1. Overview: Low unemployment and rising real incomes provide less private insolvencies in Germany
The trend of declining personal bankruptcies also continues at the beginning of 2016. In the first three months of the year, 25,649 Germans were affected by a bankruptcy. This represents a decrease of 3.7 percent compared to the same period last year.
These are the key findings from the "Debt Barometer 1st Quarter 2016" of the financial information agency Bürgel.
"At present we believe that personal bankruptcies will decline over the year. This would be the sixth decline in a row. For 2016, we currently forecast 103,000 private insolvencies. That would be the lowest level since 2005, when approximately 100,000 consumers had to declare bankruptcy," said Bürgel Managing Director, Dr. Norbert Sellin, about the latest figures. The main reason for the renewed decline is the continued positive development in the labor market. Since 2011, the number of personal bankruptcies has been decreasing. This trend follows the decline in unemployment that began in the mid-2009 with a slight delay. "This positive situation on the labor market is also accompanied by the development in private insolvencies," said Dr. Sellin. Another factor which has an influence on the situation in personal bankruptcies is the level of consumer income. "The higher the real income of citizens, the lower the risk of personal bankruptcies," said the Managing Director of Bürgel.
2. Regional analysis: Bremen, Berlin and Hamburg lead the insolvency statistics
Most personal bankruptcies in the 1st quarter of 2016 were measured in the three city-states of Bremen, Berlin and Hamburg. Bremen is again the insolvency Leader with 56 private insolvencies per 100,000 inhabitants. In the capital, the insolvency rate was ranked at 53 insolvencies per 100,000 inhabitants. In Hamburg and Lower Saxony, there were for every 100,000 inhabitants, 44 bankruptcies. About the national average of 32 private insolvencies per 100,000 inhabitants were Saarland (42), Mecklenburg-Western Pomerania (39) as well as North Rhine-Westphalia and Schleswig-Holstein (both 33).
Hessen, with an insolvency ratio of 32 private insolvencies per 100,000 inhabitants about the national average. Bavaria, Baden-Württemberg and Thuringia reported the fewest personal bankruptcies (23 per 100,000 inhabitants, respectively).
In the absolute analysis, the order changes and populous federal states are at the top of the statistics. Most personal bankruptcies in the 1st quarter of 2016 were recorded in North Rhine-Westphalia (5.793). In absolute terms, the states of Lower Saxony follow (3.465), Bavaria (2.878) and Baden-Wuerttemberg (2.496).
3. Percentage changes: In five states, the number of cases soar
In five of the states, the trend of declining personal bankruptcy numbers does not appear. In Hesse, private bankruptcies increased most with eight percent. Also in Bremen (plus 5.4 percent), Thuringia (plus 4.7 percent), Berlin (plus 3.5 percent) and Saxony-Anhalt (plus 0.5 percent) more citizens reported an insolvency than a year ago. Far more enjoyable is the situation in Brandenburg. Here, the number of private insolvencies fell by 19.9 percent. But even in Bavaria (minus 8.3 percent), Mecklenburg-Western Pomerania (minus 8.1 percent), Saxony (minus 7.7 percent) and Baden-Wuerttemberg (minus 6.7 percent), there were significant declines.
4. Personal bankruptcies by age group: Declining numbers in all age groups
Across all age groups across in the 1st quarter of 2016 there was not an increase. In the analysis it is worth looking closer at the age group "61 years and older," because these recorded rising personal bankruptcies in the last four years. During the 1st quarter of 2016, this age group recorded fewer personal insovencies for the first time (minus 2.9 percent). A trend reversal may be due to the early assessment time point but is of no consequence. The strongest decrease was recorded in the age group of 41-50 year olds (minus 7.8 percent). In the youngest age class (18-20 years) the insolvency figures remained unchanged.
5. Personal bankruptcies by gender: more men than women report a private insolvency
As in recent years, the proportion of men in the personal bankruptcy statistics is also higher in the 1st quarter of 2016 than that of women. This relates to both the absolute and the relative numbers. While the relative value of the national average is 32 cases per 100,000 population, German males were responsible for 38 private insolvencies per 100,000 population (absolute: 15,158 cases) in the first three months of the year. This contrasts with 10,491 women who had to file for personal bankruptcy. In other words, 25 women were insolvent for every 100,000 citizens. Also the decline (minus 5.1 percent) is stronger among women compared to men (minus 2.6 percent). The main reason that more men register for personal bankruptcy compared to women is that the man in many families is still considered the main breadwinner and person responsible for household budget despite the changes in lifestyles and roles. This is the case for debt within the family and declaration of personal bankruptcy.
6. Causes of personal bankruptcy: Six main reasons for a private insolvency
For all concerned, the need to sign a personal bankruptcy which expenditures exceed revenues. The result is an ever-increasing debt burden, which opens up a personal bankruptcy.
However, it is wrong to assume that the person facing insolvency must be highly leveraged. Across all age groups across the average debt level of those affected is around 33,500 Euros. For under-25s, however, the value is much lower. Here the average debt total is just under 10,000 Euros. With increasing age, the debt increases to up to an average of 43,000 Euros for German citizens in the age group 61 years and over. The main causes of personal bankruptcy are closely linked to the income situation of the persons concerned. There are six main causes of personal bankruptcy. Among the reasons are unemployment and reduced work, income poverty, failed independence, a consumption behaviour inappropriate to income, changes in family circumstances such as divorce, or separation and disease. The majority of individuals in bankruptcy owe especially at banks, mail order companies, insurance companies, government agencies, landlords, utilities and telephone companies.