A new report finds health-related problems now account for nearly one in five overindebtedness cases in Germany, outpacing unemployment and divorce.
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Germany prides itself on providing a generous welfare state — free universities, universal healthcare and promises of protection from life’s hardest blows are a key part of its contemporary identity, at least on paper.
In practice, an illness, accident or addiction could potentially be enough to tip households into a financial spiral of debt that lasts years, according to a new national report.
The Überschuldungsreport 2025, published by the Institute for Financial Services and the Foundation for Private Over-Indebtedness Prevention, paints a stark picture: health-related problems are now the single biggest driver of overindebtedness in Germany, pushing more people into unpayable debt more than job loss or divorce.
"At 17.6%, illness is the most frequently cited single reason, followed by unemployment or reduced employment at 15.3% and separation or divorce at 9.1%," the report stated.
For years, unemployment was the most common trigger for financial distress. But the 2025 report shows the tables have turned as job loss has become a slightly less decisive indicator of debt, while health-related causes have surged ahead.
The breakdown is sobering, with 13% citing illness directly, 4.4% addiction and 0.3% accidents, all grouped under the umbrella of “illness" in the report.
One debt counsellor interviewed for the study described the pattern as “a slow-burning fuse”.
Health problems often pile costs onto already fragile budgets, with medical co-payments, reduced working hours, and expensive treatments not fully covered by insurance. What begins as a manageable strain can escalate into unpaid bills, debt collection notices and eventually insolvency proceedings.
Private versus public
The German healthcare system is based on the principle of social security and is characterized by the dual system of statutory or public (GKV) and private health insurance (PKV).
88.2% of the population is insured under statutory health insurance and 11.1% is insured under private health insurance.
GKV is primarily financed through income-related contributions and includes a legally defined list of benefits. Insured persons still need to make co-payments when using a service in many areas — for example, 10% of the drug price — with a minimum of five and a maximum of ten euros per medication.
According to the Federal Ministry of Health (BMG), health insurance companies do not automatically notify their insured members once they have reached their limit.
Those affected must generally take action themselves to apply for an exemption from co-payments.
"This circumstance alone can lead to non-use of the hardship regulation for insured members and promote inequality of opportunity. How is a sick person, who is limited in their ability to function and has to bear the burden of illness, supposed to manage this complex process and recognise when they have reached their limit?" the report stated.
Awareness of hardship regulations among those with statutory health insurance is also low. A survey from 2000 showed that 62% of respondents were unaware of the possibility of reimbursement of co-payments and 28% were unaware of the possibility of exemption from co-payments.
Lower-income households face greater challenges
The clients arriving at debt counselling centres bring with them startling financial imbalances. In 2024, the median debt level was €14,908 per person. At the same time, their average household income stood at just €990 per month, meaning that the typical person in counselling owed more than a year’s income.
These figures expose just how fragile the financial foundation is for millions of Germans. When health shocks hit — like a sudden cancer diagnosis or a chronic illness — the small reserves that might cushion the blow simply do not exist.
The report also finds that 14.5% of all debt counselling clients are single parents, nearly 80% of whom women. For these households, a child’s illness or a parent’s own inability to work can prove catastrophic.
60% of people needing debt restructuring live alone, often without a support network.
When help comes too late
Another striking statistic is how long people wait before they seek professional help. According to the report, the median duration of a counselling case was 124 days in 2024, or roughly four months.
Many clients arrive only once their debt has become unmanageable, often after repeated contact from creditors and mounting psychological stress.
Debt is also spread widely. While half of those facing debt owe money to fewer than 10 creditors, almost a quarter (24%) are indebted to more than 20, making restructuring and negotiation with creditors significantly harder.
