A piggy bank is broken open and the coins inside can be seen
Finance & Law
25.09.2026 Sabrina Ludwig 22943

When are you considered overindebted?

You often only realize how quickly you can end up in the red when your account is already in the red and the outstanding bills are piling up on the kitchen table. If you wait too long to pay off your debts, it's almost impossible to get out of the debt spiral without outside help.

Read more in this article:

 

When am I in debt? What is over-indebtedness?

If you have taken out a loan and repay the installments on time, this is not a precarious situation. You may be in debt, but your livelihood is not at risk.

However, if you are unable to pay the agreed installments, this is referred to as over-indebtedness - i.e. whenever, after deducting rent, electricity and the costs of daily living, the remaining money is permanently insufficient to meet further payment obligations.

If this happens, you should react quickly and visit a debt advice center. If you don't do this and more and more debts accumulate, there is the threat of reminder proceedings and compulsory enforcement.

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Over-indebted through no fault of your own: Unemployment, divorce, illness

Over-indebtedness can occur completely "through no fault of your own". The "classic" reason is sudden unemployment. But divorce and separation are also among the most frequently cited reasons why people are suddenly no longer able to support themselves.

Especially after a divorce, alimony payments can take a heavy toll, and monthly payments to former partners and for shared children can quickly add up to costs that are difficult to control. However, long-term and serious illnesses are also cited as causes of excessive debt.

 

Young people often have money problems

Careless and too relaxed handling of money often leads to ending up in the red. Young people in particular have money problems.

In 2024, a total of 5.67 million people in Germany were overindebted. This represents an increase of 111,000 cases compared to 2023. Since 2016 (the last significant increase), the number of overindebted people had been on a downward trend, which is why these new developments are cause for concern.
People in the 30–39 age group are the most indebted. 

But people between the ages of 20 and 25 also sought debt counseling in 2016. On average, they had about 7,500 euros in debt, according to the Federal Statistical Office (Statistics on Over-Indebtedness Among Private Individuals, 2017). For many young people, their outstanding cell phone bills alone amount to several times their monthly income.

The cause of excessive debt among young people is particularly alarming. While adults typically accumulate more and more debt due to unemployment, separation, or illness, the cause among young people is “poor financial management.” In other words: They simply consume too much. Gym memberships, subscriptions, online clothing purchases, spending money on video games, and “buy now, pay later” offers—which are nothing more than mini-loans—are particularly appealing and therefore especially dangerous: Very few young people are prepared to handle money.

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Debt lexicon

How can I avoid debt?

Once a person or household has fallen into over-indebtedness, it is difficult to get out of the debt spiral again. At some point, more and more bills and reminders start arriving. Creditors, debt collection agencies and bailiffs try to collect money.

It is best to take the initiative as soon as you notice that you are slipping further and further into the red and can no longer pay outstanding bills:

  • A budget book helps you to get a better overview of your monthly income and expenditure.
  • Think about where you can cut back on expenses (e.g., eating out less often or skipping your daily coffee to go, taking a two-week vacation instead of a three-week one), and check whether you still need certain contracts, insurance policies, and subscriptions, etc.
  • Seek out a debt counseling center that will help you identify the causes and reasons for your debt, work with you to create a budget plan and develop a strategy to gradually reduce your debt.

Counseling for Financial Problems, Debts, or Debt Burdens

It is best to speak to a well-trained income and budget advisor to find out whether this is really feasible and the right path for you.

The pme Familienservice Group offers free budget counseling to employees of its client companies. 

Find out more now: pme Assistance

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FAQ – Frequently Asked Questions About Excessive Debt

When are you considered overindebted?

You are considered to be in debt when, after paying rent, electricity, and daily living expenses, you consistently do not have enough money left to cover your ongoing obligations. Payment reminders or regularly unpaid bills are early warning signs that you should address immediately.

What is the difference between debt and excessive debt?

Being in debt means that you have loans or obligations that are being repaid on schedule. Over-indebtedness occurs when you are no longer able to make payments on a long-term basis. 

What are the typical causes of excessive debt?

Common causes of excessive debt include sudden unemployment, separation or divorce, and prolonged illness; among young people, uncontrolled spending (subscriptions, “buy now, pay later” services, and in-app purchases) is a frequent cause. 

How can I prevent excessive debt?

Keep a household budget for two to three months to track your income and expenses and identify any potential cash flow shortfall. It’s helpful to build up an emergency fund (equivalent to two to three months’ salary), review your contracts and subscriptions regularly, cancel any unnecessary ones, and set up automatic savings contributions.

What immediate steps can you take when payment problems arise?

As soon as payment difficulties become apparent, you should prioritize essential payments such as rent and utilities, contact creditors early on to request installment or deferral agreements, and review recurring payments to cancel any unnecessary recurring expenses. Keep track of collection letters and note deadlines so you can respond in a timely manner before legal action is taken.

When and how should I seek professional debt counseling?

Seek professional debt counseling as soon as you notice a persistent shortfall in your household budget, receive payment reminders or collection notices, or face the threat of foreclosure. Prepare all relevant documents for your counseling appointment—bank statements, proof of income, rental agreement, payment reminders, loan agreements, and a list of current subscriptions—as this will speed up the analysis and enable concrete negotiation strategies with creditors.

zero How the Investment Bank of the State of Brandenburg Builds Resilience Among Its Employees

The ILB building in Potsdam
Leadership & HR
04.11.2024 Isabel Hempel 9494

How ILB makes employees crisis-proof

In this interview, Kathleen Wiesener, HR Development Officer at the Investitionsbank des Landes Brandenburg (ILB), sheds light on the importance of a strong team spirit and how targeted measures such as coaching, feedback culture and external moderation help to strengthen employees. She explains which strategies ILB uses to create a resilient working environment in which employees receive the support they need to be successful in crisis situations.

What does ILB mean by team resilience and why is it particularly important for the company?

For us, team resilience means the ability of a team to overcome challenges, crises or stressful situations together and emerge stronger. This includes cohesion, mutual support, good communication and trust within the group. A resilient team can adapt quickly to new circumstances and remains productive even in difficult times.

What specific challenges do you face in strengthening the resilience of your teams?

Digitalization presents our employees with considerable adjustment requirements. In addition, there are frequent reorganizations, for example due to new guidelines or efficiency measures. There is also a high workload in many areas due to sickness absences or unfilled expert positions as a result of the shortage of specialists.

How have you anchored the topic of team resilience in your organization?

ILB recognized team cohesion and resilience as key issues many years ago. We offer our employees systematic support from coaches and trainers from the pme Academy. We have succeeded in raising awareness among managers that good team dynamics promote well-being. This leads to fewer conflicts and less sickness-related absences and strengthens the team's performance.

How does the cooperation with the pme Academy work?

The pme Academy supports us in the organization of team meetings and the moderation of larger workshops - ranging from small teams of 4 people to entire areas with 80 participants. We also work together with their conflict moderators. Managers are part of the system and therefore cannot mediate neutrally, which is why external support is very valuable. There are also preventative offers that enable managers and employees to address conflicts and provide feedback.

Unleash the full potential of your managers and teams now.

Our trainers and coaches at the pme Academy support you in difficult transformation and change processes or analyze together how you can make even better use of your team's strengths. 

More information on the seminars and training courses: pme Academy

What effect do these offers have on your employees?

Our employees find these offers very helpful. They appreciate being able to talk about team spirit away from the daily work routine. Since the coronavirus pandemic, many have been working from home, which has led to fewer informal meetings and more social distancing. Hybrid or digital meetings are often very business-oriented, but personal interaction is crucial to strengthen bonds and a sense of community.

How do managers specifically support their teams in difficult times and ensure a resilient working environment?

We promote a sense of unity in a variety of ways in order to strengthen cooperation. Together with the workforce, we have developed guidelines for transparent, constructive communication, a lively feedback culture and cross-divisional collaboration.
Not only managers but also employees are responsible for regularly discussing and reflecting on these values. Regular team events offer the opportunity to maintain personal connections despite hybrid working models and to discuss common interests beyond work content.

What measures do you take to ensure that employees dare to speak openly about challenges or mistakes?

Dealing constructively with mistakes and challenges is firmly anchored in our vision of a learning organization. We promote transparency and encourage our managers to support their employees and adopt a solution-oriented approach instead of looking for someone to blame.

How does this work in practice? Are there tools and techniques for systematically talking about setbacks and mistakes?

We systematically integrate the topic of feedback into our annual appraisals and thus repeatedly raise awareness of its importance. There have also been campaigns on how to give constructive feedback, with newsletters, postcard campaigns and training measures.

What programs, training or resources do you offer to continuously promote the resilience of teams and individuals?

In addition to various communication training courses, such as conflict management, we offer teams the opportunity to call in external mediators or moderators for team building in times of crisis. The pme Familienservice is an important partner here.
In addition, all managers have the opportunity to choose a coach to support them in challenging situations. In day-to-day work, it's often all about the "what" and less about the "how". When a team is reassembled or a new manager is appointed, we support the process with targeted guidance.

How do you ensure that employees are not overwhelmed in stressful phases and remain productive?

Stress management is a key issue that we support through training for both our employees and managers. It is an essential part of management development so that they can protect themselves and their teams from overload and manage crises in a targeted manner. We also offer social counseling and practical support in difficult private and professional situations via an external partner.

We are currently experiencing a very strong polarization in society. Is this also noticeable in your teams? Are the conflicts growing?

My perception is that we are very reluctant to talk about politics, possibly to avoid conflict. I can only speak for my team here: It is very important to us to treat each other with respect, and that includes respecting different opinions. One example was the vaccination debate during the coronavirus pandemic, where there were both supporters and opponents. I experienced a lot of tolerance. Good cooperation is important to us and helps us to overcome crises together.