Debt trap: “In Austria people talk more about sex than money”

The debt counseling service looks after 700 private bankruptcies every year in Upper Austria. In 700 cases, indebted people are no longer able to service their debts on time. “Very few of our clients come on time, only when it is too late,” says managing director Thomas Berghuber. “Debt is still a taboo topic. In Austria people talk more about sex than money.”

But when is the right time to seek help? When does debt become dangerous? And how do you get out of the debt trap?

“Debt is fundamentally neither good nor bad,” says Berghuber, who and his team of 50 employees have been advising debtors for 35 years. Anyone who finances their house construction largely through debt but has a concrete and manageable repayment plan will hardly have a problem. However, anyone who finances their everyday consumer spending or vacations on credit runs a great risk of getting into difficulties.

Every fifth household in Austria is on the verge of debt problems. Debts usually get out of control when a source of income unexpectedly disappears, due to unemployment, but also when you retire or changes in the family. Guarantees would be necessary or consumer debt would get out of hand.

• All consequences of money & life on www.nachrichten.at/geldundleben

60,000 euros in debt

On average, debt counseling clients have 60,000 euros in debt. Outliers like a former entrepreneur with 42 million euros in private debt have already been taken into account. According to Berghuber, two thirds of the 60,000 euros mostly go to operating costs and interest. But that also means that this amount is enough to keep you out of debt, says Berghuber, citing as an example a consumer loan from a mail order company with an effective interest rate of 22 percent (actually determined). The interest burden for one year alone amounts to 13,200 euros, which is more than 1,000 euros per month. “For many people, this can no longer be the case, and the debts will no longer be repayable, but more because the reminder fees and debt collection costs also have to be paid,” says Berghuber.

• Read more in the comment “77,000 bankruptcies”

The way out is personal bankruptcy

The way out for many debtors is personal bankruptcy. This instrument has been around since 1995 and is a great step forward. There had previously been wage garnishments. Many debtors went into hiding and were never able to free themselves from their debts.

Now there is the possibility of an agreement. Everything that goes beyond the subsistence minimum of 1200 euros net must be handed over to the creditors for a certain period of time (usually three years). “It’s tough, but it offers the perspective that things will continue in an orderly manner,” says Berghuber. You can hear how much of the debt in personal bankruptcy is actually repaid, why personal bankruptcy is not an incentive to take on debt and which five tips can help you get out of the debt trap in the “Money & Life” podcast.

You can also listen to the podcast on the following platforms:

• Spotify: https://open.spotify.com/show/0WshpPV8wMsYxvIqrznWph
• Apple Podcasts: https://podcasts.apple.com/us/podcast/geld-und-leben/id1686094839
• Google Podcasts: https://podcasts.google.com/subscribe-by-rss-feed?feed=aHR0cHM6Ly9nZWxkLXVuZC1sZWJlbi5wb2RpZ2VlLmlvL2ZlZWQvbXAz
• Deezer: https://www.deezer.com/show/5759567
• Amazon Music: https://music.amazon.de/podcasts/cacee42c-5d06-46ef-a78a-7f8d38c0baac/geld-und-leben

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