The Domestic Debt Advisory Service was established as a pilot project of the Ministry of Social Affairs in February 1996. Today the advisory service's operations are based on an agreement between the Ministry of Social Affairs, Housing Finance Fund, City of Reykjavik, Town of Kópavogur, Arion Bank Ltd, Íslandsbanki Ltd, NBI bank ltd., Icelandic Savings Banks Association, Union of Local Authorities in Iceland, The Icelandic Red Cross, Association of Academics, National Church of Iceland, National Association of Pension Funds, Confederation of Icelandic Labour, Federation of State and Municipal Employees and Creditcard Ltd. among others.  The agreement will be in force through 31 December 2012. Other parties have also been sought to support the service, e.g., local governments and other parties involved in these matters.

Function of the Advisory Service:

To provide consultancy, at no cost, to people with serious debt payment problems who have exhausted their financial resources. The Domestic Debt Advisory Service shall assist people in getting an overview of their situation and help them to make payment plans, choose remedies and act as liaison in agreements with creditors, if required. The service shall also provide comprehensive consultancy and training on domestic debt management by publishing specific pamphlets and educational materials.

Since the beginning, about 12.000 families in Iceland have got assistance in solving their financial problems. In addition, several thousand people have received telephone consultancy. Last but not least, an important function is to bring into collaboration the parties involved in solutions to a family's financial difficulties. Strength lies in this collaboration.

The Domestic Debt Advisory Service has been a pioneer in Iceland in various fields. The Consumption Criterion that the Advisory Service bases evaluations of applicants' financial status on, which builds on the findings of a survey in 1995, was a complete novelty in debt-payment consultancy in Iceland. The Criterion, among other things, has become the basis for credit ratings in the housing system. However, a consumption standard criterion is lacking, cf. standardbudgett in the other Nordic countries. The necessity has been pointed out of preparing a consumption criterion that would take into account a family's costs in fulfilling its needs.

Numerous pointers from the Advisory Service have been the catalyst of statutory amendments and changes in the environment of debtors. Iceland lacks specific legislation on solving difficult debt affairs, cf. lag om skuldsanering in the other Nordic countries. On the other hand, the Act on legal aid for individuals seeking composition was enacted in 1996.

28 people work for the Domestic Debt Advisory Service. They include for example, an attorney, business administration graduate, economist, lawyersand draftsman. The Domestic Debt Advisory Service is located in Reykjavik, and its director, Ásta Sigrún Helgadóttir, is an attorney.

In recent years the Advisory Service has proved its worth and done good work in Iceland on behalf of families in debt problem.