The way out of the debt trap lasts 14 years | Loan consolidation
The path from the insolvency of a private household to its complete economic recovery takes an average of 14 years. This emerges from an investigation of the Hamburg Institute for Financial Services.
Debt counseling firms
For the study, around 12,500 insolvency cases from 9 debt counseling firms were examined. The long period until the restoration of economic normality is attributed to the authors of the study to several circumstances. On the one hand, the duration of legally regulated consumer insolvency in Germany is very long by international standards. The law requires debtors to have a six-year beneficial period, while all income shares above the mortgage exemption must be assigned to the creditors.
Another reason for the long duration of the study, according to a poor supply of advice centers. This is evidenced by other studies and studies. Thus, debtors often have to wait for up to 6 months for an appointment with a debt counseling service. In addition, many consumers with financial problems delay the inevitable for as long as they possibly can, and thereby delay the clean-up of their debt problems.
Even after the conclusion of the insolvency proceedings and the remainder of the debt clearance obtained by the court, normality has not yet been restored. Because the insolvency proceedings remain stored in the data of credit bureau and Co. Such harsh negative characteristics make it almost impossible to obtain benefits on credit. Therefore, ex-debtors can no longer conclude a mobile phone contract even if their relationships have long since stabilized again.
Over-indebted households in Germany
The number of over-indebted households in Germany will increase significantly this year. Up to 3.2 million households will permanently be unable to meet their financial obligations in the current year.
Experts advise for a long time to act already at the first signs of financial overload. If cumbersome measures are unnecessarily delayed, the situation can become significantly more avalanche-like within a very short time. A significant percentage of households going through bankruptcy today would have timely debt rescheduling combined with an optimization of current spending with very modest restrictions on credit bureau income, going to court and talking to creditors can get around.