Rising debts

More and more people in the country cannot afford to live

Those affected were on average 55,000 euros in debt.

(Bild: Antonioguillem - stock.adobe.com)

Partly due to inflation, more and more people in Austria were forced to turn to debt counseling in 2023. The number of people who cited increased living and housing costs as the reason for their over-indebtedness more than doubled compared to the previous year.

The so-called first contacts increased by 17% compared to the previous year 2022, as the "Debt Report 2024" shows. In total, 21,600 people made use of a debt advice center for the first time in 2023. "Across Austria, this is the highest figure in the last twelve years and there are individual federal states where this is even an all-time high," explained Clemens Mitterlehner, Managing Director of the umbrella organization ASB Schuldnerberatungen, at a press conference on Monday.

Themost common reason for over-indebtedness is job loss
The most common reason for over-indebtedness in 2023 was again the loss of a job or a deterioration in income, which became a problem for 32 percent of those affected last year. Around one in five of those affected cited money management or a lack of financial education as a reason for overindebtedness, while 18% cited former self-employment. Increased living and housing costs were a reason for over-indebtedness for twelve percent, significantly more often than in 2022 (five percent). Inflation is playing an increasingly important role, "clients report that they can no longer afford to live," warns Mitterlehner.

(Bild: INGOSFOTOGRAFIE.DE, stock.adobe.com)

More and more people who come to a debt advice center have very little income, in a third of cases it is below the subsistence level of currently 1217 euros per month, explained Mitterlehner. At the same time, more and more people could not afford personal bankruptcy. On average, those affected were around 55,000 euros in debt, while the figure for those who were formerly self-employed was significantly higher at around 103,000 euros.

Rauch denounces structural causes
"Debt is never just down to individual fault, but has structural causes," said Social Affairs Minister Johannes Rauch (Greens). He therefore also called for structural measures to combat over-indebtedness. These include a reorganization of the minimum income, the valorization of unemployment benefits and unemployment assistance, a limitation of collection costs, basic child protection and improved data on over-indebtedness in Austria. Rauch also referred to the tough negotiations with the black coalition partner: "A reform of the Social Welfare Act towards a minimum income worthy of the name is currently not feasible with the ÖVP".

In fact, there is currently no well-founded data on the total number of indebted people in Austria. Together with Statistics Austria, this and other gaps are now to be closed, and in future it should be possible to link data from execution proceedings with administrative data, for example. "Between eight and 9,000 people go into personal bankruptcy every year, but we know that there are significantly more over-indebted people, but we don't know exactly how many," says Mitterlehner.

Amounts owed are exploding
The debt advice service also sees a need for political action. It is calling for the net replacement rate for unemployment benefit to be raised to 70 percent of the last income, an increase in the minimum subsistence level and better consumer protection, for example in advertising for consumer loans. Mitterlehner also criticized the "explosion of debt amounts". Over-indebtedness is being exacerbated by interest, compound interest, court and collection costs. Debt counseling therefore demands that debts should not be allowed to double. Furthermore, there is a threat of a tightening of insolvency law, Mitterlehner demanded that the possibility of a three-year debt relief should be permanently retained.