Legal protection and insolvency

The Office of Bankruptcy Ombudsman | National Administrative Office for Enforcement

The Bankruptcy Ombudsman supervises bankruptcy proceedings

Source: The Office of Bankruptcy Ombudsman

Bankruptcies 2014 - 2018

As shown in Chart 1, the number of debtors declared bankrupt in 2018 rose by 19.3 per cent year-on-year. There are currently 3,051 bankruptcy proceedings pending, of which 470 will continue under public receivership with state funds.

Special audits and their costs 2014 - 2018

The number of special audits has increased slightly compared with the previous year (Chart 2). Special audits ordered by the Bankruptcy Ombudsman are mainly conducted on insolvent bankruptcy estates, in which the administrators have determined that there is a need for a more detailed investigation into the operations of the debtor prior to bankruptcy.

The net costs of special audits were down about 20 per cent from the previous year (Charts 3-4). As special audits are carried out in insolvent bankruptcy estates, recovery is only possible if the bankruptcy estate manages to accumulate enough funds through recovery actions or criminal compensation, for instance.

Public receivership and the costs of the proceedings 2014 - 2018

The number of cases under public receivership accounts for 15.4 per cent of all pending bankruptcy proceedings (Chart 5). The costs of public receivership have risen higher than before, even though more than one third of bankruptcy estates under public receivership manage to accumulate sufficient assets to cover the costs of the proceedings. The disbursements paid to creditors in completed public receivership proceedings clearly exceeded the annual net costs of the proceedings (Chart 6).

Citizens are running up debt – according to the statistics of the enforcement authorities

Source: The National Administrative Office for Enforcement

Finns are the most conscientious bill payers in Europe. However, the enforcement statistics show that financial difficulties are also on the rise in Finland. The amount of debt owed by Finnish citizens in enforcement proceedings is growing.

Indebtedness is on the rise

In Finland, the payment morality of citizens and companies is at a high level in international terms. Finns pay their debts and take care of their obligations. However, there are situations in which both companies and people run into debt, and enforcement proceedings are initiated.

Running up debt and becoming subject to enforcement proceedings do not constitute either shadow economy phenomena or economic crime. People in all income categories can end up in debt.

The shadow economy may be tempting

Those in financial difficulties may be tempted to do undeclared work, hide assets or neglect their obligations as an employer and otherwise in their business operations. For this reason, the grey economy and economic crime snapshot includes enforcement statistics.

Changes are evident in the statistics

The enforcement statistics provide us with information on changes in the amounts of debt and the number of debtors subject to enforcement proceedings. The statistics show the trend in the changes and help us to put things into perspective.

In fact, the enforcement statistics should be examined by comparing them with the observations and statistics of other authorities presented in this snapshot. This makes it possible to determine the correct scales and weights of issues and phenomena.   

Slight rise in the number of enforcement cases

Payments are made to applicants in about half of enforcement cases. The remainder revert to the applicant due to lack of means on the part of the debtor (Chart 1). The outcome of debt collection depends on several factors independent of enforcement.

The rise in the number of cases in 2017 is primarily due to scheduling. The enforcement of a substantial share of 2016 tax matters was initiated in 2017. In 2018, the number of tax cases began to decline. On the other hand, more public law and private law cases were initiated.

Debtors are divided into individual and corporate debtors. The distribution has remained unchanged (Chart 2). It should be noted that the same debtor may be subject to several proceedings in the enforcement system. This contributions or different kinds of receivables is the case, for instance, when the debtor pays their debts in full but later becomes subject to new enforcement proceedings.

It is shown in chart 3 enforcement cases, total and grouped into taxes, other public law cases (for example, insurance payable to municipalities and other public organisations such as healthcare and day-care fees) and other matters (debt collection and proceedings under private law, alimony and fines).

Half of Finns live in Helsinki and other parts of Southern Finland, and more than half of new companies are established there. This is reflected in the regional distribution of enforcement cases. Indebtedness increases the risk that citizens will participate in the shadow economy.