ROUTE

Personal insolvency

A complete creditor list, free advice with the compulsory settlement attempt, two applications to court, three years of obligations and the limits of discharge.

✓ Checked: 15/08/2026

⚠️ First, which kind of proceeding applies, because it governs everything else. What is described here is CONSUMER insolvency. It is open to anyone who was never self-employed, and to the formerly self-employed whose affairs are manageable: fewer than twenty creditors and no outstanding claims from employment relationships. Anyone currently self-employed or above those limits goes into regular insolvency, where the out-of-court attempt falls away and the case starts at court.

1

STEP

Building the full picture of your debts

The procedure starts not at court but with a list. Until every creditor and amount is known, neither advice nor an attempt to settle can work.
2

STEP

The compulsory attempt to settle — and it is free

Before court, the law requires an out-of-court attempt to settle with creditors. A recognised debt advice service conducts it, and at charitable providers it costs nothing.
3

STEP

Applying to court: proceedings and discharge

Two applications go in together — to open proceedings and for discharge of residual debt. The second is critical: without it the proceedings run and the debts remain.
4

STEP

Three years under obligations

After proceedings open comes a period with duties: work or seek work, report changes, hand over the attachable part of your income. Today it lasts three years.
5

STEP

Discharge granted: what is gone and what stays

The order discharges the remaining debts, but not all of them. The credit bureau entry also lives on its own timetable, not the court’s.

› More about this route

Personal insolvency in Germany is not a declaration of bankruptcy but a staged procedure with a compulsory preliminary phase. The court is the second step, not the first: the law requires an attempt to settle with creditors through a recognised debt advice service, and the certificate that it failed is your ticket in.

This five-step route covers everything: assembling the full picture of your debts, the compulsory and free advice with its settlement attempt, the two applications to court, three years under obligations, and finally discharge of residual debt with its limits.

On money explicitly: at charitable and municipal services debt advice is free, and where funds are short the court costs can be deferred. Getting into this procedure generally costs nothing — and free options deserve checking before commercial ones.

WHERE PEOPLE MOST OFTEN LOSE MONEY AND TIME

Filing to open proceedings without the application for discharge. The second is only possible together with the first, and without it the procedure achieves nothing.
Paying off one creditor among several before the procedure. Such a payment can be challenged as a preference and creates a problem rather than a solution — take the question to advice first.
Relying on the six years quoted in older articles. Discharge normally follows after three years, but the internet is full of texts citing the old period.
Expecting the credit bureau entry to vanish with the court order. It follows the bureau’s own rules and is deleted later — and it, not the court, is usually what blocks finding a flat.

FREQUENTLY ASKED QUESTIONS ABOUT THIS ROUTE

Is debt advice genuinely free?▾

At charitable and municipal services, yes — it is free there, and those recognised services are exactly the ones that issue the certificate the court needs. Commercial providers exist, but going to one without checking the free routes makes no sense.

Which debts survive no matter what?▾

The law expressly excludes claims from intentional wrongful acts, from intentionally breached maintenance duties, and fines and comparable sanctions. Whether any exist is better established before you start.

May I work during the procedure?▾

You must: the duty to be in paid work or to demonstrably seek it is one of the obligations. Extra earnings partly go to creditors, but refusing work jeopardises the discharge itself.

WHAT USUALLY COMES NEXT

SCHUFA: Report and ScoreThe free GDPR report, what really moves the score (not your salary!) and how to remove wrong entries.Opening a Bank AccountThe basic-account right even without SCHUFA, opening via VideoIdent in an evening, and the three first-week settings: rent, salary, direct debit.WorkPersonal step-by-step checklist for starting work in Germany: Steuer-ID, Krankenkasse, Sozialversicherung and Steuerklasse. Adapts to your situation — employee or self-employed.Getting a Loan in GermanyWhat the bank sees in a foreigner, comparing without SCHUFA traces, the payment-protection trap — and borrower rights from withdrawal to extra repayment.