Association of Collection Agencies: Bulgaria’s middle class is rapidly falling into debt

“Bulgaria’s middle class is becoming more and more indebted, and faces difficulties even concerning the payment of monthly utility bills,” showed the analysis of the Association of Collection Agencies in Bulgaria (ACAB) at the end of January. Contrary to the popular belief that poorer people pay their bill with more difficulty, it appears that, more often, the debtor is between 40 and 50 years of age, a resident of a city - Sofia, Varna and Burgas.

"Bulgarians with an average income did not take into consideration the reduction in their revenue on time, and continue to maintain their standard of living of the good economic years, living in practice on the edge of their abilities. For them, even a minimum change in the planned payments means falling into debt," said Raina Mitkova-Todorova, Chairperson of ACAB.

“And if the loss of the family car is a matter of prestige, the non-payment on credit cards or other products on lease remains hidden, which automatically leads to lower collection of these debts,” added the expert. It also appears that whereas the payments for using the services of district heating companies can be deferred, people who use electricity for heating have no choice. When money is insufficient,  it is the liabilities on credit cards and leases that go unpaid most often . At the same time, after three years of crisis, people with a minimum income have learned how to budget, and have permanently ceased to consume goods and services that they cannot afford.

According to the analysis of ACAB, the high bills for electricity and medical services were pointed out by households as the main reason for the delay in payments on loans or leases. On the other hand, every second household has delayed its payments due to the indirect effect of greater inter-company indebtedness, which has led to the deferred payment of salaries. According to the association, in a mere 12% of the cases unemployment was the reason for non-payment. In most of the cases, non-payment was due to bad budgeting and unaffordable costs.

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