Insurers, housing corporations and water and energy companies have signed a covenant in which they commit to reporting customers who fail to pay their bills to their local authority.

The aim, broadcaster NOS reports, is to warn councils in time so they can help people avoid building up problematic debts. Only people who fail to respond to repeated reminders about overdue bills will be reported.

They will then be contacted by council officials and offered a debt payment plan if appropriate. It is then up to the person whether he or she accepts the help of offer.

The scheme will be put into operation from January 2021, at the same time as local councils become required by law to contact people who may be having trouble paying their bills.

All 350 local councils will be participating in the scheme. ‘What we see now is that people have been struggling for an average of five years before they ask for help. They will have some 14 creditors by then and debts amounting to €40,000 on average. We have to make sure it doesn’t come to that,’ Marco Florijn, chairman of debt counselling organisation NVVK told the broadcaster.

Amsterdam, Nijmegen and Arnhem are already experimenting with the early detection of problematic debt.

‘The covenant means we won’t have to make these individual agreements anymore.’ Vattenfall manager Martin Neef said. ‘It’s a win-win for all. People in debt are getting the help they need, councils are preventing new problems from occurring as a result of debts and companies are getting paid quicker.’

Some 15% of Dutch households have debts which they cannot deal with, NOS said.