iff over-indebtedness-report 2016 – key findings

Key findings 2016 in English (pdf)

Economic recovery leaves behind the less well-off.

Positive trends in the labour market continue. Unemployment is falling, employment is rising, as are salaries. Yet the number of people affected by “negative indicators” rose slightly from 6.7 million. 656,000 people were awaiting debt cancellation on completion of personal bankruptcy procedures and, in 2015, 647,000 people sought help from non-profi t debt advice organisations. Introduction of the minimum wage has not led to a signifi cant fall in the number of the working poor receiving topup benefi ts in the form of “Arbeitslosengeld II”, and are in need of state benefi ts despite being in employment. In 2015, their numbers fell by only 60,000 to 1.24 million. This results primarily from the fact that those in receipt of the minimum wage often do not live alone and their income is too low to lift the household out of poverty.

Decline in personal bankruptcies is only superficially a good sign - many of those affected have adapted to their situation.
The number of new personal bankruptcies fell to a historical low of about 85,000, despite the continuing increase in the number of consumers facing diffi culties in paying their debts. This is because, since the introduction of the Protected Account, participation in cash-free transactions is now possible and a number of those affected do not see the need permanently to restructure their fi nances. It appears that they have given up hope of a debt-free future.

Despite the fall in the rate of unemployment, unemployment remains the number one reason for overindebtedness.
Unemployment and reduced hours of work together accounted for 27.5 per cent of reported causes of overindebtedness, a slight increase. This was despite a fall in unemployment statistics. Overindebted individuals appeared to fi nd it more diffi cult to fi nd work than did the population as a whole. Despite the favourable economic statistics, in 2015 the income poverty remained stable at the high level of 10.4 per cent, and was the second most frequently cited cause of overindebtedness. Other principal causes of overindebtedness were business failure (9.1 per cent), consumer behaviour (8.9 per cent), sickness (8.6 per cent), and divorce or separation (8.1 per cent). Overall, the main cause of over 70 per cent of cases of overindebtedness was reported to be one of the “Big Six” referred to above.

The income of overindebted individuals has fallen since 2009 and lies clearly below the poverty threshold.
The per capita income of overindebted individuals, adjusted for infl ation, has fallen by 9 per cent to 861 euro since 2009. It is accordingly about 13 per cent below the poverty threshold of 987 euro (current value for 2014).

The level of indebtedness, adjusted for inflation, has fallen over the years to 14,400 EURO in 2015.
Those seeking advice from non-profi t debt advice agencies presented with consistently falling levels of indebtedness. The average amount of debt fell to 14,400 in 2015, while in 2009 the fi gure was about 19,000 euro. In debt recovery claims, between 4 and 25 per cent of this fi gure is interest on arrears and other costs (up to 7 per cent interest on arrears and up to 12 per cent other charges), but costs incorporated into debt re-structuring are not included in the fi gures. The preponderance of bank debts has fallen signifi cantly from 40 per cent in 2004 to 28 per cent in 2016. On the other hand, the proportion of debts owed to statutory agency creditors (18 per cent) and telecommunications providers (13 per cent) has increased markedly. About 12 per cent of claims were brought by lawyers and debt collection and telecommunications agencies.

Single parents are affected by overindebtedness 2.5 times more than the polulation as a whole.
The average age of overindebted individuals in 2015, as in the previous year, was 41. At the time advice was fi rst sought, 27.6 per cent of overindebted people were between 25 and 35 years old. Compared with the previous year (28.8 per cent) the proportion of this middle group fell slightly, but it still formed the most represented age group. Compared with the population as a whole, many overindebted people lived alone (55.8 per cent). The proportion of single parents again increased signifi - cantly to 16.7 per cent compared with the previous year (15.6 per cent) and was about 2.5 times greater than in the population as a whole.