June 2022

In Germany the base effect leads to a significant drop in personal insolvencies - forecast for the year is 95,000 personal insolvencies

Personal insolvencies in Germany fell significantly in the first three months of the year. There was a total of 22,166 personal insolvencies in the 1st quarter. This corresponds to a decrease of 30.3 percent compared with the same period last year (Q1 2021: 31,821).


The sharp increase in insolvencies seen last year has been reversed. The significant increase in personal insolvencies in 2021 was mainly due to the fact that many private individuals withheld their insolvency applications in 2020. The individuals concerned wanted to benefit from a legal reform and take advantage of the announced reduction in the duration of the proceedings from six to three years and consequently did not file until 2021. The law to further shorten the residual debt discharge proceedings came into force at the beginning of 2021 and those affected can now be debt-free after just three years instead of six. This is intended to make it easier for debtors to get back on their feet more quickly. This special feature led to a particularly sharp rise in personal insolvencies in 2021. Consequently, the base value (1st quarter 2021) is also exceptionally high and the corresponding percentage change in the 1st quarter 2022 is distorted at minus 30.3 percent. Compared with the first quarter of 2020 (figures excluding the legislative reform), personal insolvencies rose by 9 percent in the first three months (Q1 2020: 20,328), and personal insolvencies in the 1st quarter of 2019 were also below the level of 2022, at 21,490 cases.

"The strong variations in personal insolvencies we are seeing now are mainly due to two specific effects. In 2021, the catch-up effect triggered by the legislative reform to shorten residual debt discharge caused personal insolvencies to rise sharply. In Q1 2022, this is now leading to a base effect. The base level of insolvencies was exceptionally high in the first three months of last year. Therefore, the rates of change are currently distorted," commented CRIF Germany Managing Director Dr. Frank Schlein, explaining the current figures.

The financial situation of many private individuals in Germany remains strained, above all due to steadily rising rents and energy prices. People in Germany will have less money in their pockets to meet their obligations such as loan payments, rent or financing. In the long run, less income leads first to over-indebtedness and then possibly to personal insolvency. 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 less than €10,000 and the average debt is just under €19,000. As the Federal Statistical Office recently published, just under 575,000 people took advantage of the help of a debt counseling center in 2021. "We expect private insolvency figures to remain high in 2022, with up to 95,000 consumer insolvencies this year."

The trend of rising personal insolvency is already evident in the figures from January to March 2022. While there were 6,777 private insolvencies in January, the number rose by almost 20 percent to 8,151 cases in March.