OVERINDEBTEDNESS – ECRC’s German member iff has published its 2007 report on Overindebtedness in Germany. "A new poverty policy has become necessary, one that concentrates on Liquidity instead of Assets". Both geographical debt distribution patterns and debates on the indebtedness of young persons are misleading. Iff provides some facts and redirects questions to all those involved. The institute for financial services (iff) with support from the Nuremburg based TeamBank (until 23.01 formerly called Norisbank) has completed a study on the situation of private overindebted individuals in Germany. The research, which has already received media attention, was based on the evaluation of data from about 3000 persons obtained from debt advisors and debt agencies following the visit by these 3000 individuals for causes of private Overindebtedness over the course of the year 2005/2006. As funds directed at interpreting, analysing, and undertaking research in the field of overindebtedness from either the State or from charitable/scientific foundations are scarce, the iff has started to evaluate data behind the social phenomenon using direct communication with debt advisors across the whole country. The wealth of information and details collected from its debtor consultation software CAWIN, a product that has been in use by debt advice agencies for more than 20 years, allows, as was the case of this project, to extract meaningful statistics from the anonymously designed datasets. Overindebtedness is foremost the consequence of an unsteady income and unforeseen problems (such as unemployment, loss of income, separation, illness and other exogenous expenditure inducing factors). As a result, overindebtedness affects those households the least able to compensate for unexpected risks, the most. According to the numbers, these less financially “flexible” victims are the low income earners, the single parent households, and the households with small kids and those with many children. Furthermore, the authors of the study conclude that the incidence of overindebtedness is rarer for “risk-reducing partnerships” made up of several grown-ups living together, for those living in an apartment, for those enjoying a higher and more stable income source, as well as those having been able to complete vocational education training, or even those married couples without children. The statistics also show that a large amount of credit from one single creditor constitutes a better protection from insolvency than does the existence of several smaller credit contracts with a variety of different creditors. With this report, the iff has aimed to stimulate actors from the fields of economics, politics and social welfare, in order to provoke a broad joint discussion on the merits and avenues for more prevention and compensation. This means conceptualising, investigating and developing: better products; more risk sensitive instruments; solidarity-based solutions; better reflection of debt difficulties in times of either separation or job loss; and improved financial literacy and acumen. The “Überschuldungsreport 2007” (Overindebtedness Report 2007) is available for download, in German, free of charge below. ID: 39360 Author(s): iff Publication date: 29/01/07     iff Überschuldungsreport 2007 (1317696 Bytes)

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Created: 30/01/07. Last changed: 30/01/07.
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