Experiencing financial difficulties

For whom are advisory services?

• Advisory services can be useful for those who have lost control of their financial situation and want to gain a better overview of it.
• Advisory services can help individuals who are struggling to make their payments and do not know how to respond to their difficulties. Those who have tried without success to negotiate with their creditors can also benefit from seeking advice.
• Advisory services can be useful for individuals who foresee that their financial position will deteriorate and want to take action before the situation becomes unmanageable.

How do I apply?

• Applications for assistance in financial difficulties are filed electronically, using an e-ID or an Íslykill.
• When the application has been filed, the Debtors' Ombudsman obtains information on the applicant’s income, assets, and liabilities.
• Applicants themselves must provide information on their living expenses.
• Married or cohabiting couples may apply jointly.

How are the advisory services structured?

• The advisor assists applicants, at the applicants’ request and with their permission.
• The advisor prepares an assessment of debt service difficulties, which includes income, living expenses, assets, liabilities, and debt service capacity.
• The advisor recommends solutions and makes proposals based on the assessment of debt service difficulties.
• If voluntary agreements with creditors are possible, the advisor may act as an intermediary in bringing about such agreements, upon prior consultation with the applicants.
• If voluntary agreements are not a possibility, the advisor examines other options that could contribute to a solution.

Applicants’ participation in the process

• Communications and conversations with applicants are an important part of advisory services. Such conversations generally entail the following:
• The advisor listens actively when the applicants describe the problems they are facing.
• The advisor asks questions about applicants’ situation, including their social situation, income, employment, pension arrangements, residence, expenses, etc.
• The advisor provides information on possible measures for individuals in financial difficulties
• The advisor provides information on measures available from the Office – advisory services, debt mitigation, financial assistance with payment of bankruptcy expenses, and information on what these measures entail and what repercussions they have.
• In conversations with applicants, the advisor tries to inform the applicants what their options are, so that they can develop realistic expectations about the resolution of their difficulties.
• Records are maintained of all communications with applicants.

Solutions and recommendations

• The results of the advisory process can entail the following:
• Proposals on payment of claims.
• Proposals on deferral of payments.
• Assistance in applying to the Housing Financing Fund for deferral of payments.
• Written guidelines on other measures available from the Office.
• Intermediation in negotiations with creditors.
• Assistance with requesting a reduction in monthly loan payments; i.e., by lengthening the loan period.
• Assistance with requesting a reduction in penalty interest and collections costs on claims.
• Assistance in reviewing monthly expenses.

The advisory services provided by the Office of the Debtors' Ombudsman do not include the following:

• Legal advice.
• Assistance in applying for loans.
• Instructions on where to apply for refinancing and on what terms.
• Agreements providing for 100% forgiveness of claims.
• Examination of the validity of guarantees.
• Assistance with tax return filing.
• Granting loans to pay debts.