Debt Amounts Are Rapidly Increasing: Estonia’s Largest Private Individuals Payment Default Analysis 

Estonia’s largest financial services infrastructure company, Aktiva Finance Group, compiled a comprehensive overview of Estonians’ debt behavior. Aktiva Finance Group assesses individuals’ creditworthiness and manages overdue credit portfolios through OÜ Krediidiregister and OÜ Julianus Inkasso.

In today’s economically challenging times, we decided to assess the situation in early December, in addition to our regular spring analysis of payment defaults, to get a fresh overview of consumers’ current situation.

Debtor Count Stabilizes, Yet Debt Totals Surge Remarkably

The unique aspect of the ongoing economic crisis is that while its effects are universally felt, no significant rise in defaulters for any creditor exists. The growth in debts is very dispersed. Compared to spring, the number of debtors has only increased by 1500 people. 224,000 active debts need servicing, and their total amount has grown from 280 million to 370 million euros. The average debt amount has risen from 3600 euros to 4400 euros in six months.

Labor Market Depends on Entrepreneurs’ Resilience

Despite layoffs in many Estonian companies, the labor market remains historically high. There are approximately 642,000 people aged 20-64 employed, in addition to about 50,000 pensioners and students. Since the beginning of the year, there has been only a 1% drop in employment.

The critical question is how long entrepreneurs can withstand the current conditions. An economic breakdown could lead to a collapse in the labor market. For example, in 2010, compared to 2008, the number of employed people fell by about 100,000. If such an event were to recur, its impact would be much more devastating than the lockdown during the coronavirus crisis.

Let’s take a closer look at the debt situation in November 2023

Number of DefaultsNumber of IndividualsPercentageTotal AmountAverage Debt per Individual
13706143,23%66 329 262,28 €1 789,73 €
21694319,90%68 765 677,80 €4 058,65 €
31034612,17%52 092 278,27 €5 035,02 €
469818,30%44 077 865,71 €6 313,98 €
5 or more1357916,40%139 673 155,94 €10 292,03 €
Number of Payment Defaults per Individual

The number of individuals with payment defaults remains relatively the same, with a few percent increase – 83,253 in spring 2023 compared to 84,910 in November 2023.

The average amount has significantly increased even for those debtors with more than three debts, indicating that they have taken on additional loans or their previously contracted loans have become overdue.

More Debt Among Men

Although women constitute a larger share of the Estonian population, men have more payment defaults. The proportion of women in arrears is about half that of men, making up 34% of debtors, while men account for 66%. Yet, the average debt amount for both genders has remained relatively the same.

GenderNumber of debtsPercentageUnique personsPercentageSummaPercentageAverage debt by gender
man14334463,79%5631566,32%250 400 222,76 €63,79%4 446,90 €
woman8136936,21%2859533,68%120 538 017,23 €36,21%4 215,65 €
Total224713100,00%84910100,00%370 938 239,99 €100,00%4 369,02 €
Gender Distribution of Debtors

Debt On the Rise Among Working-age Individuals

The number of indebted individuals is increasing fastest among the 18-25 age group but is surprisingly decreasing in the 46+ age group. This indicates less financial responsibility among young people, making them a higher risk for creditors. The debt reduction among those aged 46+ suggests they have incomes or reserves to escape the debt cycle.

 age 18-25age 26-35age 36-45vanus 46-55vanus 55+
Amount of debt per personNumber of peoplePercentageValue of debt per personNumber of peoplePercentageValue of debt per personNumber of peoplePercentageValue of debt per personNumber of peoplePercentageValue of debt per personNumber of peoplePercentageValue of debt per person
1208647%1 236 €646535%1 6856 €966138%1 915 €824443%2 233 €1060557%1 504 €
288519%3 355 €360420%3 620 €499220%3 553 €395221%4 889 €351019%4 471 €
351311%4 200 €248014%5 329 €328513%4 857 €234612%5 612 €17229%4 414 €
43708%5 667 €173510%6 513 €23569%6 041 €15388%6 775 €9825%6 139 €
5≥69415%8 437 €366421%11 168 €470819%10 155 €285515%10 391 €16589%9 351 €
Total4548100%3 442 €17948100%4 979 €25002100%4 569 €18935100%4 805 €18477100%3 288 €
Distribution of debtors by age

Estonians’ Debt Amounts Remain Higher

Russian-speaking Estonian residents comprise 26% of the population but represent a third of all debtors, indicating they are more likely to have payment problems.

On the other hand, Estonians have a higher average debt of 600 euros and more debt per person.

NationalityNumber of people living in EstoniaPercentage of populationPercentage of debtorsAverage value of debtAverage amount of debt
Estonian92586275,11%66,41%4 375,65 €3,06
Russian30680124,89%33,59%3 710,77 €2,81
Total1232663100,00%100,00%4 152,32 €2,98
Distribution of debtors by nationality

Compared to individuals who speak Estonian and Russian as their mother tongue, people who speak other languages have fewer debts and a smaller total debt amount. Often, this is because many of them are foreigners whose permanent residence is not in Estonia. As a result, they have fewer credit agreements and smaller credit limits.

Decrease in Debtors in Ida-Viru County

CountyAmount of peopleShare of populationShare of debtorsShare of Total Debt Amount
Harju county64093546,82%39,18%41,09%
Hiiu county97580,71%0,48%0,52%
Ida-Viru county1317759,63%14,30%10,72%
Jõgeva county279022,04%2,51%2,52%
Järva county298182,18%2,89%3,07%
Lääne county208271,52%1,65%2,81%
Lääne-Viru county587924,29%5,71%5,67%
Põlva county243691,78%1,89%1,63%
Pärnu county877656,41%6,60%7,16%
Rapla county339762,48%2,65%2,67%
Saare maakond345492,52%1,75%1,84%
Tartu county15993211,68%10,07%10,07%
Valga county279262,04%3,16%2,91%
Viljandi county455873,33%4,28%4,43%
Võru county350062,56%2,88%2,89%
Distribution of Debtors by County

The geographical distribution of debtors across Estonian counties has largely remained the same.

Despite the difficulties businesses currently face, the labor market has remained surprisingly strong. However, it’s almost certain that lenders’ losses will increase due to the rising average debt amount, amplified by high interest rates increasing the discount rates of debt amounts.

Take a look at the infographic in Estonian.

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Aktiva Finance Group CMO

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