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Comparison with 2019 shows high level of insolvencies
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Increasing number of older Germans affected by personal insolvency
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Forecast for 2023: 100,000 personal insolvencies in Germany
Personal insolvencies fell in Germany in 2022. There was a total of 96,231 personal insolvencies last year. This corresponds to a decrease of 11.7% compared with the same period of the previous year (2021: 109,031). These are the key findings from the latest CRIF "Debt Barometer 2022".
The sharp increase in insolvencies in 2021 (up 93.6% on an annual basis) has now been reversed. The significant increase in personal insolvencies in 2021 was mainly due to the fact that many individuals held back on filing for bankruptcy in 2020. Those involved wanted to benefit from the legislative reform that shortened the residual debt discharge procedure from six to three years. As a result, they did not file their petitions until 2021. This change in the law came into force at the beginning of 2021 and enables those affected to become debt-free more quickly and facilitate their financial recovery.
These special circumstances led to a particularly sharp rise in personal insolvencies in 2021. The baseline figure for 2021 (109,031 personal insolvencies) is correspondingly high, and the percentage change for 2022 is distorted at minus 11.7%.
It is interesting to compare the insolvencies to 2019 - i.e., before the legislative reform and before coronavirus. This comparison shows the current high level of personal insolvencies and a 10.8% increase in personal insolvencies in 2022 compared with 2019 (2019: 86,838).
Supply bottlenecks, the energy crisis and persistently high inflation are pervasive at the moment. The sharp rise in energy prices in particular, but also other commodity and food prices, has led to an inflationary increase in consumer prices. The financial situation of many people in Germany remains strained due to steadily rising rent and energy prices. As a result, people in Germany will have less money in their pockets to meet their obligations such as loan payments, rent or finance. In the long run, lower incomes lead first to over-borrowing and then possibly to insolvency.
"The economy in Germany continues to be in crisis, and as costs continue to rise, a wave of debt is possible. If costs rise sharply, it will be difficult for people who are already living on the breadline. For financially weak and low-income households in particular, the financial situation will come to a head – this is also because financial reserves have been depleted by losses during the coronavirus pandemic. Economic crises have a delayed impact on consumers. Since insolvency statistics mainly reflect the past, the consequences due to increased costs will have an impact on insolvency figures, especially from 2023 onwards. On a positive note, many German citizens are currently highly motivated to save due to the economic uncertainty or fears about the future," commented CRIF Germany Managing Director, Dr. Frank Schlein, on the current situation.
The information service provider CRIF expects up to 100,000 personal insolvencies in Germany again in 2023.
People who file for personal insolvency do not necessarily have to be heavily in debt. A large proportion of those affected have total debts of just under €10,000. The average debt is currently less than €18,000.
Personal insolvencies by federal state: most personal insolvencies in Bremen, Lower Saxony and Hamburg
Nationwide, there was an average of 116 personal insolvencies per 100,000 inhabitants in 2022. Germany's northern states were more affected by personal insolvencies than the southern states. Bremen tops the list with 188 insolvency cases per 100,000 inhabitants, followed by Hamburg with 167 and Lower Saxony with 154. The states of Schleswig-Holstein (141), Mecklenburg-Western Pomerania (139) and North Rhine-Westphalia and Saarland (132 each) are also well above the national average.
The lowest numbers of personal insolvencies were recorded in Bavaria (74 cases per 100,000 inhabitants), Baden-Württemberg (83) and Thuringia (97). In absolute terms, the states of North Rhine-Westphalia (23,684), Lower Saxony (12,333) and Bavaria (9,773) lead the insolvency statistics.
Percentage changes: fewer personal insolvencies in all 16 German states
Bremen recorded the biggest change in personal insolvencies, with a drop of 23.4%, followed by Mecklenburg-Western Pomerania with 18% fewer insolvencies and Saarland with a drop of 17.5%.
Baden-Württemberg showed a decline of 15.7%, while Lower Saxony recorded a drop of 14.3% and Bavaria 13.9%. Schleswig-Holstein and North Rhine-Westphalia each also saw double-digit declines in personal insolvencies of 13.3% and 13.1% respectively. Hesse had the smallest year-on-year change, with a decline of 2.1%.
A different picture emerges when the current figures are compared with 2019 - i.e., before the legislative reform and before the coronavirus pandemic. In this comparison, personal insolvencies nationwide increased by 10.8%. The most significant increase in the comparison between 2019 and 2022 was in Hamburg, with a rise of 23.2%. Significant increases were also recorded in Hesse (up 22.3%), Baden-Württemberg (up 18.6%), Bremen (up 17.8%) and Saxony (up 16.2%).
Personal insolvencies by age: increase in the 61 and older age group
A total of 14,907 people aged 61 and over filed for personal insolvency in 2022. Compared with the same period of the previous year, this is an increase of 1%. However, the number of cases increased by 57.3% among older citizens compared to 2019.
"For many senior citizens, their income or pensions are no longer sufficient, leading them to file for personal insolvency," according to Dr. Frank Schlein. The number of senior citizens who are dependent on welfare because their pensions are not enough is also rising steadily. In a year-on-year comparison from September 2021 to September 2022, the number increased by 12%. "Due to continued high inflation and the energy crisis, we expect insolvency figures to continue to rise in the 61 and older age group in 2023," Schlein said.
Compared with the same period of the previous year, insolvency figures in the other age groups have fallen - most sharply among 21- to 30-year-olds, with a drop of 17.1%.
