More and more people find themselves in financial need

Status: 10/27/2021 11:25 a.m.

More and more people are in financial need as a result of the corona pandemic and are looking for support from the debt counseling centers of Caritas and Diakonie. The demand for advice has increased significantly.

“The increasing demand for social debt counseling is alarming,” says Maria Loheide, director of social policy at Diakonie Deutschland. In the first half of 2021, Diakonie and Caritas counseling centers recorded a significant increase in the demand for debt counseling. This is the result of a survey by the debt counseling working group of the two associations.

As the survey shows, more than two-thirds of the counseling centers surveyed increased the number of inquiries compared to the period before the pandemic. In some cases, demand rose by more than 30 percent. Above all, the duration of the pandemic is becoming a problem for many people, says Loheide: “At the beginning of the pandemic, many people were able to keep themselves afloat financially through reserves or privately borrowed money. In the meantime, however, many can no longer compensate for their over-indebtedness.”

Inquiries about rising energy costs are increasing

A private household in Germany is considered over-indebted if its income is insufficient to pay the bills and finance everyday life. In particular, the Caritas Association sees the rise in energy prices in recent months and the rising costs of an effective climate policy as the driving forces behind this development. The increased demand for advice was due to over a quarter of the advice centers due to loans, rent and energy debts.

Much more people than before would have asked about a seizure protection account and needed help filling out the necessary certificate. With a seizure protection account, the credit is protected against seizure up to a sum of around 1180 euros. This allows affected persons to pay rent and electricity, for example, even during a seizure.

Debt counseling for everyone

The future president of the German Caritas Association, Eva Welskop-Deffaa, therefore called for compensatory measures such as a climate bonus: “We are not only demanding adequate financing of debt counseling from the traffic light coalition and the continuation of free energy advice for low-income households.”

The demand from self-employed people and people on short-time work also rose by more than 40 percent in some cases. Diakonie and Caritas are therefore calling for access to non-profit debt counseling to be expanded, for employees and self-employed people, for example: “Without professional support, many of these people will not be able to find their way out of overindebtedness. We urgently need more capacities in the social debt counseling centers. The employees in the counseling centers are working over their limit, and not just because of the pandemic, “explains the Social Policy Board of Diakonie Deutschland.

In 2020, the over-indebtedness rate fell

In 2020, the over-indebtedness rate in Germany had fallen: According to the debtors atlas of 2020, the number of over-indebted consumers was around 6.85 million, the over-indebtedness rate fell below ten percent. The debtor atlas is published annually by the Association of Creditreform Associations and examines the over-indebtedness of German consumers. Nonetheless, the authors of the Debtors Atlas warned last year of rising indebtedness, especially among low-income households: “The lower social classes have little or no financial reserves and a negative savings rate – they become indebted and over-indebted,” says Boniversum – Managing Director Stephan Vila.

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