The most important thing about household debt
- Household debts are debts that are made by households.
- Households may consist of one or more natural persons .
- The reasons for over-indebtedness can be unemployment and illness, but also separation and uneconomic behavior.
- In case of over-indebtedness or inability to pay , a debt counseling service must be consulted urgently, which is recognized according to § 305 InsO!
- Debt counseling is offered for example by welfare, municipalities and lawyers .
- As a first step, creating a budget can be helpful.
What are household debt?
Household debt can also burden relationships.
A household is generally considered to be an economic entity consisting of at least one natural person . For example, singles form single-person households, families a multi-person household.
Even married couples are considered as a multi-person household. In contrast, a residential community is usually not a multi-person household economically, but consists of several single or multi-person households.
Household debts are therefore spoken of in debts of single and multi-person households. The over-indebtedness of households in particular is problematic: according to the SchuldnerAtlas Deutschland (2017), a total of 3.39 households were over-indebted in 2016 . For 2017 and 2018, as in previous years, a slight increase in the level of over-indebtedness is expected.
An over-indebtedness exists when the existing income and assets are no longer sufficient to pay all financial liabilities and probably will not change in the foreseeable future. What is the best way for you to get out of debt? Check your options for free now!
Causes of household debt
A whole range of different reasons can lead to single and multi-person households being in debt. Many of these debts are even inevitable and planned – such as house building or a replacement vehicle for the old family coach. As long as the loan is not too high , the repayment is appropriate and the loan installments have been chosen affordable , debt is not necessarily a problem.
Household debts usually become tricky if these conditions are not met, if several loans have been taken or unforeseen events occur. Among the most important causes of over-indebtedness are therefore:
- Economic triggers : unemployment, failed self-employment etc.
- Separation , divorce, death of the life partner
- Illness , addiction, accident
- Inefficient housekeeping , inappropriate consumption behavior
- Failed real estate financing
Often, household debt is based on external causes.
As a rule, the main causes of over-indebtedness are not the control of debtors , but are determined by external factors. However, an uneconomic behavior and inappropriate consumption patterns have gained in recent years in importance.
Behind many of these causes of household debt is ultimately a lack of financial literacy , which correlates sociologically with a low level of education – also because economic and financial (general) education in the German school system mainly fragmented, but never bundled and taught especially in higher school forms. Thus, school education alone only leads to a patchy build-up of competencies .
Measures against household debt: Debt counseling
However, free debt counseling services are highly frequented and therefore often booked out for months. Debtors should therefore consider whether they are also a lawyer debt counseling in question. Although there are costs, these can usually be covered by an advisory assistance certificate or even by the interest and reminders that will be saved in the future.
In addition, a lawyer can also assist in cases of personal bankruptcy and the subsequent conduct of business . A non-legal debt counseling is not entitled to this.
At the very latest , when insolvency threatens, people with household debt should seek professional help! Beware of posting debts ! The dispo should never be negative for a longer period of time and should only be used in an emergency.
As a rule, debt counseling should be entitled to issue a certificate of failure to settle out of court in accordance with § 305 Insolvency Act (InsO). Only with such an explanation is it even possible to open insolvency proceedings . Otherwise, the previous work may have been in vain and the attempt to unify must be done a second time, which can lead to further costs.
Beware of dubious offers , be it for quick loans or other unrealistic promises. Serious debt counselors work intensively with their clients, negotiate with their creditors and promise no miracles ! What is the best way for you to get out of debt? Check your options for free now!
First aid for debts
A revenue-spending bill can help avoid household debt.
Household debts usually do not arise in one fell swoop. If people realize that their payment obligations are continually rising or their liquidity is threatening to dwindle, certain measures can help limit the damage. In particular, it is important to contrast your own revenues and expenses :
- What income did your household record (salary / wages, state benefits such as parental allowance, rental income, etc.)?
- Which fixed expenses are incurred monthly ( rent , internet etc.), the new quarter (insurance premiums, GEZ etc.) and yearly (club contributions etc.)?
- What variable costs are incurred for the monthly standard of living (food, petrol, clothing, pets, etc.)?
Do not forget true to the motto “Even small cattle makes manure” the small daily expenses for the morning coffee on the way to work or the magazine in between.
In particular, savings potentials become so clear, which in turn means that part of the household debt can be paid. It may not have been clear yet where part of the available money will actually go – thanks to a budget , debtors can reconsider their own consumption patterns .
With high household debt , insolvency and over-indebtedness , however, there is no way around a professional debt settlement. The sooner you find the courage to seek professional help, the better!