More and more households are falling into a debt trap

Status: 07.11.2021 3:51 p.m.

High rents, rising energy prices and living costs are driving more and more people into debt. This especially affects those who already have to turn every penny.

In the past, Josefa Fernandez always had to look for handkerchiefs. Today she has a dispenser box on the table. Many tears flow in the debt counselor’s office. Here at the Caritas debt counseling service in Berlin Mitte, all the stress simply comes out. Energy costs and rent drive their clients into debt.

“At some point you can no longer use the red pencil,” says debt counselor Josefa Fernandez.

Image: rbb

Inflation accelerates the fall into the debt trap

The figures already speak a clear language: In 2019, 31 people with electricity debts came for advice, in 2021 there were already 79 by the end of October it is almost 500 euros more.

The number of debtors who are looked after in Berlin Mitte alone has almost tripled. And the prices for electricity, heating and mobility are currently at record levels. Food prices are also rising steadily. “Basically everyone has the problem that everything is getting more expensive. But for those who have little money, it is of course particularly difficult,” says Fernandez. Next year it will probably get even worse in the counseling center.

Nationwide significant increase in debt counseling

In the first half of 2021, the non-profit debt counseling centers across Germany recorded a significant increase in inquiries. This is the result of a survey by the debt counseling working group of the welfare associations. In more than a quarter (28 percent) of the advice centers, the increased demand was due to rental and energy debts, the study shows. A total of 461 advice centers took part.

Maria Loheide, board member for social policy at Diakonie Deutschland, describes this as “alarming”: “At the beginning of the pandemic, many people were still able to survive financially,” she says. Many of them are now unable to compensate for their over-indebtedness. Over-indebtedness is when the income is insufficient to finance the cost of living and to pay the bills. The self-employed and people on short-time work have been more affected since the pandemic.

According to the Overindebtedness Report 2021, 6.85 million Germans were considered over-indebted last year – less than in 2019. However, from the perspective of the Institute for Financial Services, that is no reason for optimism. Often the real hardships of such a cut as that of the pandemic only become apparent after a delay. At least at the beginning, many still fall back on reserves. It gets tough when they are used up.

Once in debt, always in debt?

Debt counselor Fernandez experiences this again and again. Most of them only come when it really is no longer possible, when the reserves have been used up, when there is a threat of resigning from their apartment and power cut. Many debtors simply lose control at some point. “A lot of people say that if I don’t pay the rent, then I can pay the other bills,” says the consultant. But everything else could take a back seat – rent and electricity not.

In the debt counseling centers, however, this is exactly the new everyday life. But even then all is not lost. “You can get out of there, too. But you should come and see us,” she appealed. The first task is always to avert homelessness. Experience has shown that many landlords are ready to talk.

But she prefers the clients who seek advice early on. You still have room for maneuver. Together with the client, she tries to find ways to save. “With some it is the case that with great difficulty a balanced budget is there. At some point you can no longer use the red pencil,” says Fernandez. She expects more people for whom saving is simply no longer possible. With a view to the development of prices, even more people will need help.

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