Over-indebtedness in Germany could rise significantly again in 2026. On August 26, Creditreform warned in Berlin of a further substantial increase. As early as 2025, 5.67 million adults were classified as over-indebted—an increase of 111,000 compared to the previous year. The credit information agency cites high living costs and a weak labor market as the primary burdens. However, many households have virtually no financial reserves left, while unexpected expenses can more quickly lead to persistent payment difficulties.
High prices deplete financial reserves
After six years of declining figures, the trend reversed as early as 2025. The over-indebtedness rate rose from 8.09 to 8.16 percent. At the same time, the number of affected individuals increased by two percent to 5.67 million. Creditreform views this as a turning point, as the financial buffers of many consumers have shrunk following the years of crisis.
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Upward price pressure has since eased, yet price levels remain high. In July 2026, the inflation rate stood at 2.8 percent compared to the same month the previous year. Furthermore, according to Destatis, food and non-alcoholic beverages cost around 36.8 percent more than in 2020. The overall consumer price index was 25.6 percent above the level of the 2020 base year. However, a lower inflation rate does not reverse the earlier price surges.
Unemployment exacerbates financial problems
While prices remain high, the labor market is also showing signs of weakness. In July, 3.007 million people were unemployed—28,000 more than a year earlier. Additionally, in May, the number of employees subject to social security contributions was 69,000 lower than the previous year’s figure. This is relevant to the issue of over-indebtedness because a loss of income can quickly render existing loan and rent obligations unsustainable.
However, data from debt counseling services indicate that financial hardship stems from multiple causes. Illness, addiction, or accidents were the most common primary triggers in 2025, accounting for 18 percent of cases. Unemployment followed at around 17 percent, and average debt stood at 34,650 euros. More than half of those seeking advice lived alone, meaning that all fixed costs had to be covered by a single household income.
Over-indebtedness rising faster than consumer insolvencies
So far, there has been no sudden surge in personal insolvencies. In May, local courts recorded 5,926 consumer insolvency cases—a 10.3 percent decrease compared to the same month last year. However, the total for the period from January to May was 32,093 cases, up 1.9 percent from the previous year. Consequently, current warnings about rising over-indebtedness appear to serve more as an early indicator than as a description of an insolvency wave already underway.
Nevertheless, Creditreform anticipates a further worsening of the situation if costs and labor market conditions remain unfavorable. Patrik-Ludwig Hantzsch states: “Given the high cost pressure and the weak labor market, I consider a further significant increase to be possible.” The crucial factor, therefore, is not merely the current inflation rate but also the persistently higher price level. If the number of affected individuals continues to rise, more households are likely to find themselves permanently unable to fully meet their financial obligations.
Author: Blackout News
Sources: Handelsblatt (26.08.26) – Statistisches Bundesamt (14.08.26) – Destatis (15.07.26)