📉 Debt counselling and personal insolvency

Debt counselling is a mandatory municipal service. Since 2020 the route through personal insolvency leads to discharge of residual debt faster than before.

debt counselling personal insolvency residual debt discharge mandatory service out-of-court settlement attempt

In brief

If you are over-indebted, you are entitled to free debt counselling – it is a mandatory municipal service and open to every over-indebted person regardless of employment status, not only to recipients of basic income support. If there is no way around a court solution, personal insolvency can be applied for. Since a reform in 2020/2021, residual debt discharge (Restschuldbefreiung) – the final release from the remaining debts – is generally granted after three years instead of six as before.

Step by step

Go to a debt counselling serviceMunicipal, church-run or Verbraucherzentrale (consumer advice centre) debt counselling services check the overall situation and possible solutions free of charge.
Attempt an out-of-court settlementBefore an insolvency application, a serious attempt at an out-of-court settlement with the creditors is in principle required; the debt counselling service supports you with this and certifies its failure.
Apply for personal insolvencyIf the out-of-court settlement fails, you can apply to the responsible Amtsgericht (local court) for the opening of insolvency proceedings, together with the application for residual debt discharge.
Go through the good-conduct phaseDuring the proceedings, attachable portions of income must be paid to the insolvency administration; after the period expires, a decision is made on residual debt discharge.
Receive residual debt dischargeIf no claims have been registered or costs and estate liabilities are covered, early residual debt discharge is even possible before the three years have passed.

Deadlines

3 years

Standard period until residual debt discharge for all insolvency proceedings applied for from 1 October 2020 (previously 6 years)§ 287 Abs. 2 Satz 1, § 300 Abs. 1 InsO

Possible before the 3 years are up

Early residual debt discharge if no claims have been registered or procedural costs and estate liabilities are covered§ 300 Abs. 2 InsO

Watch out – common mistakes

Without a prior serious out-of-court settlement attempt, an insolvency application as a private individual is generally not admissible – debt counselling is usually the right first step, not a lawyer alone.
The reduction to three years applies to proceedings applied for from 1 October 2020; for older proceedings already under way, partly different transitional rules applied.
New debts that arise during the good-conduct phase (e.g. new loans, mobile phone contracts) endanger residual debt discharge and should be avoided.
Debt counselling is a mandatory municipal service, but waiting times for an appointment differ greatly by municipality – if enforcement or an account attachment threatens, say expressly that it is urgent.

In depth · legal basis, figures and practice – for advisers and professionals

Debt counselling as a mandatory municipal service

Under § 11 SGB XII (and, in connection with integration into work, additionally § 16a SGB II), debt counselling is one of the services that the municipality must provide. The concrete design – responsible organisation, waiting times, additional offers such as budget counselling – nevertheless varies from municipality to municipality.

Reform of residual debt discharge 2020/2021

With the Act to further shorten the residual debt discharge procedure, in force since 1 October 2020, the so-called assignment period (Abtretungsfrist) was shortened from six to three years (§ 287 Abs. 2 Satz 1 in conjunction with § 300 Abs. 1 InsO). Early residual debt discharge is possible even earlier under § 300 Abs. 2 InsO if no claims have been registered or procedural costs and estate liabilities are fully covered.

Relationship to other topics in this module

Debt counselling and personal insolvency are often connected with the topics protected account (important during the proceedings to secure the subsistence minimum) and rent arrears or energy debts (often the trigger or part of the total indebtedness).

Who is responsible

Municipal, church-run or Verbraucherzentrale debt counselling
Insolvency court (Amtsgericht)

Quick questions

Worum geht es bei „Debt counselling and personal insolvency“?

Debt counselling is a mandatory municipal service. Since 2020 the route through personal insolvency leads to discharge of residual debt faster than before.

Which deadlines and figures matter?

3 years: Standard period until residual debt discharge for all insolvency proceedings applied for from 1 October 2020 (previously 6 years) (§ 287 Abs. 2 Satz 1, § 300 Abs. 1 InsO)
Possible before the 3 years are up: Early residual debt discharge if no claims have been registered or procedural costs and estate liabilities are covered (§ 300 Abs. 2 InsO)

What should I do first?

Go to a debt counselling service: Municipal, church-run or Verbraucherzentrale (consumer advice centre) debt counselling services check the overall situation and possible solutions free of charge.
Attempt an out-of-court settlement: Before an insolvency application, a serious attempt at an out-of-court settlement with the creditors is in principle required; the debt counselling service supports you with this and certifies its failure.
Apply for personal insolvency: If the out-of-court settlement fails, you can apply to the responsible Amtsgericht (local court) for the opening of insolvency proceedings, together with the application for residual debt discharge.

What do I need to watch out for?

Without a prior serious out-of-court settlement attempt, an insolvency application as a private individual is generally not admissible – debt counselling is usually the right first step, not a lawyer alone.
The reduction to three years applies to proceedings applied for from 1 October 2020; for older proceedings already under way, partly different transitional rules applied.
New debts that arise during the good-conduct phase (e.g. new loans, mobile phone contracts) endanger residual debt discharge and should be avoided.

Evidence

§ 11 SGB XII; § 16a SGB II (gesetze-im-internet.de)
§ 287, § 300 InsO (gesetze-im-internet.de)
Bundesministerium der Justiz, Merkblatt über das Verfahren zur Restschuldbefreiung, as of 2021 (justiz.de)

As of

As of September 2026. · Sources and method

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