you can seek more information about the services available and receive answers to simple questions and advice on where to seek further answers or services.

• In addition, you can send inquiries to the Office by e-mail and receive written answers to individual inquiries. You can also request a call on the web.

Application process

The office seeks to offer its employees flexible working hours with the aim of making it easier for employees to balance work and private life without compromising the services provided by the office.

The Office has been fortunate over the years with good staff. The majority of employees have worked since the office was founded and even worked before before the office’s predecessor, which was the Financial Advisory Office for the Households (mean age takes into account this). The Office has therefore developed a great knowledge of what concerns the financial affairs of the households.

In 2021, 17 employees were in 16 positions. Two employees were on maternity leave for much of the year.

The Debtors Ombudsman supports employees to take care of their health and exercise.

The employees of the Office in 2021 had diverse education and extensive experience, but the average age of employment was 11 years. This includes the age of employees who previously worked at the Financial Advisory Office.

The Debtors' Ombudsman's ( Debtors' Ombudsman) standards are intended as a reference when solving debt problems through the Office's resources. The standards are intended for a shorter period than the standards of various other institutions, for example, typical standards of the Ministry of Welfare. The Office's standards take into account real expenditure of Icelandic households according to the expenditure survey of Icelandic households by Statistics Iceland.

Applicants must state in their application various costs of living, such as heat, electricity, childcare, property taxes and they are added to other costs to calculate the total cost of living for the family. The criteria thus take into account the circumstances of each applicant.

The Office has promoted this project in various ways, such as through information on the website and on the office’s facebook page and through communication with the media about the problem of debtors and about the resources available.

The Directorate of Health has put great emphasis on education and prevention in recent years and good cooperation has developed, e.g. with parties that service individuals who may need assistance due to financial problems. In 2021, the year was different from previous years in many respects, but there was little room for holding educational meetings because of the Covid-19 restrictions that were in effect for much of the year. However, four educational meetings were held in cooperation with Virknimiðlun under the auspices of the Welfare Department of the City of Reykjavík.

The Office put great emphasis on providing clear and informative information on the website related to finance in times of uncertainty due to Covid-19.

In the last years, the office has cooperated with service centers in the capital area and offered education for social workers and other employees. The office has also participated in various projects and offered education for participants and professionals.

An electronic educational meeting was also organized for BHM members about finances and job loss.

The search for the money

In October 2020, an agreement was signed between the Minister of Social Affairs and Children’s Affairs to promote financial education among young people, as there was a big increase in applications for assistance due to financial problems among individuals aged 18-29.

Many people were in difficulty with their loans and the need for education and prevention was great. It was decided to focus on two ways, making podcasts about personal finances and opening a website where there was good access to various financial education.

More on the teaching website.

When an individual has decided to seek assistance from the Debtors Ombudsman because of financial problems, the first step is to submit an application.

The office's experts then analyse and evaluate in consultation with the applicant which remedies are best suited to resolve the problem of the person concerned.

This arrangement has been successful and has helped to reduce waiting times.

Total number of applications received by the Directorate in 2021

• 773 Applications for assistance due to financial problems

Here you can see how the applications received in 2020 went after analysis.

• 513 Advice

• 323 Payment adjustment

• 75 Financial aid for the payment of transition costs

Applications for financial assistance in figures

Advice is initiated after the application for assistance due to financial problems has been received and an analysis has been carried out in consultation with the applicant.

The advice includes the preparation of a credit difficulties assessment with the aim of gaining an overall view of the financial situation and seeking solutions.

With advice from the Debtors' Ombudsman, the aim is to resolve financial difficulties before the problem has become such that other remedies, such as a payment adjustment or bankruptcy, are needed. After processing the application, the applicant receives a summary of his/her financial situation, a credit difficulties assessment, and if possible, proposals for improvements. In some cases, the counselors assist applicants in seeking agreements with creditors, which may include, among other things, loan extensions, cancellation of late interest, loan freezing or loan modification.

If the above measures are not sufficient, applicants are advised to apply for personal adjustment or financial assistance to pay insurance for the costs of bankruptcy proceedings with the debtor's representative.

When the applications for counselling are examined, the gender distribution is quite even.

During the year, applications were processed

• men 56%

• females 44%

The largest number of applications in 2020 were individual applications (1+0) or 55%.

• 570 - Total number of applications for counselling

• 532 - Total number of completed applications Advice

Advice in numbers

In 2020, the following were:

• 32% with negative payment capacity

• average assets 5,132,969 ISK

• average debt 11.525.163 ISK

• average payment capacity in settled cases 43,757 ISK

Information on applicants

The objective of the Act on personal accounting is to enable individuals in severe credit difficulties to restructure their finances and to strike a balance between debt and ability to pay so that it is realistic for the debtor to meet his obligations for the foreseeable future.

Processing of payment adjustments is carried out entirely within the office where the supervisors handle the processing of payment adjustments from the beginning of the application to the end of the case.

The application system of the Directorate is electronic and applicants do not need to submit a written consent for data collection, but such consent is granted electronically. The application is entered through island.is, either with an ice key or electronic ID.

Processing of applications for individual payment adjustment can be completed in three ways, through approval, through refusal and through the applicant himself deciding to withdraw his application.

There may be more than one reason for refusing an application for a payment adjustment.

The most common reason for refusal in 2021 was the applicant’s unclear financial situation, but in 75% of applications, unclear financial situation was one of the reasons for refusal.

Appellate Decisions

Decisions of the Debtors Ombudsman on refusing the authorization to seek payment adjustment and on cancelling the authorization to seek payment adjustment can be appealed to the Welfare Appeals Board.

In 2021, 5 decisions were appealed, all decisions were confirmed by the adjudication committee.

Applications for payment adjustment in 2021

• 170 applications

• 151 deliveries

When the applications for payment adjustment are examined, it can be seen that women are in the majority of those who apply for individual payment adjustment.

• 51% women

• 49% male

The majority of applicants were individuals with the family label 1+0 or 65,3%

• 42% approved

• 45% refused

• 18% withdrawn

Payment adjustment in figures

In 2021, there were:

• 48% with negative payment capacity

• Average loan 2,331,029 ISK

• Average debt 7,312,302 ISK

Information on applicants

Payment Adjustment Process

Agreements for payment adjustment

After approving the application for a payment adjustment, a coordinator is appointed and the process of negotiating contracts begins.

When the creditor drafts a contract for the payment adjustment, the law on payment adjustment stipulates that the draft must ensure the maintenance of the debtor and his family and that it is realistic that he will be able to meet his obligations, restructure his finances and establish a balance between debt and ability to pay.

In 2021, 57 agreements were concluded for payment adjustment, while 59% of agreements provided for 100% repayment of all contractual obligations.

The period of payment adjustment in contracts in 2021 ranged from no period to 36 months. The most common result was 12 months in 33% of cases and 24 months in 35% of cases.

Payment adjustments may provide for the total retention of individual claims, their proportional reduction, their maturity, their terms, their payment with a share of the instalment amount paid in certain intervals over a certain period, the change of the form of payment of claims or all of the above at once.

Various factors are considered, e.g. debt amount, family status and age, and it is the role of the depositary in consultation with the debtor to assess how a contract is best suited to meet the conditions of the Act discussed above.

In 2021, 57 agreements were concluded. Gender ratio:

• 65 % women

• 35 % male

Most applications were processed as individual contracts (1+0) or 62%

Contracts for payment adjustment in figures

In 2021, there were:

• 63% with negative payment capacity

• Average loan of ISK 3,750,003

• Average debt 7.707.111 ISK

Amendment to the Agreement

When the depositary proposes to enter into a contract between the debtor and the creditor, the objective is always that the contract is realistic and is suitable for solving the creditor's payment and debt problems. However, it is never possible to exclude that something occurs during the contract period that prevents the debtor from fulfilling the contract that was entered into.

If unforeseen circumstances occur during the contract period that weaken the ability of the debtor to comply with his payment adjustment agreement, the debtor may request the creditor to change the agreement.

Since 2013 the process has been implemented whereby the Debtors Ombudsman acts as a mediator for the claimant on behalf of the debtor, although the law allows the debtor to perform this role himself.

Experience has shown that it is a great burden for debtors to perform this role themselves and the Office has been better able to reach a settlement on the amended contract in line with the ability of debtors.

Total number in 2021:

• 15 amendments

• 9 agreements amended

• 6 Requests Revoked

Since the beginning, 69% of the amendments have been accepted.

The remedy consists in the applicant requesting to receive a guarantee for the cost of liquidation for bankruptcy proceedings, subject to certain conditions.

The aim is to enable individuals who have experienced significant payment problems and have unsuccessfully sought other payment solutions to claim for the change of their livestock.

The main criteria are that the applicant has significant payment problems, that the applicant cannot meet the insurance for the costs of bankruptcy and that other payment problems are not sufficient to solve the applicant’s payment problems. Similar criteria are also contained in the Act on Individuals’ Payment Adjustment No. 101/2010, which the applicant must meet in order to be authorized to seek payment adjustment.

There may be more than one reason for the rejection of an application for financial aid to cover the cost of the exchange.

In 2021, the most common reason for rejection of an application was that the applicant did not meet the requirement of Article 3(1)(b) of the Bankruptcy Code, that the applicant must not be able to satisfy the obligation to pay the cost of the bankruptcy transaction, taking into account the assets and liabilities of the bank.

In 2021, 40 individuals who had received approval for financial assistance to pay collateral for the costs of bankruptcy proceedings requested that their estate be taken to bankruptcy.

The law on financial assistance for payment of insurance for the cost of liquidation for bankruptcy does not contain a clause on deadlines, therefore individuals can in fact go to the District Court at any time with their consent and submit documents. At the end of 2021, 85 unpaid consents were outstanding.

Applications for financial assistance to pay the transition costs in 2021 in figures

When the applications for financial assistance to pay the cost of the exchange are examined, it can be seen that men are in the majority of applicants. The applicants were:

• 72% male

• 28% women

The largest number of applications were individual applications (1+0) or 88%

• 71 - Total number of applications for financial aid for exchange costs

• 52 % of applications accepted

• 27 % of applications rejected

• 3 % of applications cancelled

Other information:

• 68% with negative payment capacity

• average asset 167,141 ISK

• average debt 10.759.263 ISK

Statistical information on exchange costs