First steps

How do I become debt-free? How do I get out of financial difficulties?
Initial consultation with personal meeting and assessment of your personal and financial circumstances: At the beginning of your path to becoming debt-free is an intensive conversation about your needs. The focus is on an understandable explanation of our methodical work. In doing so, we explain to you exactly which courses of action are available to you, what the advantages and disadvantages of the various options are, and work with you to find the best way out of your debts. This consultation takes place exclusively in person, so that you can get to know your debt advisor and he can get an overview of your personal and financial situation. The more documents and information you can bring to this appointment, the better and more accurately we can find your way out of debt together. Due to the current situation caused by the Corona pandemic and the resulting contact restrictions, we currently also offer counseling appointments via video conference or telephone if desired.
Setting up a garnishment protection account: If your account has already been seized by one or more creditors, you can ask us – if you have not already done so – to set up a garnishment protection account, or P-account for short, depending on your family circumstances, to transfer an amount of currently at least € 1,178.59 to your

The first option for you to get rid of your debts is to try to reach an out-of-court settlement with your creditors. It is possible to agree with the creditors on a one-time payment or a monthly installment payment, usually over three years.
In the out-of-court settlement attempt, a distinction must be made as to what our common goal is:
If we have jointly decided that the path to insolvency is the best solution for you to become debt-free, then we offer the creditors only the then usually very low in comparison to the total debt, garnishable income. In the short term, this then leads to a rejection and, at the same time, to the failure of the out-of-court settlement attempt. This opens the way to insolvency, as the failure of the out-of-court settlement attempt is an absolute prerequisite for private insolvency. If, contrary to expectations, the out-of-court settlement attempt is nevertheless accepted by all creditors, you will not suffer any disadvantage because, just as in insolvency, you will only have to pay the attachable portion of your income to your creditors. Even if it is clear from the outset that an out-of-court settlement has no prospect of success, it must be carried out. The unsuccessful attempt with the help of a “suitable body” is in fact a mandatory requirement for private individuals for the implementation of consumer or private insolvency proceedings.

If the out-of-court attempt to settle the debt fails, the debtor can file an application for the opening of private insolvency proceedings with the competent insolvency court within six months.
The insolvency court can then decide at its own discretion whether it now still wishes to attempt a judicial debt settlement with the creditors. This judicial settlement attempt is the renewed attempt, with the help of the insolvency court, to reach an agreement between the debtor and creditors in order to avoid insolvency proceedings. The plan itself is usually no different from the out-of-court debt settlement plan.
If the insolvency court is convinced that the out-of-court debt settlement plan will not be accepted by the creditors, it immediately orders the continuation of the proceedings on the opening of private insolvency proceedings.
If it is of the opinion that this has a chance of success, it sends the judicial debt settlement plan to all known creditors and requests them to comment on it within one month. If one or more creditors do not do so, this is deemed to be a declaration of consent to the plan submitted. However, even if several creditors reject the plan, the insolvency court can, at the debtor’s request, convert this rejection into consent if a total of more than half of the creditors have given their consent.

If both the attempt to settle debts out of court and the attempt to settle debts in court have failed, the insolvency court decides whether to open consumer insolvency proceedings.
Consumer or private insolvency proceedings are simplified insolvency proceedings for private individuals. It is open to all debtors who are not engaged in or have not engaged in self-employed economic activity. (Section 304 (1) InSO). This includes: Unemployed persons, social welfare recipients, pupils, interns, students, trainees, employees, pensioners and civil and military service members. A managing director of a GmbH (limited liability company) and a member of the management board of an AG (stock corporation) are also consumers within the meaning of section 304 InsO if they are not at the same time shareholders with a shareholding of at least 50%.
If a debtor is self-employed, consumer insolvency proceedings are also open to him if he has fewer than 20 creditors at the time of the application for commencement of insolvency proceedings and there are no claims against him arising from employment relationships. Claims arising from employment relationships are wage and salary claims of former employees, claims of tax offices for wage tax and claims of social security institutions.
The insolvency court now examines whether the conditions for opening insolvency proceedings are met.
These are:
Insolvency or impending insolvency (only if the debtor files a petition): This is the case if the sc

Now the procedure begins for the debtor, at the end of which he can hopefully start a new life free of all debts, the so-called period of good conduct. In order to achieve this statutory debt relief, the so-called residual debt discharge, the debtor must, however, fulfill various obligations.
These essentially include the following obligations:
He must engage in appropriate gainful employment or, if he is unemployed, make efforts to find such employment.
He must surrender half of any assets he acquires during this period, for example through an inheritance or a gift. Lottery winnings must even be surrendered in full.
He must immediately report any change of residence or place of work.
He may make payments to the insolvency creditors only to the insolvency administrator (or trustee) and may not provide a special advantage to any creditor.
If the debtor complies with these obligations, he will obtain residual debt discharge after 3 years (see duration of consumer insolvency proceedings) from the opening of the formal insolvency proceedings. The debtor is strongly advised to fulfill these obligations properly throughout the entire period of good conduct in order not to jeopardize the granting of residual debt discharge. In particular, in the event of unemployment, efforts to find a new job and to respond to inquiries from the trustee or the insolvency court are essential.

If you have been granted residual debt discharge, this means that the consumer insolvency proceedings are over for you! You are debt-free, almost all claims existing against you at the beginning of the insolvency proceedings are waived and you can now start a new life without debts!
Only the following debts are excluded from the discharge of residual debt:
All claims that have arisen against you during the insolvency proceedings
All debts from intentionally committed tortious acts: The most common cases here are those of unemployed persons who have obtained benefits from employment offices on the basis of false information. If a creditor succeeds in proving that the debtor ordered goods without ever being able to pay for them, this also falls under the category of intentional tort and is therefore excluded from residual debt discharge.
All claims from overdue statutory maintenance obligations
All claims from tax evasion
All liabilities from fines
All liabilities from interest-free loans granted to settle the costs of the insolvency proceedings
All procedural costs previously deferred to you that have not yet been settled. However, if your income is still below the exemption amount after the granting of residual debt discharge, you can apply for an extension of the deferral.

Under the new legislation, residual debt is discharged three years after the opening of all newly opened insolvency proceedings.