Overindebtedness is probably one of the most severe threats to the welfare state today. In the European Union, the number of overindebted individuals and households is rapidly increasing. Fairly new figures, based on official statistics from the member states, estimate that 12-15% of the population in EU is overindebted. The reasons for the massive growth of overindebtedness in recent years are manifold. The global financial crisis, unemployment, structural changes in production systems and the liberalisation of the credit market in conjunction with inadequate consumer behavior and education, have been pointed out as main causes. One of the most severe consequences of overindebtedness at the individual level, is its effects on health and quality of life. Also, overindebtedness bring about substantial losses to the financial sector, as well as to the society itself. Based on previous studies of the author (Ahlström), The Law Enforcement Services (Kronofogden) in Sweden have estimated that the total costs of overindebtedness to the Swedish society is 3-5 billion Euros per year. This figure include loss of production and the costs for health care, but do not include the expenditures of social security, sick-leaves and unemployment. Also, the costs do not include the losses to the financial sectors, the costs for court procedures, debt advisory services and debt settlement. In contrast to a number of European and non-European countries such as USA and Canada, the legal debt handling procedures in Sweden have been criticized of imposing an uneccessary hardship to the lifes of the overindebted indivual and his/her family. In this paper, the present attempts to combat overindebtedness in Sweden is discussed in the light of law and social policy measures.