Have you ever gone bankrupt

Personal bankruptciesDebt Free Faster

The woman is short and skinny, in her early forties and lives in a two room apartment in the middle of Berlin. Letters are piling up on the desk. The woman hasn't opened them for a long time; she can't pay most of the bills in the letters anyway. Debt has been a common thread in her life since she grew up.

"At the age of 18 I moved into my first own apartment, then furniture was needed. At that time I had finished my studies and still earned 1,600 DM net. Then the bank offered you a generous offer that you could cover the triple line that I used for furniture and then I used it to the full, at some point I lost my job. You slowly but surely slipped into it. "

No new debt for six years

The only way to ever get rid of debt is to step into consumer bankruptcy, known as personal bankruptcy. No new debts may be incurred for six years, assets and income must be assigned up to a certain attachment limit. After the six years - the so-called good conduct phase - the remaining debt is waived. Under the new regulation, debtors can shorten this period in certain cases: To five years if at least the insolvency administrator and the court costs can be paid. And in exceptional cases even for three years, says Kerstin Altendorf from the banking association:

"If everything goes well and you can get enough money from a new job or an inheritance, for example, that you can pay 35 percent of the accrued debt plus the legal costs within three years, then you are actually out within three years. That has to be done in practice show whether and how many people this affects. "

However, too many will probably not benefit from the new rules, the consumer advice center in Berlin is afraid. The clients there have an average of 31,000 euros in debt, and more than half of them live from Hartz4, says Claudia Both from Debtor and Insolvency Advice:

"The greatest number of our clients really have nothing available that they can somehow resign and no opportunities. That is the majority."

Main reasons: unemployment, divorce, separation

The main reason for over-indebtedness is unemployment, followed by divorce and separation, illness and failed self-employment. Frank Schach's company went bankrupt after the flood. He was privately liable, he can only laugh about the possible shortening of the insolvency procedure in the future:

"It would not have been of any use to me and accordingly I would not have been able to repay it at all. If you are broke, then you are broke."

The banks, which are usually the largest creditors, are initially more positive about the new regulation. After all, many single parents are also affected, says Kerstin Altendorf from the banking association:

"But these are often well-trained women. If they then find a decent daycare place and find a part-time job - and at the moment the labor market is pretty good, then they will hopefully get back into salary ranges relatively quickly where they can then be gradually reduced. "

Another new feature is the possibility of using an insolvency plan procedure to find a new, individual arrangement with the creditors even during the judicial insolvency proceedings. This can include anything from partial debt relief to revised repayment plans and deadlines. This can be beneficial to debtors. However, not all debts can be got rid of through bankruptcy proceedings. Fines and administrative fines have already been excluded from the discharge of residual debt, explains Eva Bell from the Berlin consumer center:

"Now there are new maintenance debts and tax debts. Previously, after going through the bankruptcy proceedings, the debts were gone, the tax and maintenance debts, now they are still there."

Both banks and consumer advice centers only want to give a judgment on the second stage of the insolvency law reform once they have had their first practical experience. The new regulations will come into force on July 1st