the root, sometimes instantly turning indebtedness into over-indebtedness. Other households have unconsciously, or consciously, gradually become over-committed. They make use of available forms of credit, sometimes without realizing that they might not be able to repay in the future. Lack of financial management skills and aggressive marketing by lenders may both lie at the origin of this. Another potential cause includes escalating consumption habits. The third group of people are the least well-off. They need to obtain credit in order to attain a reasonable standard of living. They are frequently subject to relatively high interest rates. Potential consequences for the over-indebted household include financial hardship, depression, poor health, relationship breakdown, exclusion from basic financial services, a strain on social relations, absenteeism at work and lack of organizational commitment, a feeling of insecurity. Responses to household over-indebtedness can be preventive, alleviative and rehabilitative. Preventive measures include financial education and regulation. An example of the last is the European Union’s "Directive on Credit Agreements for Consumers Household debt advisory services". It stipulates, for example, that lenders should list the interest rates they change in a homogenized way (yearly rates) and that paper contracts should be signed for debts above a certain amounts, thus inhibiting for example impulsive borrowing through SMS-loans. Alleviative measures include debt advisory services, which aim to help households getting their finances back on track, mainly by means of information provision, budget planning and balancing, help with legal arrangements, negotiation with creditors, providing psychological support by having someone to talk to, and even by effectively, voluntarily taking over the managing of a household's finances. Rehabilitative measures include consumer bankruptcy and legal debt settlement procedures. While precise arrangements vary largely between countries, in general such procedures work as follows. During such procedures, the over-indebted household hands over all income above a minimum threshold to the creditors/state and is cleared of its debts after the period, varying in length from for example 1 year in the UK to 5 in Portugal and 12 in Ireland. External References Federal Reserve Bank of New York - Quarterly Report on Household Credit and Debt McKinsey & Company – Debt and Deleveraging – 2012 Update How to Predict the Next Financial Crisis-Clemons and Vague-July 2012 Mian and Sufi – What Explains High Unemployment? The Deleveraging – Aggregate Demand Hypothesis-October 2011 Krugman and Eggertsson – Debt, Deleveraging, and the Liquidity Trap: A Fisher‐Minsky‐Koo approach – Revised February