How to Avoid Over-Indebtedness
Automatically translated summary. The full text is available in Romanian.
An information note produced under the National Financial Education Campaign run by the National Bank of Moldova and Expert-Grup explains what over-indebtedness is, why it arises and how borrowers in Moldova can avoid it or escape it, including the responsible lending rules that apply to lenders.
Over-indebtedness means regularly being unable to meet creditor payments, and it can be economic, temporal, social and psychological. It is usually caused by financial imprudence, low financial literacy and limited lender transparency, or by unforeseen events such as lost income, illness or higher interest rates. Borrowing anew to repay old loans creates a debt spiral. Since 2022, Moldovan lenders must follow responsible lending requirements.
To protect themselves, borrowers should manage spending rationally, save, build an emergency fund of 3-6 monthly salaries and stay informed. Those already over-indebted should avoid new loans, consolidate or restructure debts, and repay the costliest first. Debt service should not exceed 40% of average monthly income for a family of three, and secured loans may not exceed 80% of the pledged property value. Without official income, lending is capped at MDL 2,000 in 2024.
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