Paper Short Abstract:

The research explores debt advisors' guidance for over-indebted households in Northern Hungary. These strategies combine formal legal advice with informal techniques, such as establishing dependent relations with one's social network to mitigate the adverse effects of judicial debt collection.

Paper Abstract:

Household over-indebtedness and judicial debt collection in Hungary affect around 700,000 people through wage garnishment – a forced 33% or 50% deduction of wages exceeding the living minimum amount (160 euros per month). This phenomenon disproportionately impacts the populations of villages in Northern Hungary, entangling inhabitants in debt traps, resulting in exclusion from formal wage labour and diminished incomes. A few non-governmental organizations offer debt advice in Hungary in the region.

The central inquiry of this research explores how households navigate and sustain their livelihoods amidst such an illiquid economic environment. Furthermore, the research investigates the advice and strategies debt advisors extend to debtors who cannot meet present and future payment obligations. Through comprehensive 12-month ethnographic fieldwork, the research relies on interviews with debtors and social workers and participant observation with debt advisors in Budapest and Northern Hungary. Across 130 meetings with nine debt advisors in two organizations, engaging around 170 debtors in 22 villages and two large cities, the study sheds light on debt advisors’ multifaceted approaches.

The findings underscore that debt advisors offer legal guidance to contest debt collectors, aiming to reduce debts and suspend wage garnishment. When such legal guidance fails to improve financial situations, debtors are further informed about additional ways to avoid wage garnishment, mainly through legal techniques for establishing dependent financial relationships with family, friends, neighbours, employers, and even the local state. These strategies aim to mitigate the adverse effects of judicial debt collection while reshaping social relations and upending hierarchies.