Unemployment has long been the reason why people in Germany have become over-indebted – according to a media report, this has now apparently changed: This is shown by the “Over-indebtedness Report 2024” of the Institute for Financial Services (IFF), which the “Welt am Sonntag” reported.
At 18.4 percent, almost one in five cases in 2023 will be due to health problems. Job loss, in turn, was the trigger in 17.5 percent of cases, according to the study. According to the report, this is followed by divorce or separation, income poverty and consumer behavior as other important reasons.
According to the information, the non-representative study is based on data from 114 debt counseling centers. Almost 200,000 counseling cases from 2008 to 2023 were evaluated, of which almost 24,000 were from last year.
Installment loans play a major role in over-indebtedness in Germany.
Hanne RoggemannIFF economist, an author of the report
In the report, experts explain that unemployment is no longer the main cause for the first time in years, due to the stable employment situation and demographic developments in Germany: “We have an employee market, and in many places there is a shortage of workers and skilled workers.
Recommended editorial content
Here you will find external content selected by our editors that enriches the article with additional information. You can display or hide the external content with one click.
I agree to the external content being displayed to me. This means that personal data can be transmitted to third-party platforms. You can find more information about this in the data protection settings. You can find these at the very bottom of our page in the footer, so that you can manage or revoke your settings at any time.
The issue of job losses has therefore steadily lost importance,” said Patrik-Ludwig Hantzsch, head of economic research at the credit agency Creditreform, which itself publishes the so-called “Debtor Atlas” every year.
This also confirms the trend identified by the IFF, it continues: According to it, between 2008 and 2023, the number of cases in which unemployment was the main reason for over-indebtedness fell by 45 percent, while the factors illness/addiction/accident increased by 37 percent.
Hantzsch also sees improved diagnostics and the effects of the corona pandemic as an accelerator of this development. “The connection between illness and excessive indebtedness has become even clearer due to Corona.”
According to the information, the most common debt trap is an installment loan. This is followed by outstanding debts from the public sector, for example outstanding taxes or demands for repayment of social benefits.
According to the Over-Indebtedness Report, installment loans include so-called “buy now, pay later” offers, where the bill does not have to be paid until later. The late payment interest and reminder fees are usually high; in addition, many consumers find it difficult to keep track of everything.
“Instalment loans play a major role in over-indebtedness in Germany,” emphasized one of the authors of the report, Hanne Roggemann. According to the report, the Federal Association of Consumer Organizations and the IFF warn against such offers. Almost one in five people seeking advice have at least one claim that results from such installment loans.
The entry into the debt spiral happened quickly, regardless of the trigger. Despite recent falling inflation rates again The financial burden for many households remains high, especially for low-income earners, single parents and people living alone, as the statistics show. “For many, this is an expenditure shock,” said IFF economist Hanne Roggemann. (lem)
