Falling behind on payments can feel overwhelming, but there are solutions, and it is often possible to find a way out. The earlier you act, the more options you have. These are the main routes available in Iceland.
Get an overview of your situation
The first step is to get a clear picture of your finances: which debts you have, to whom and when they fall due. A good overview is the basis for finding a realistic solution.
Agreements with creditors
It is often possible to negotiate with creditors on new payment terms, such as a longer repayment period, a reduction or a payment freeze. Many creditors prefer an agreement to enforcement. A lawyer can help you negotiate.
The Debtors' Ombudsman
The Debtors' Ombudsman (Umboðsmaður skuldara) is a public office that offers free advice to individuals in financial difficulty. It can help you review your finances and negotiate with creditors, and it also handles applications for debt adjustment.
Debt adjustment (greiðsluaðlögun)
Debt adjustment is a formal procedure for individuals in serious financial difficulty. It provides a structured way to reorganise debts under supervision, and while it is under way creditors cannot enforce their claims.
A supervisor helps reach an agreement with creditors. For many people this is a way to avoid bankruptcy.
Bankruptcy
When other solutions are not enough, bankruptcy (gjaldþrot) may be the result. Although it is a hard step, it can also be a fresh start. The rules on bankruptcy proceedings are complex, and a lawyer can explain the consequences and your rights.
Companies in difficulty have their own options, such as a moratorium and composition with creditors. These cases fall under bankruptcy and insolvency law.
Act early
The most important advice is to act early. As debts build up, the options shrink. By seeking advice in time you increase your chances of finding a solution that works for you.
Find a lawyer under bankruptcy and insolvency law, or for debt collection disputes under contract law and debt collection. You can also browse lawyers by region.