1. Overview: Private insolvency rate 2009 on the rise / Slight decrease towards the end of the year
In 2009 130,698 German citizens filed for private bankruptcy. This corresponds to a rise by 8.65 percent in comparison with the previous year. In 2008 private persons swore an affidavit in 120,289 cases (see Chart 1). In particular younger people are increasingly hit by the wave of bankruptcy and threatened with poverty.
A current survey by the Hamburg financial information agency Bürgel produced this result. It is true that the number of cases of private insolvencies decreased towards the end of the year of the survey period 2009. In the fourth quarter of 2009 there were 33,834 consumer insolvencies (October: 11,814 cases; November 11,599 cases; December 10,421 cases). This corresponds to a decline by 4.28 percent in comparison with the previous quarter (3rd quarter 2009: 35,347).
However, Bürgel reckons with a negative development in the number of consumer bankruptcies for 2010. Altogether within the last decade, 833,376 private persons in Germany declared their insolvency.
2. Insolvency statistics per federal state: every fifth private insolvency in North Rhine-Westphalia / In population density figures the most cases were in Bremen
Top of the insolvency list of the absolute figures is North Rhine-Westphalia with 26,918 private bankruptcies. This means: just below 20 percent of all cases occurred in this federal state. In 2nd place is Lower Saxony with 17,605 insolvencies and in 3rd place Bavaria with 14,860 bankruptcies (see Chart 2).
In relation to the population figure pro federal state a differentiated picture is shown in the insolvency rate. In this category Bremen leads with 284 insolvencies per 100,000 head of population, followed by Lower Saxony (222), Schleswig-Holstein (219), the Saarland (213), Brandenburg (210) and Hamburg (202).
On a federal average, private persons had to apply to the Bankruptcy Court in 159 cases per 100,000 head of population. The lowest number of private insolvencies during the survey period 2009 was registered in Thuringia with 112 cases per 100,000 head of population, Bavaria (119) and Baden-Württemberg (129) – see Charts 3 and 4.
3. Changes at federal state level: strongest rise in the Saarland
In comparison with the previous year the figures of private bankruptcies in 2009 are only on the decline in three federal states (see Charts 5 and 6). Here, Thuringia comes out best with minus 23.1 percent (2009: 2,530; 2008: 3,290 cases). The rates are also falling in North Rhine-Westphalia with minus 5.67 percent (2009: 26,918; 2008: 28,537) and in Berlin with a minus of 4.26 percent (2009: 5,365; 2008: 5,604).
Meanwhile the Saarland, with a high plus of 57.78 percent more private insolvencies, records the strongest increase from 1,388 to 2,190 cases. Also in Brandenburg (plus 34.71 percent; 2009: 5,286; 2008: 3,924 cases), Hamburg (plus 23.13 percent; 2009: 3.572; 2008: 2.901 cases) and Schleswig-Holstein (plus 22.02 percent; 2009: 6,218; 2008: 5,096 cases) the number of cases rose in 2009.
4. Genders: Men more often affected by private insolvency
Altogether during the past year 58.59 percent of all private bankruptcies lay on the shoulders of men. This means 76,571 cases (see Chart 7). This trend is predominant, with only one exception, in all age groups – especially in the age group of 36 to 45-year-olds. In this segment the men even have a share of 61.43 percent. Only in the youngest age group of the under 25-year-olds mainly women are hit by a private insolvency with a share of 54.23 percent. This corresponds to 3,817 cases.
5. Age groups: insolvency risk highest among young people
The Bürgel survey described the most private insolvencies in 2009 as being among the 36-to 45-year-olds. The share of this age group lies at 31.9 percent. That corresponds to 41,695 bankruptcies (see Chart 7). The second strongest group with 41,499 are the 46- to 60-year-olds with a share of 31.75 percent. Only 8.1 percent of the private affidavits can be allocated to the over 60s.
The group of the 18- to 25-year-olds seems to present problems. There 7,038 private insolvencies occurred last year, i.e. 34.49 percent more cases than in 2008 (5,233 cases) – see Chart 8. Also the second-youngest age group managed a double-digit rise by plus 15.03 percent to 29,874 private insolvencies (2008: 25,970 cases). Only with the over-60s does Bürgel report decreasing tendencies by minus 0.5 percent. In this segment the number of cases fell from 10,647 (2008) to 10,592 (2009).
The uneven distribution of private debts in the individual age groups is connected with an unfavourable expenditure-income ratio in the case of the younger groups and consequentially with a higher rise in insolvencies because: in this segment investments in setting up homes and starting a family have to be managed from a relatively low income. In addition, from a statistical point of view younger consumers have less saved capital that could help then to overcome financial bottlenecks in times of crisis. Furthermore in the case of the younger citizens, sometimes the consumer behaviour and the income situation do not go together. Older people, on the other hand, with higher incomes are confronted with lower investments.
6. The main reasons for private indebtedness and the outlook: negative forecast for 2010
According to Bürgel the rise in the private insolvency rate by 8.65 percent is particularly connected with the fact that it has become much more difficult to obtain new loans from banks: Regarding the securities as forerunners to the granting of loans financial service-providers are applying far stricter standards than in previous years.
Besides these, there are the classical reasons for private insolvencies: unemployment and changes in the personal circumstances due to separation, divorce or death of a partner. In addition, the causes can be illnesses, accidents and the failure of self-employment. When obligations pile up – under certain circumstances paired with unemployment – consumers often and rapidly get into financial difficulties. If this happens to debtors, many have no choice but to take the step of filing for consumer insolvency.
In addition to the above-mentioned causes, in particular in the case of younger citizens, there are failed property financing and a consumer behaviour that is not appropriate to the income situation. Apart from these the rising numbers of corporate insolvencies – headed by the spectacular Arcandor and Woolworth bankruptcies as well as the collapses of companies in the automobile supply industry – lead to a growing risk of becoming unemployed. This is underlined by the current unemployment statistics: whereas in November 2009 the unemployment rate was at around 7.6 percent, in December the figures climbed, not only for seasonal reasons, to 7.8 and in January even to 8.6 percent.
“With this background the outlook for 2010 continues to be negative,” Bürgel managing director, Dr. Norbert Sellin, forecasts. During the current year private insolvencies could amount to over 137,000. If this was the case, the insolvency case figures would surpass the situation in 2007. A current survey by the German Institute for Economic Research (DIW) also supports this trend. According to the survey, in 2008 about 11.5 million people – especially young adults – were considered as being under the threat of poverty.