Personal insolvency

Privatinsolvenz (personal insolvency, consumer insolvency) is the legally regulated way out of over-indebtedness in Germany.

The procedure:

1. Out-of-court settlement (mandatory):

• Together with a debt counselling service, you try to reach an agreement with all creditors
• If the agreement fails: go on to step 2

2. Insolvency application to the court:

• The court opens insolvency proceedings
• A trustee is appointed

3. Good-conduct period (3 years):

• You hand over the seizable part of your income to the trustee
• Protected income limit: approx. €1,410/month (2026) – you keep that
• You must make efforts to find work

4. Discharge of residual debt:

• After 3 years: ALL remaining debts are cancelled
• You are completely debt-free – a real fresh start

Costs: the procedural costs (approx. €2,000–3,000) can be deferred – you only pay them after the discharge of residual debt.