For the primary time, sickness and habit are the most typical causes for Germans’ over-indebtedness | EUROtoday

Illness and habit have changed unemployment as the most typical explanation for over-indebtedness in Germany. This is proven by the “Over-indebtedness Report 2024” of the Institute for Financial Services (IFF), which WELT AM SONNTAG has solely obtained. At 18.4 p.c, virtually one in 5 of the full 5.69 million instances in 2023 have been as a result of well being issues.

According to the research, which is predicated on information from debt counseling facilities, job loss was the set off for 17.5 p.c of instances. This was adopted by divorce/separation, revenue poverty and shopper conduct as causes.

According to the IFF, anybody who’s unable to satisfy their cost obligations for an extended time frame with out endangering their very own primary wants is taken into account to be over-indebted. Experts say that unemployment is now not the primary trigger for this for the primary time in a few years, because of the secure employment scenario and demographic developments in Germany.

“We have an employee market, and there is also a shortage of workers and skilled workers in many places. The issue of job losses has therefore steadily lost importance in recent years,” says Patrik-Ludwig Hantzsch, head of financial analysis on the credit score company Creditreform, which itself publishes the “Debtor Atlas” yearly.

This additionally confirms the development recognized by the IFF: between 2008 and 2023, the variety of instances through which unemployment was the primary cause for over-indebtedness fell by 45 p.c, whereas the elements of sickness/habit/accident elevated by 37 p.c. Hantzsch additionally sees improved diagnostics and the results of the corona pandemic as accelerating this growth. “The connection between illness and over-indebtedness has become even clearer due to corona.”

Regardless of the set off, coming into the debt spiral occurs shortly. Despite inflation charges just lately falling once more, the monetary burden for a lot of households stays excessive, particularly for low-income earners, single dad and mom and other people dwelling alone, because the statistics present. “For many, this is an expenditure shock,” says IFF economist Hanne Roggemann, one of many authors of the non-representative over-indebtedness report, for which just about 200,000 counseling instances from the interval 2008 to 2023 have been evaluated by a complete of 114 debt counseling facilities, virtually 24,000 of which have been from final yr.

Those affected typically owe cash to a number of collectors on the identical time, most of them as much as 4 totally different ones. However, 23 p.c of these in search of recommendation even have greater than 20 collectors with excellent claims. According to the 2023 report, the typical debt is 16,547 euros. The vary is huge: the most typical, at virtually 35 p.c of instances, are excellent money owed of lower than 10,000 euros, however the second most typical is the opposite finish of the size, with money owed of greater than 40,000 euros every.

In phrases of sorts of claims, installment loans are on the high, adopted by excellent money owed from the general public sector, whether or not within the type of excellent taxes, statutory pension and medical insurance contributions, excellent fines or calls for for compensation of social advantages. This is adopted by telecommunications firms and tradespeople. “Installment loans in particular play a major role in over-indebtedness in Germany,” says Roggemann. Almost one in 5 folks in search of recommendation have at the very least one declare that outcomes from such installment loans.

This refers to “buy now, pay later” gives, for instance, the place the invoice is deferred and subsequently solely needs to be paid later. These gives, primarily from cost service suppliers in on-line retail similar to PayPal or Klarna, are aimed primarily at youthful, internet-savvy and notably consumer-oriented goal teams – and carry the danger of excessive late cost curiosity and reminder charges. The Federal Association of Consumer Organizations, in addition to the IFF, warn towards these gives. They encourage impulsive buying choices and make it troublesome to maintain observe of excellent money owed.

“Unfortunately, financial hardship is a taboo subject”

According to the over-indebtedness report, a pointy enhance in small loans of lower than 1,000 euros can be noticeable. Creditreform additionally confirms this: According to the credit score company, a very good 40 p.c of all newly concluded installment loans have been just lately beneath this restrict. In 2022 alone, the quantity rose from two to three.8 million, a rise of 90 p.c.

According to the IFF report, debt counselors now worry an “increasing financial overburden” as a result of, amongst different issues, numerous small loans, steady overdraft refinancing and chain loans through which outdated money owed are transferred into a brand new mortgage with greater month-to-month rates of interest.

“The current consumer credit guidelines do not offer sufficient protection in the digital environment,” criticizes Roggemann. However, an EU requirement that Germany should implement by the top of 2025 may present a treatment. “Hopefully this will be more effective in preventing people from getting into financial difficulties.”

Those affected often search assist far too late, says the professional. “Many try to solve their money problems on their own. But in doing so, they often drag out the problem and make their own situation worse.” Advice is required even by those that can foresee that they will be unable to pay payments instantly or within the following weeks.

Philipp Blomeyer, Chairman of the Germany in Plus Foundation, which campaigns for the prevention of personal over-indebtedness and promotes the IFF's over-indebtedness report, says: “Unfortunately, financial hardship is a taboo subject.” In any case, folks in Germany discuss little or no about cash. “It should actually start in kindergarten, but at the latest in school.” Financial training is an important lever in prevention.

Carsten Dierig is a enterprise editor in Düsseldorf. He reviews on Handel and Consumer items, Mechanical engineering and the Steel business in addition to Recycling and Medium-sized firms.