Two years of the corona pandemic and rapidly rising costs of living: more and more people are finding themselves in financial distress. In spring 2022, the non-profit advice centers for debtors in Germany recorded a significant increase in demand for advice compared to late summer 2021. This is the result of a survey by the Debt Advice Association of Associations (AG SBV), which was published at the end of the Debt Advice Week. A total of 462 advice centers took part in the survey.
Expansion of debt counseling required
At the same time, the alliance made it clear that an expansion of debt counseling, its adequate financing and investments in the digitalization of social debt counseling are urgently needed so that over-indebted people receive support. Effective debt counseling is essential so that you can escape the vicious circle of unpaid debts, shame and excessive demands.
Up to 30 percent more inquiries
More than half of the advice centers surveyed reported between ten and 30 percent more inquiries compared to summer 2021. This continues the trend of a first wave of surveys in summer 2021, which has already identified a significantly increased need for advice. 32 percent of advice centers reported increased demand for advice on rent and energy debts in the first quarter of the year (summer 2021: 28.5 percent). The associations' consultants report that this trend has continued to increase since the time of the survey in view of rising energy prices. There was an increased need for information and education from (solo) self-employed people in 36 percent, from people on short-time work in 29 percent, and from employed people in 32 percent of the advice centers.
Debt is socially desired
Taking on debt is socially accepted and economically desirable - be it to finance your car, your home or your smartphone. However, unemployment, short-time work or illness can mean that liabilities can no longer be serviced. Predictably controlled indebtedness then becomes over-indebtedness, especially among people with little income.
“We are clearly feeling the effects of the pandemic and inflation. More and more people are coming who can no longer pay their rent and electricity costs. We are also observing that people seeking advice with mental illnesses are coming to us even more often than before Corona. Unfortunately, we have to send many people away again because they have no right to advice.”
Annabel Oelmann, board member of the Bremen Consumer Center
There is no free debt advice if you are not receiving social benefits
In Germany, not everyone has the opportunity to seek professional advice from non-profit debt counseling - or only when it is too late. Anyone who does not receive social benefits cannot receive free debt advice. This is what the law says.
“This particularly affects people who are particularly vulnerable because they usually have no financial cushion - such as low earners, pensioners, self-employed people and students. Anyone who finds themselves in acute financial distress will grasp at any straw and run the risk of falling even deeper into the debt trap. Dubious or unqualified offers often seem to promise quick help and, in the worst case, even profit from the situation. That's why we demand the right to debt advice for everyone! Municipalities should be obliged to provide free debt advice in line with social needs. The public sector would benefit from this because there would be no enormous social costs.”
Maria Loheide, head of social policy at Diakonie Germany
Low-threshold counseling services necessary
Almost 90 percent of the advice centers surveyed used digital advice options in the first quarter - via email, messenger or video service.
“We have to make debt counseling crisis-proof. The demand for advice is increasing, the capacities of the advice centers are not sufficient, and the waiting lists are getting longer and longer. If you're up to your neck in water, you can't wait weeks until your first consultation. The pace of expansion of debt advice – analogue and digital – must keep pace with the speed at which crises are causing people economic hardship. Those seeking help need easy access to advice. Digital accessibility is particularly important for young adults, who naturally first look for help online.”
Eva Maria Welskop-Deffaa, President of the German Caritas Association
Social debt advice
Social debt counseling follows a holistic counseling approach and supports over-indebted people in their economic and psychosocial stabilization. The Working Group of Associations' Debt Advice Centers (AG SBV), which is organizing the action week from May 30th to June 3rd with the motto "...and suddenly over-indebted", represents around 1,400 non-profit advice centers in Germany. These are sponsored by consumer and welfare associations or municipalities or are members of one of the associations (German Caritas Association, Diakonie Deutschland, Arbeiterwohlfahrt Bundesverband, German Paritätischer Wohlfahrtsverband, German Red Cross, consumer advice centers).
Source: Bremen Consumer Center
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