Last year, three Styrians went bankrupt every day. On average they had debts of 104,000 euros. Vienna was the leader with 2,881 private bankruptcies. But how do you get into these financial problems and what can you do? The “Steirekrone” has spoken to experts and has some advice.
Illness, unemployment, divorce: there are many reasons why your own financial situation suddenly deteriorates enormously. Anyone who can no longer pay their bills is essentially over-indebted. A private insolvency procedure can then help you out of financial problems.
More than 1,000 Styrians went bankrupt
According to a current analysis by the credit protection association KSV1870, 1,034 Styrians had to follow this route last year. “That corresponds to an average of three debt settlement procedures per day opened at a court in Styria,” calculates Rene Jonke, KSV1870 head of the southern region, in an interview with the “Krone”. The proportion of women and men was fairly comparable: 42.7 percent to 57.3 percent.
Credit protectors expect another increase
Although Styria was the only state with a decrease in the number of private bankruptcies, with a minus of 1.4 percent, “significant relief is still not expected,” says Jonke. Because the already high expenses for daily living would continue to rise. “We also know from experience that personal bankruptcies usually occur with some delay.”
About 1,150 bankruptcies are expected this year. Even if Styrians think twice or three times about their expenses, there are fixed costs that cannot be avoided and are constantly rising.
“The road to bankruptcy is not shameful”
If you notice a stomach ache as soon as the mail arrives, you should seek help. The sooner the better. But only a fraction of those affected initiate insolvency proceedings to get rid of debts. The shame is too great. “Private insolvency is always accompanied by a certain stigma,” says Graz lawyer Christoph Rappold (law firm Reif und Partner).
“Insolvency can be viewed on the Internet in public records and often the bankruptcy court freezes the account.” Yet the road to insolvency is not a shame. “A debt-free new start in life is certainly possible,” the lawyer emphasizes. based on years of experience.
Existing assets are used
But how does the process actually work? “Private insolvency is initiated by a so-called own application by the debtor to the court,” Rappold explains. This is followed by an interest and foreclosure freeze. Asset realization then begins, provided assets (such as a car or other seizureable property) are available. The creditors must then submit their claims to the court within a certain period.
Once all claims are known, there are several ways to get out of the situation: For example, the affected person can offer the creditors an agreement. Twenty percent of the debt must be repaid within a maximum period of five years.
“If a repayment plan is not possible due to low income, going through the garnishment process is the last resort,” the attorney says. The income up to the subsistence level is transferred to a trustee for three years, who distributes the repayments.
The debtor must live at subsistence level
There is often a payment plan. A specific repayment percentage is agreed that is in line with the income situation for the next three years. The amount must be repaid within three to a maximum of seven years. The debtor is left with the subsistence minimum.
In any case, legal support is useful in the event of bankruptcy, with additional costs of around 1,500 euros on average.
The main reason is overconfidence
The most common reasons for private bankruptcies are delinquent debts at 28 percent (financial overconfidence, poor consumer behavior and irresponsible lifestyles such as speculation), closely followed by becoming self-employed at almost 27 percent.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
