Finding debt advice

As a rule, no – and this is set out in law. § 11 Abs. 4 SGB XII provides: “If advice from a debt advisory service or other specialist advisory services is called for, its use is to be promoted.” The task of the Sozialamt is therefore to promote the use of specialist advice, not to provide the advice itself. It is provided by recognised advisory services run by independent or local-authority providers – Caritas, Diakonie, Arbeiterwohlfahrt, Der Paritätische, consumer associations and local-authority bodies –, while the Sozialamt refers and funds the advice for people receiving benefits. In practice, this means: you may ask explicitly about it there, rather than waiting for an offer. In practice, it changes little about your route: ask the Sozialamt or the Bürgerservice about the services available locally, or contact one of the providers named above directly. More important than the type of provider is another question – whether the body is permitted to issue certificates under § 305 InsO, in case personal insolvency comes into consideration.

At recognised bodies, nothing – for people receiving social benefits in any case, because the local authorities fund the advice, and otherwise too it is predominantly free or very low-cost. The most important rule of thumb in this area follows from this: reputable debt advice does not demand advance payment. Offers that demand money upfront for arranging a debt settlement, for a “debt regulation plan” or for negotiations with creditors make your situation worse – you then pay for something you could get free of charge, and from a budget that is not enough anyway. Blanket promises of guaranteed debt relief are also a warning sign.

Above all a certificate that the out-of-court settlement attempt with the creditors has failed. § 305 Abs. 1 Nr. 1 InsO requires it “from a suitable person or body … on the basis of personal advice and a thorough examination of the income and asset situation” – and not every advisory service is authorised to do this. So ask about this explicitly before accepting an appointment: at a body that is not suitable, you will have to repeat the attempt later, and that costs months. Also pay attention to the deadline: the settlement attempt must have failed “within the last six months before the application for the opening of proceedings” – the certificate therefore does not support the application indefinitely. The process: creditor list, settlement attempt, if it fails a certificate, then a prompt application to the insolvency court.

This cannot be stated generally – waiting times are very different by region and sometimes considerable, depending on the number of advisory services and local demand. So the most important practical advice: register before you are prepared. The time of registering determines your place, and you can use the waiting time to draw up the creditor list and sort the post – work that needs to be done anyway and that nobody can do for you. When registering, ask explicitly about the expected waiting time and whether there are urgent appointments: with threatened termination, eviction or account attachment, most services keep short-notice capacity free.

A protected attachment account. You can require your bank to convert your existing current account into one – it automatically protects a monthly basic personal allowance from attachment, so that rent, electricity and food can be paid for. The decisive point is the timing: set it up before the first account attachment arrives. After that it is still possible, but considerably more laborious, and in the meantime you may not be able to access your money for weeks. Higher allowances – for example for dependent children or certain social benefits – must be proven additionally; the debt advisory service issues the corresponding certificates.

Rent arrears take precedence over everything else, because the flat depends on them and losing it sets back any debt regulation by years. Two things immediately: first, say so at the first contact with the advisory service and explicitly name the termination or eviction date – urgent appointments exist for this. Second, ask the Sozialamt in parallel about taking over rent arrears: SGB XII provides options for this, as a rule as a loan, if this avoids homelessness. Do not wait for the advisory appointment for this – with a termination already issued, weeks, sometimes days, count.

Yes, and for many this is the hardest step of all. Deadlines run regardless of whether a letter was read: a Mahnbescheid against which no objection (Widerspruch) is lodged in time becomes legally binding, and after that, objections to the claim can hardly be raised any more – even if the claim did not exist at all. If opening the post seems impossible to you, there is a practical middle way: collect the unopened post in a box and bring it unopened to the advisory service. There it is opened and sorted together with you – this is a common process and nothing unfamiliar to anyone there.

First the situation is put in order: all claims are recorded, checked for whether they are justified and whether any are perhaps time-barred or excessive, and it is calculated what remains exempt from attachment for you. Then follows securing your existence – P-Konto, housing, energy supply, ongoing social benefits –, because nothing can be regulated without a stable basis. Only after that comes the out-of-court settlement attempt with the creditors: the body draws up a plan and negotiates. If a settlement succeeds, no insolvency is necessary. If it fails, the certificate under § 305 InsO is issued and the path into the proceedings is prepared. Expect several appointments over a longer period – this is normal and not a sign that something is going wrong.