Altogether 30,491 German citizens filed for private insolvency during the first quarter of 2009 meaning 37 persons out of every 100,000 head of population. In comparison with 4th quarter of the previous year, this indicates a drop by 7.5 percent.
The South-North Divide in Private Insolvencies on the Increase
The number of consumer insolvencies during the 1st quarter of 2009 differs greatly from one federal state to another.
On the whole consumers in the northern states are much more frequently hit by private insolvencies than consumers from the south.
Consumers from Bremen appeared before the insolvency court most frequently, i.e. 71 per 100,000 head of population, the least frequently in Thuringia with 21 cases per 100,000 inhabitants. The consumers in the two southernmost states continue to be the best placed: Bavaria registered 29 and Baden-Wuerttemberg 30 private insolvencies per 100,000 head of population.
A comparison with the absolute figures from 4th quarter 2008 also shows a non-uniform picture in the various federal states. In Bremen private insolvencies rose most drastically with a plus of 37.32 percent. Likewise the figures in Hamburg (plus 7.25 percent) and Schleswig-Holstein (plus 6.02 percent) are on the increase.
The largest reduction in private insolvencies in comparison with the previous quarter is apparent in Thuringia with 38.19 percent. Also in North Rhine-Westphalia (minus 24.55 percent) and in Berlin (minus 23.12 percent) there have been less private insolvencies than during the previous quarter.
No Changes in the Age Structure of Those Filing for Private Insolvency
A comparison of age structures with last year’s figures (Debt Barometer 2008) shows almost identical results during the 1st quarter 2009:
Particularly badly affected by consumer insolvencies are the age groups of 36- to 45-year-olds (31.82 percent/9,702) and the 46- to 60-year-olds (33.92 percent/10,344). With increasing age the risk of a private insolvency decreases. For instance, during 1st quarter only 7.86 percent of all insolvent federal citizens were older than 60 years. The reason for this is, on the one hand, the fact that older people are more experienced in dealing with money and are able to invest more savings. On the other hand they no longer have such high costs: loans are paid off and the children have usually left home.
Men and Young Women at Risk
The strongest increases can be registered in Saxony-Anhalt (+36.65 percent), Hessen (+28.61 percent) and in Baden-Wuerttemberg (+28.60 percent). Only in North Rhine-Westphalia (–2.91 percent), Brandenburg (–1.64 percent) and in Berlin (–0.32 percent) are the corporate insolvencies on the downward trend.
Unemployment is the Main Cause of Consumer Insolvencies
Despite the – compared with the 4th quarter of the previous year – reduced number of consumer insolvencies during the 1st quarter 2009, the financial information agency Bürgel forecasts an increase in consumer insolvencies in Germany throughout the whole of the year.
Figures could reach more than 140,000 cases, according to Bürgel. This forecast is based on, among other things, the rise in the unemployment figures over the last few months (Jan. 2009: 8.3 percent, Feb. 2009: 8.5 percent, March 2009: 8.6 percent; Source: Federal Statistical Office). For many companies the financial and economic crisis is leading to liquidity bottlenecks. Over the next few months a considerable increase in the number of corporate bankruptcies is expected. The job market runs slightly behind the negative economy. For this reason one can reckon with a continuation of the rising unemployment figures during the 2nd half of 2009. As unemployment and short-time inevitably result in a reduction in income, this will be the main cause of the over-indebtedness of private persons during the years 2009/2010.
During the first quarter 2009 payment delays on the part of consumers already increased: companies have to wait longer for their customers to pay their bills.
The most frequent causes of private debts are still provisional liquidity bottlenecks and running instalment loans. Another reason for the forecasted rise in private insolvencies is, according to Bürgel, the fact that it has become more difficult to procure new loans from banks. There are now much stricter regulations for securities than in previous years.
Besides this, there are still the typical causes of private insolvencies: changes in one’s personal environment due to separation, divorce or the death of a partner, illness, accidents and the failure of self-employment. If liabilities build up or if unemployment is added to this, consumers quickly fall into financial distress situations. Then filing for consumer insolvency is often the only solution left open to them.