Private debt for inflation: when finances begin to wane

Status: 06/29/2022 12:22

The rise in prices has hit many people hard in everyday life. It is not only in low-income families that money is often insufficient. Debt counseling centers are working to the limit nationwide. For example in Speyer.

The Diakonisches Werk of the Evangelical Church of Speyer has its seat in the city center. The building is a sober functional building. Inside, however, some personal dramas take place. The counseling center is the contact point for those who can no longer cope with their daily life, their family environment or their finances.

Axel Giovanni

“The higher the price increase, the more requests and requests for help we get. At first it increased slowly. Now more people come every week,” says Tanja Gambino. She is a social educator and senior consultant at Diakonie, inter alia in debtor and insolvency counseling.

“The payment difficulties of more and more people started with the Corona crisis,” Gambino says. With the first lockdown in spring 2020, many socially disadvantaged people would lose their jobs, such as mini-workers. “In the middle class, the self-employed often had to give up their businesses. Many employees also worked part-time jobs. Both groups often lost their savings in the middle of last year.” And then came inflation.

Installment as an attempt

With her in the Speyer Diakonie there was the first great horse race of the year. “Back then, energy costs increased significantly. Many energy suppliers were also making additional demands at that time,” Gambino recalls.

The next price shock then came in supermarkets and gas stations. Trigger: the war against Ukraine. “Our customers keep getting more and more bills. Suddenly the bill is overdrawn. Everything starts to slip. At some point the gas and electricity are turned off,” Gambino says. Before going that far, Diakonie is trying to negotiate installment payments with electricity suppliers and banks.

Social worker Tanja Gambino does debt counseling for Diakonie. More people come every week, she says.

Photo: private

The Diakonie in Speyer offers first emergency advice in case of financial problems. Normally, those seeking advice receive an appointment within two weeks. After that, it takes up to six months before the next appointment can be made. “The demand is simply too great. It is also surprising that almost all deadlines are met by customers. In the past this was not the case. The pressure is increasing. Inflation has now reached the middle class.”

“Social peace in danger”

A few offices further on, the regional pastor of the diakonia Albrecht Bähr is preparing his briefcase. He is about to join the state government of Mainz. It is about alleviating poverty. “What we are experiencing in Speyer applies to the whole of Rhineland-Palatinate. More and more people who can no longer make ends meet are also turning to Caritas or Arbeiterwohlfahrt”, says Bähr.

It calls for targeted help for welfare recipients and low-income families. “Aggression is on the rise in many families. We are also seeing an increase in alcohol addiction. Children in particular suffer. We need to pay more attention to this social group, otherwise social peace is at risk.”

Advisors recommend early debt restructuring

In Berlin, Ines Moers pulls the current numbers out of a drawer. She is the CEO of the Federal Working Group for Debt Counseling. Ines Moers just evaluated a survey with her team. About 1,400 offices nationwide attended. According to this, the number of people seeking advice had already increased by two thirds by the end of the summer of last year. This year too, the trend is uninterrupted: at the beginning of March, demand had again increased significantly, by 56%.

“People now have the courage to come to the consultation,” says Moers. “More and more they are affected. I forgive the shame, for which there was no reason before.” Her only appeal is: “The sooner those affected by inflation come to us, the more we can save. Any early debt restructuring is better than bankruptcy.”

Concerns for the winter

And how will inflation continue, especially as regards energy prices? The federal government is at least considering a third aid package. Chancellor Olaf Scholz, meanwhile, has met with broad resistance with his proposal for a one-time payment for employees. The Federal Ministry for Consumer Protection recommends using energy sparingly. At the moment, therefore, no concrete relief programs are foreseeable by the coalition.

Due to the war against Ukraine, almost any increase now seems possible, especially in the case of gas. “That doesn’t bother me, it’s almost scary,” says Tanja Gambino. It is also in favor of targeted aid, in particular an increase in unemployment benefit II. “For those who benefit from social security benefits, the price increases for heating are borne by the office. For the middle class, however, this will be a big problem because no one else will pay them. I’m afraid we are facing an autumn and a winter. very difficult”.

Leave a Comment