Reintegrating debtors - Why carrot trumps stick when tackling debt traps

Work is the only way out of debt, but what do we do when debt becomes a barrier to employment? 8 out of 10 debtors in Lithuania do not work (legally). It‘s a loss for everyone, as debts lead to poverty, social and financial exclusion, mental health issues and substance abuse. It pushes people out of the formal labour market, loses the government tax-revenue and increases social costs, while the creditors are never compensated. Traditional punitive solutions to over-indebtedness have made this trend worse because they treat debt as a consequence when it‘s also a source of problems. At the core of debt policy lies our perceptions of morality and individual responsibility. „Reintegrating debtors“ is about changing this core starting point to reexamine causes of over-indebtedness in Lithuania, humanize the debtors and produce empathic, empowering and effective policy solutions.