Men between the ages of 26 and 60 years who live in Bremen are, statistically speaking, most frequently hit by private insolvency. This is one of the results of the current Bürgel Survey „Debt Barometer 2008“. On the basis of its extensive database in which information on more than 39 million private persons in Germany are stored, the Bürgel Wirtschaftsinformationen GmbH & Co. KG Hamburg analyses the development of the over-indebted-ness of private persons. The analysis shows that there are significant differences between the various federal states.
South-North Divide in Private Insolvencies
Altogether 120,289 German citizens filed for private insolvency in 2008, i.e. 146 of every 100,000 head of population. In comparison with the previous year, this means a decline by 12.2 percent. However, the number of consumer insolvencies differs considerably from one federal state to another: In 2008 consumers from Bremen filed a petition at the insolvency court most frequently, meaning 236 per 100,000 head of population, the least frequent cases being in the Saarland with 93 cases per 100,000 inhabitants.
The chances are also good for consumers in both most southerly federal states, where Baden-Württemberg counted 109 and Bavaria 111 private insolvencies per 100,000 head of population.
Older people financially sounder
In particular, the age groups of 36 to 45 year-olds (33.05 percent/39,751) and the 46 to 60 year-olds (32.16 percent/38,688) are hit by consumer insolvencies. With increasing age, the risk of falling into private insolvency is then reduced. For example, in 2008 only 8.8 percent of all insolvent federal citizens were older than 60 years. This is due on the one hand to the fact that older people have more experience in handling money and have had more time to save some money. On the other hand, their costs are no longer so high: loans are paid off and the children have usually already moved out.
Men and Young Women at Greater Risk
In addition, there are gender-related differences: Just under 60 percent of all federal citizens who file for private insolvency are male. The fact that men are affected more frequently by consumer insolvency applies to all age groups – with one exception: Only in the age group under 25 years is the number of insolvent female private persons (55 percent/ 2,889) higher than the number of males.
Unemployment is the Main Cause of Consumer Insolvencies
According to assessments by the financial information company Bürgel, subsidiary of the Euler Hermes Kreditversicherungs-AG (Allianz Group), an increase in the number of consumer insolvencies can be expected in 2009. Numbers could increase to more than 140,000 cases (plus 16 percent), according to Bürgel. This forecast is based, among other factors, on the rise in unemployment figures over the past few months (Nov. 2008: 7.1 %, Dec. 2008: 7.4 %, Jan. 2009: 8.3 %. Source: Federal Statistical Office). For many companies the financial and economic crisis will lead to liquidity bottlenecks and bankruptcies and therefore to a considerable increase in the number of unemployed. As unemployment and also short time unavoidably result in a decrease in income, this will be the main cause of the overindebtedness of private persons in 2009.
Temporary liquidity bottlenecks and current instalment loans are still the rule for private debts. In addition, the reason for the forecast rise in private insolvencies is therefore, according to Bürgel, the fact that it has become increasingly difficult to get a new loan from banks. There are much stricter rules for securities now than in previous years.
Besides this, the typical causes for private insolvencies still remain: changes in one’s personal environment due to separation, divorce or the death of a partner, illnesses, accidents and the failure of self-employment. The liabilities of the consumers such as rent and energy costs, telecommunications, consumer costs as a result of buying on hire-purchase terms or by credit card, maintenance obligations, property financing and reclaims by the inland revenue cause additional increases in the risk of private insolvency. If obligations of this kind add up or if unemployment even occurs at the same time, the consumers soon get into financial disorder. Often the only way out is to file for private insolvency.
There are Early Indications of Private Insolvency
But this step does not come about over night. Early indications of consumer insolvencies are, in particular, the affirmation in lieu of oath and the arrest warrant. If a private debtor files for bankruptcy, he has usually already gone through one of these stages. Also, seen over the whole year 2008, the early indicators of an imminent private insolvency have declined. The frequency of the first stage, the affirmation in lieu of oath, fell from 958,895 to 826,475 (minus 13.9 percent) and the number of arrest warrants was reduced from 538,308 to 504,674. This corresponds to a minus of 6 percent. On the other hand, according to assessments by Bürgel, a rise in these early indicators can be expected for 2009.