Debt counseling

If you have debts, this is called indebtedness. You don't necessarily have to be in payment difficulties. However, if your expenses exceed your income and you can no longer pay your bills, this is known as over-indebtedness.

The first task of debt counseling is to help you pay your rent, energy and living costs. The debt counselor will get an initial overview of your current debt situation.

It is helpful if you provide all the necessary documents (such as bills, letters, reminders) and ideally prepare a list of creditors. The debt counselor will then work with you to create an overview of your income and expenses.

On this basis, the debt counselor will work with you to agree on specific goals, such as the creation of a debt relief plan.

The debt counselor will help you to take the necessary steps. It provides support with legal issues and helps you to cope better with what is often a very stressful situation.

Your debt advisor will help you to compile all the important documents. It helps if you bring the following documents with you to your appointment:

• First overview of your income and expenses
• Invoices and reminders
• Letters from offices and authorities
• Notices of default and enforcement orders, Letters from bailiffs
• Letters from creditor representatives (e.g. lawyers and debt collection agencies)

Important: Always open all letters that you receive. This is the only way your debt advisor can get a good overview of your current situation and help you. Depending on the advice center, someone will also open your mail together with you and sort the relevant documents with you.

The debt counseling process is usually as follows:

• Making an appointment with the debt counselor
• Initial consultation
• Discussion of measures to secure your livelihood and debtor protection
• Reviewing and planning the household budget and drawing up the Debts
• Negotiating with creditors
• If necessary, preparing for insolvency proceedings and support in applying for personal insolvency

In the consultation, you describe your current situation and how you got into over-indebtedness. Over-indebtedness can affect anyone. Every situation is different and you will receive the help you need according to your situation.

Reliable offers from advice centers are usually free of charge. There are free counseling services for people in debt and over-indebted people throughout Germany. Use this link to find the advice center online or in your area.

State funding:

Most advice centers receive subsidies from the federal states or the cities and municipalities in which the people seeking advice live. However, state funding alone is often not enough to offer counseling free of charge. In some federal states, those seeking advice with higher incomes therefore have to pay a small personal contribution. The providers of the advice center almost always also contribute their own funds.

Caution:

Some advice services, especially on the internet, lure you in with the promise of "immediate and fast" advice, a "free initial consultation" or a "free debt analysis". Expensive consultancy contracts are often linked to such bait offers. Always find out about the total cost of a consultation before signing a contract. This page gives you tips on how to recognize dubious offers.

If you have decided to make an active effort to improve your financial situation, you should be prepared for a longer consultation period. Over-indebtedness does not usually happen overnight. And so debt relief is usually not achieved in the short term.

To talk about money, debts and the many interdependencies in everyday life, there needs to be a basis of trust. The first or second consultation often determines whether you can build a relationship of trust with your debt advisor. If not, make it an issue. Perhaps talking openly about it will help to clear up any misunderstandings. It may be possible to change counselors.

The amount does not matter. If your monthly income is not sufficient to meet all your obligations (rent, energy, living expenses, loan installments) over a longer period of time, this is referred to as over-indebtedness. If you are unable to overcome your over-indebtedness yourself, you should arrange a consultation with a debt advice center - even if you are only worried that your money will no longer be enough in the future.

Many people find this step difficult. The sooner you seek expert advice, the more likely you are to find a way out of debt.

The advice centers of welfare associations, local authorities and non-profit organizations advise consumers free of charge on all questions relating to debt. Ask your job center or social welfare office for contact details.

Many advice centers regularly offer an emergency consultation hour. You can visit these at short notice if, for example, you are threatened with having your electricity cut off because you can't pay your bills or you can no longer access the money in your current account.

The waiting time for a fixed appointment with the debt counseling service depends on the respective counseling center. However, it can be several weeks.

In 1999, the German Insolvency Code (InsO) created the possibility for private individuals to settle debts in court under certain conditions and to obtain a discharge of the remaining debts (so-called residual debt discharge). One prerequisite for opening insolvency proceedings is that you have previously attempted to reach an out-of-court settlement (i.e. without the court) with your creditors.

As insolvency law is very complicated in many areas, the legislator has stipulated that a "suitable body" or a "suitable person" must accompany this attempt to reach an agreement. When applying for insolvency proceedings, this person must confirm that you have attempted to reach an agreement and that this attempt has failed.

• In order to be recognized as a suitable body, debtor and insolvency advice centres in many federal states must prove that they employ qualified staff and have extensive experience.
• Lawyers, tax advisors and auditors, for example, are usually recognized as suitable persons.