Debt counselling and personal insolvency

If your debts are more than you can pay from a realistic household budget, a recognised debt and insolvency counselling service (Schuldner- und Insolvenzberatungsstelle) can help you explore your options. Insolvency is one possible outcome; you do not need to start by buying a form from a commercial debt-relief advertiser.

Deal with urgent risks first

A frozen account, court payment order, threatened eviction or utility disconnection needs immediate action. Tell the adviser which is happening when booking. Use debt collection for court-response and P-Konto steps, and tenant basics for housing threats. Keep money for current essentials and obtain advice before favouring one old creditor or taking another loan.

Find advice and build the file

1. Ask your municipality, Sozialamt or Jobcenter for a recognised debt/insolvency counselling service. The federal family portal links a local finder. Ask whether the service can certify a failed settlement under InsO section 305, what fees apply and whether an urgent appointment is available. There is no uniform nationwide promise of free debt advice.
2. Gather each creditor’s name, reference, current balance, letters, court titles and enforcement notices. Add your income, benefits, regular essential expenses, bank accounts, property, guarantees and joint debts. Keep opening new letters and update your adviser. If a creditor is missing, share the rest of what you have rather than waiting for a perfect file.
3. Review the budget and debts with the adviser. Check disputed claims and compare a sustainable out-of-court arrangement with insolvency, including consequences for assets, existing contracts and other people liable for the debt. Ask about the adviser’s authority before assuming they will respond to court for you.

Which insolvency route applies?

The consumer procedure normally serves individuals who are not and have not been self-employed. Formerly self-employed people qualify for this route only if they have fewer than 20 creditors when applying and no claims arising from employment relationships. Current self-employment, more complex former businesses and cross-border circumstances need the correct separate assessment; do not reuse a consumer form without checking.

For consumer insolvency, section 305 requires a certificate from a suitable person or body, based on personal advice and a thorough financial review. It must show that an attempt to settle under a plan was unsuccessful within the six months before the opening application. Prepare this with your adviser; an ordinary unpaid reminder is not the required certificate.

Prepare the court application and costs

Use the required forms with the creditor/debt lists, assets and income, proposed settlement plan, certificate and discharge request. Check the responsible Insolvenzgericht and signatures with the adviser. To get discharge of your remaining debts (Restschuldbefreiung), section 287 requires you to ask for it. Sending the application to open insolvency proceedings is not enough by itself. Some debts are excluded by law.

There are court and procedure costs. Ask whether section 4a cost deferral is available because assets are insufficient and discharge is requested. Deferral is an application and is not a promise that all costs disappear. Ask what must be paid later and what legal support is included.

Duties and what discharge does not clear

The ordinary assignment period is three years from the opening of the proceedings, not from the first counselling visit. Repeat procedures have additional admissibility rules and can have a five-year period; disclose any earlier insolvency or discharge. Follow the court and trustee’s instructions, disclose assets and income fully, report address/job changes and meet the applicable work/job-search duties. In the period governed by section 295, do not give individual insolvency creditors special payments; ask before disposing of assets, gifts or inheritance.