Germany's Decline in Over-Indebtedness in 2024

In 2024, Germany witnessed a slight decline in the number of over-indebted individuals, marking the lowest figure since 2004. The count decreased to 5.56 million, with the over-indebtedness rate dipping from 8.15% to 8.09%. Despite this positive trend, low-income earners and single mothers remain significantly affected. This reduction is attributed to increased saving tendencies amid ongoing economic challenges, political factors, the war in Ukraine, and the U.S. elections.

Creditreform's revised methodology in 2023 means these figures aren't directly comparable to previous years. Notably, men tend to be more over-indebted than women. Cities like Bremerhaven, Pirmasens, and Gelsenkirchen reported the highest indebtedness rates, and experts anticipate a potential rise in over-indebtedness in 2025 due to depleted savings.

The causes of over-indebtedness have shifted. Illness, addiction, and accidents are now leading factors, surpassing unemployment, thanks to a stable job market. The popularity of 'buy now, pay later' schemes and small loans under €1,000, particularly among younger consumers, also contribute to rising debt levels.

Despite the decrease in overall figures, debt counseling services struggle with demand and staffing issues. The EU Consumer Credit Directive, effective since October 2023, aims to regulate small loans more stringently by 2025, ensuring clearer cost communication to borrowers. This regulation seeks to mitigate future indebtedness by promoting informed financial decisions.