The number of over-indebted people has increased - this is evident from the new "Debtor Atlas" from Creditreform. High energy prices and rising costs of living are placing increasing pressure on younger people in particular.
The number of people who are over-indebted has increased. 7.36 million people aged 18 and over are affected, according to the new “Debtor Atlas” from the credit agency Creditreform. That is around four percent or 293,000 cases more than in the previous year. For its “Debtor Atlas,” Creditreform evaluates anonymized data based on official registers, online retailers and other sources. Creditreform assesses, among other things, people's creditworthiness.
“The financial situation of private consumers has continued to deteriorate,” says the head of Creditreform economic research, Patrik-Ludwig Hantzsch. In particular, the sharp rise in living, energy and housing costs put a strain on expenses. At the same time, the labor market situation continues to deteriorate. Anyone who is permanently unable to meet their financial obligations from loans is considered over-indebted. An indication of this could be, for example, an ongoing debt collection process.
According to the Federal Statistical Office, illness, addiction or accidents most often lead to excessive indebtedness for people who turn to an advice center. This accounted for more than 18 percent in each case. Unemployment is another trigger at 16.8 percent, as is inefficient household management at 11.7 percent.
Although adults under the age of 30 are not the largest group of over-indebted people, the number of those affected has increased at an above-average rate, according to Creditreform's study. It increased by 5.8 percent to 1.17 million. That is 64,000 more cases than in the previous year. “The over-indebtedness of young adults is in many cases characterized by excessive consumer behavior,” says Hantzsch. “Buy now, pay later” offers, for example, reinforce this behavior.
Behind this are payment models in which customers cannot pay immediately, but only after 30 days or in installments. Many people are not aware that they are taking out a loan, says Ines Moers from the Federal Working Group for Debt Advice.
That should now change: in the future, small and short-term loans should be checked more strictly. From November 20th, according to the EU Consumer Credit Directive, providers must also carry out a creditworthiness check for amounts of up to 200 euros. Anyone who borrows money from the bank should also be informed more clearly in the future about the costs involved.
In addition to general offers, there are also contact points that specifically advise young people, says Ines Moers from the Federal Working Group for Debt Advice. However, the offer varies greatly from region to region. The “My Debts” website offers guidance. There is an address directory that you can use to find a counseling center in your area.
However, the demand cannot be met with the existing offers. People who seek advice sometimes have to accept longer waiting times. The EU Consumer Credit Directive requires member states to provide low-threshold advice. “Unfortunately, the federal government missed the opportunity to set up offers of help in such a way that the EU’s full mandate can be fulfilled,” says Moers.
Bremer is twice as likely to be over-indebted as Bavaria
Bremen has the highest over-indebtedness rate, i.e. the proportion of over-indebted people in relation to all adults (15.89 percent). This is followed by North Rhine-Westphalia (13.19 percent) and Saxony-Anhalt (13.08 percent). The lowest values are achieved in Bavaria (7.58 percent), Baden-Württemberg (8.73 percent) and Brandenburg (9.15 percent). The rates increased in all federal states.
Several eastern German states are below the national average. This is due, among other things, to the lower housing and living costs, says Hantzsch. In addition, the population in the east is older than average. The financial risks are greatest in middle working age. Older people are less likely to become over-indebted.
Nationwide, around 4.39 million men show symptoms of over-indebtedness, while the figure for women is 2.97 million. According to Hantzsch, men are more likely to be self-employed and therefore take financial risks more quickly. In addition, according to Creditreform, they seem to be more inclined to consume more and limit their spending less when their income falls. When it comes to financial problems, they often only seem to seek help when their situation has become significantly worse.
