1. Researching rehabilitation: evidence from Germany Insolvency and Debt Management Roundtable Friday 26 th November, Westminster Room Michael Knobloch iff institute for financial services, Hamburg

2. Knobloch Researching rehabilitation: evidence from Germany Definitions indebtedness: „ A condition of owing money or something of value to another.“ over-indebtedness: „ The current or future impossibility to amortise the debts on schedule.“ (German Insolvency Code) „A household is regarded to be over-indebted when its income, in spite of a reduction of the living standard, is insufficient to discharge all payment obligations over a longer period of time“ (German Federal Ministry for Family Affairs, Senior Citizens, Women and Youth) 2

3. Knobloch Researching rehabilitation: evidence from Germany Data collection and processing 3

4. Knobloch Researching rehabilitation: evidence from Germany 4 Average duration

5. Knobloch Researching rehabilitation: evidence from Germany Impact of debt advice 5

6. Knobloch Researching rehabilitation: evidence from Germany 6 Approximately 100.000 persons passed legal debt-discharge in 2011 Insolvency proceedings, openings

7. Knobloch Researching rehabilitation: evidence from Germany 7 Triggers of over-indebtedness – as seen by debt advisors

8. Knobloch Researching rehabilitation: evidence from Germany 8 Professional qualification by age (total population and over-indebted persons)

9. Knobloch Researching rehabilitation: evidence from Germany 9 Households affected by poverty (total population and by over indebted persons)

10. Knobloch Researching rehabilitation: evidence from Germany 10 Methodology  Quantitative test  Former clients of debt advice agency in Wilhelmshaven  After legal discharge of debt  Identified by debt advice agency  Written questionnaire  Cash incentive (5 Euro)  400 sent out in June/July 2010 by debt advice agency  78 returned due to wrong address  59 = 18% responded to iff  No following up on non-respondants

11. Knobloch Researching rehabilitation: evidence from Germany Reasons for insolvency as seen by former bankrupts 11

12. Knobloch Researching rehabilitation: evidence from Germany Former bankrupts´ estimation of insolvency proceedings 12

13. Knobloch Researching rehabilitation: evidence from Germany Help requested and received during insolvency 13

14. Knobloch Researching rehabilitation: evidence from Germany Debts after legal debt discharge 14

15. Knobloch Researching rehabilitation: evidence from Germany Former bankrupts´ situation after discharge of debt 15

16. Knobloch Researching rehabilitation: evidence from Germany Current accounts of over-indebted households 16

17. Knobloch Researching rehabilitation: evidence from Germany Former bankrupts´ financial situation by changes in opportunities in the job market 17

18. Knobloch Researching rehabilitation: evidence from Germany Former bankrupts´ financial situation by changes in labour situation 18

19. Knobloch Researching rehabilitation: evidence from Germany Former bankrupts´ financial situation by changes in income 19

20. Knobloch Researching rehabilitation: evidence from Germany Former bankrupts´ income situation by changes in educational level 20

21. Knobloch Researching rehabilitation: evidence from Germany Former bankrupts´ financial situation by changes in educational level 21

22. Knobloch Researching rehabilitation: evidence from Germany Former bankrupts´ financial situation by changes in health situation 22

23. Knobloch Researching rehabilitation: evidence from Germany 23 Conclusions  Unemployment and failed self employment are key triggers for over-indebtedness  Fresh start in Germany takes too long  Long waiting period before debt advice  Out of court settlements not successful in the majority of cases  Great impact of credit bureaus  Work is key indicator for post-bankruptcy health  Majority manages to rehabilitate without extra-help  Minority needs extra-help exceeding “pure” debt advice:  Vocational training  Education  Family counseling  Psychological support  Debt advice agencies´ resources are not yet sufficient to cover the demand  More research needed!