Have you encountered a similar situation? - Social media user Endijs Elias believes that the problem of disproportionate debt growth is relevant in Latvia, where small loans eventually turn into multiple larger amounts.
According to him, if a person took a loan of 1000 euros, it would be logical to return about 1200–1300 euros considering interest and penalties; however, he considers cases where the debt grows to 6000 euros to be abnormal.
"In my opinion, there has long been a problem in Latvia regarding how debts inflate and what disproportionate amounts are ultimately collected from people. If a person took a loan of 1000 euros, I would understand if, with interest, late fees, and collections, they needed to return about 1200–1300 euros, but certainly not 6000 euros — that is already abnormal," writes Endijs.
The author of the publication also reminded about the consequences of the coronavirus pandemic, when many residents lost their incomes and the ability to pay loans on time. In his opinion, instead of helping people, the system often just allowed the interest to continue to grow.
"We cannot pretend that the Covid era did not exist, because it was then that many people’s finances, incomes, and ability to pay collapsed. But the system often did not help find a solution, but silently waited while the interest became larger and larger. That is why people feel that everything is arranged only in the interests of creditors," writes the author of the publication.
He specifically criticized the work of the Council of Judicial Executors of Latvia, stating that over two years of observation, his trust in the system has only decreased. As an example, he cited cases where a fine of 20 euros eventually increases to 120 euros or more.
Moreover, according to him, people find themselves in an "artificial debt circle," where new loans are taken to pay off old ones.
"I have been observing the work of the Council of Judicial Executors of Latvia for two years, and honestly, trust in this system has only decreased over time because it is abnormal when small debts turn into huge amounts. The same goes for fines — an unnoticed fine of 20 euros eventually becomes 120 euros or more. For what? Where is the proportionality? Essentially — it’s mafia," the man believes.
In Endijs' opinion, it is time for Latvia to talk much more seriously about interest rate caps, protecting people, and the accountability of the system because now it is too often that a person in a difficult situation is simply driven deeper into debt. An artificial debt circle is created — you are constantly borrowing to pay back.
The publication sparked active discussion. Some users agreed with the criticism.
– "From 1 thousand to 6 thousand in our time seems not quite legal anymore."
Some commentators also pointed out the serious psychological consequences of debts, including an increase in the number of suicides.
– "No, it can get even worse. That’s why there is such a high suicide rate. A colleague borrowed 300, but has to pay back 2800."
At the same time, other participants in the discussion believe that responsibility also lies with the borrowers themselves. In their opinion, before taking out a loan, one must assess their capabilities, and when problems arise — negotiate with creditors and judicial executors.
– "What about thinking before borrowing? It’s not worth taking a loan if you know you can’t pay it back. I myself had loans and debt collections before. I arranged all this for myself, and it became a good lesson — to think with my head in the future. And even in debt collections, if you approach it normally, everything can be negotiated."
