How to Get out of DEBT as a Foreigner in Germany

How to Get out of DEBT as a Foreigner in Germany

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In this video I discuss:
How to Get out of DEBT as a Foreigner in Germany

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The German economy is struggling and it’s the only major European economy to experience an economic contraction during 2023 according to forecast by the European Commission on top of that more than 8 000 businesses in Germany have gone bankrupt this year and more companies will go bankrupt even though

The situation is not unique to Germany but due to a lack of German language and not knowing their rights many foreigners coming to Germany fall into the death trap especially students in this video I will tell you why most expats in Germany fall into debt what you can do about it

And how you can get help for free if you are struggling to keep your finances in check hey friends if you’re new here my name is Essen and on this channel I make videos on business and personal finance in German and as a result I get a lot of

Questions ranging from the best free bank account in Germany to pass free credit cards in Germany but due to a sharp rise in German bankruptcies I have been getting a lot of messages from expats in financial trouble who have fallen in the death trap it’s particularly disheartening because most

Of these individuals are young professionals or students young professionals or students who have become accustomed to a high standard of living despite having limited income and you know what it’s not entirely their fault you see the buy now pay later culture has become so prevalent that it’s incredibly easy to fall into this

Trap when the latest iPhone no problem you can get it for just 60 Euros a month craving a vacation back home by lacking the funds no worries personal loans are handed out like candy however what many fail to realize often too late is that these seemingly small costs can add up

Over time that 60 Euros per month for the phone 100 euros for the personal loan repayment and many other unnecessary purchases can make a hefty amount each month not to mention that pesky credit card debt right now interest rates on credit card is near 25 per annum meaning that you have to pay

25 Euros in interest each year if you pay a 100 euro Loan in installments this is just the tip of the iceberg the worst case is people jumping to buy real estate just because they found what they thought was a good deal just the other

Day I received a message from one of my followers let’s call him Jon he asked me about something really tough how to declare personal bankruptcy you see Jon got caught up in a crypto scam he gave some money to a person who claimed to be a crypto investor in just a few days

That person promised Jon a profit of 100 from his Investments you can guess what happened next the crypto investor convinced John to give him even more money so John took out a big Loan in the tens of thousands of euros and gave it to him but here’s the sad part the

Investor disappeared with all of John’s money leaving him in a terrible situation since Jon couldn’t repay the loan he had to declare personal bankruptcy I’ll talk more about what that means later on this video but before you start panicking I know your case might be different so before you

Start panicking you should look into your credit score or shufa score I have a detailed video on that but what’s important is that shufa holding age is a company that collects information about you as a consumer from various sources such as utility suppliers Banks and internet providers they keep track of

Your bills and fines over time and use this data along with their own algorithm to create a credit score for all residents in Germany when people talk about shufa referring to the record that this company holds about their credit worthiness in Germany this company rates your ability to pay bills and creates a

Record called shufa ausconf that will follow you in your everyday life as a consumer in Germany your super record is created as soon as you register an address in Germany having a 75 Shiva score is very good and 95 percent shifa score is considered good however the

System is designed to prevent you from becoming overwhelmed by that over time so even if you pay all of your debts your score will still drop a few points for unknown reasons so it’s totally okay to have a score as low as 95 percent the important thing to remember is that if

You ever find yourself struggling with debt and feeling overwhelmed you don’t have to go through it alone good news is that there are about 1500 debt advice centers or children birata in Germany that are here to help you out the best part they offer their advice for free

These centers are usually run by non-profit organizer organizations like Caritas diocony or the German Red Cross and guess what it’s not just them consumer advice centers and local authorities also have your back when it comes to debt advice now I know what you’re thinking where do I find these

Debt advice centers well it’s as easy as checking out their websites providers like Caritas diaconi and the German Red Cross all have the addresses and contact details that you need or you can also check out this website from the German government link below the like button these debt counselors are total Pros

They come from various backgrounds ranging from social work to banking to law so you know you’re getting top-notch advice and when things get legally tricky these Consultants can even team up with lawyers to make sure that you are covered now if you’re dealing with more complex cases like self-employment

Debt or disputed claims you might want to consider reaching out directly to a specialized lawyer they can offer tailored assistance but keep in mind that their services will be a bit pricey so when should you reach out for advice well the sooner the better let me break

It down for you if you find yourself constantly struggling to make ends meet with not enough money left at the end of the month it’s a clear sign that it’s time to seek help now I get it it’s easy to let shame get in the way and many

People try to handle their death situation all by themselves for way too long they start exploring options like loan from providers who don’t even bother checking credit worthiness with shufa but here’s the problem these types of loans come with Sky High interest rates only making the debt Mountain grow

Taller some people resort to borrowing money from friends and family over and over again sure it can help if that cash injection is actually used to tackle the debt hat on but if personal loans aren’t used to reduce the debt it can strain friendships and Family Ties real quick

Plus when you’re in trouble with your loved ones it’s harder to reach out for help due to embarrassment and you end up isolating yourself even more having a solid support system from friends and family can be a game changer on your journey out of the Dead trap to make

Things easier for those seeking advice organizations like awo and Caritas offer anonymous online advice it’s a great option if you want to dip your toes in but let’s be real if you need long-term support a personal conversation is the way to go don’t worry though everything you shared during those conversations is

Treated with the utmost confidentiality now when it comes to making an appointment I suggest you give them a call or simply send them an email but remember non-profit counseling centers often have waiting lists that can stretch for months however in Urgent cases where you are at risk of losing

Your apartment or other severe cases they usually find a way to help you out as soon as possible if you’re getting value from this video please hit the like button and consider subscribing let’s talk about how this debt counseling thing actually works in your meeting with a debt counselor for the

First appointment you’ll dig deep into the nitty-gritty of your financial situation they want to understand the scope of the problem and how you ended up in the debt in the first place so they’ll ask you about your income your expenses and the total amount of debt on

Your plate then even Explore areas where you can specially save some money oh and don’t forget about the social benefits you might be missing out on that counselors make sure that you’re aware of all of the options that are available to you if needed the counselor can also

Help you take immediate action they might assist you in converting your account into a seizure protection account or help you dispute those pesky reminder notices now let’s move to step two the debt advisor will go through all of your documents and gather all of the claims from your creditors together you

And the expert will examine if those claims are valid or if any creditors have added ridiculously high reminder fees if you want the debt advisor can even handle all of the correspondence and negotiate with your creditors for example they can work on your behalf on arranging payment difference and you

Know what’s cool once the mail starts going directly to the debt Counseling Center instead of your own mailbox it can give you some much needed relief from those constant reminders now here’s the tip while lawyers usually focus on the financial and legal aspects non-profit advice centers take a

Holistic approach they want to provide you with a comprehensive social support energy into tackling your current debts they show you how you can keep track of your finances using a budget plus they’ll point out areas in your everyday life where you can make some changes to save some money these experts are well

Connected too they have networks with various social institutions and if necessary they can help you set up appointments with family or Addiction Counseling centers the job center or the housing office the goal here is to address the root causes of your debt problems and prevent any future debt

From piling up see debt counseling is not just about the numbers it’s about taking care of you as a person all right let’s talk about the different ways you can get out of insolvency when you find yourself in a tough spot with debt piling up there are two options to

Consider option number one debt settlement this is the best route if you want to avoid going to the court here’s how it works you team up with a debt advisor lawyer or a Tax Advisor to create a debt settlement plan together you figure out which claims you can pay

And in what time frame with this plan in place you can offer your creditors a lump sum payment plan or fixed installments in exchange for forgiving a portion of your debt now here’s the catch all of your creditors must agree to this plan even if one character

Doesn’t come to the table the whole deal falls through but you’ll put the agreement in writing and once you’ve implemented the plan you’ll be debt free option number two consumer bankruptcy when there is no agreement between you and your creditors the only way out is through consumer bankruptcy this option

Allows you to get rid of your debt even if you can’t repay them in full here’s how it goes you will need to pay a portion of your income that can be legally attached to a trustee for three years the three-year rule applies to anyone who has applied for personal

Bankruptcy after October 1st of 2020. before that the old rule of six years still applies to bankruptcy oh and during the process you’ll need to work or actively search for a job if you do not have one plus it’s important not to take any new debt along the way that

Advisor are there to help you weigh the pros and cons of the insolvency process they’ll also assist you in filing out any of the necessary documents if you decide to file personal bankruptcy and if you choose to take this route they can stick by your site throughout the entire process providing the support

That you need remember no matter which option you choose there are ways to overcome insolvency and pave the way for a debt free future you don’t have to face it alone debt advisors are here to guide you every step of the way are there dubious debt advisors yep

Unfortunately they exist here’s the deal in Germany the term debt advisor isn’t legally protected which means that there are plenty of commercial providers out there who specifically Target debtors and offer a so-called debt help or financial restructuring but here’s the catch these providers usually bring more problems to the table than solution

Because they’re in it for the money for most people struggling with overwhelming debt the best bet is to turn to recognize debt counseling centers like Caritas or diacon tea centers have a good reputation for genuinely helping people but hey if you’re thinking about getting advice from someone else please

Be careful first closely look at the Consulting contract if the provider says they won’t give legal advice that’s a warning sign that advises without proper authorization can’t give helpful debt advice they might say they work with lawyers but here’s the thing you’ll end up paying for both the service provider

And the lawyer that’s not good and while we’re talking about it please don’t sign any contracts that they give you like insurance or new loans just say no another important thing to think about is whether the advisor can give you a certificate according to section 305 of the insolvency Court lawyers and

Non-profit centers can do this this certificate is really important because it shows you that you have tried to agree with your creditors it’s a key requirement for starting the insolvency process now besides all of the technical stuff choosing the right debt advisor comes down to your instinct you should

Feel comfortable enough to be honest about your money situation and work together to find a solution a great starting point would be to increase your savings in this video I share some actionable tips that you can take to increase your income in German so I’ll see you in this video