Sixty-Nine Thousand Apply for Debt Cancelation

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Sixty-Nine Thousand Apply for Debt Cancelation

By Zoë Robert
Reykjavík and Esja mountain

Reykjavík. Photo: Páll Stefánsson.

A total of 69,000 applications, from Icelanders living in 61 countries, to correct indexed loans for the effects of inflation in 2008 and 2009 were received before the September 1 deadline, ruv.is reports. The applications also included those for the paying down of debt via personal pension funds. 

The majority of applications received from abroad were sent from Norway, followed by Denmark, Sweden, the U.K. and the U.S.

ISK 80 billion (USD 680 million, EUR 519 million) of the indexed mortgages will be written off over the course of the years 2014-2017. The ISK 80 billion will be paid through increased taxes on financial institutions and winding-up committees of the collapsed banks. ISK 70 billion will be paid through tax incentives through pension system payments.

The plan allows for tax relief as well as debt cancelation of up to ISK 4 million (USD 34,000, EUR 26,000) on indexed mortgages per affected household. The ISK 4 million limit does not apply to up to 90 percent of households entitled to the debt cancelation. These are homes with loans of up to ISK 30 million at the end of 2010. The plan will reportedly affect—both directly and indirectly—more than 100,000 households.

The cancelation of household debt was Prime Minister Sigmundur Davíð Gunnlaugsson’s Progressive Party’s big election promise.

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