How to file for insolvency in Germany
A practical guide to filing for insolvency for consumers and self-employed individuals
Debts that keep piling up. Reminder letters left unopened. A phone you no longer want to answer. When your financial situation seems hopeless, filing for insolvency is often not the end – but the first step back towards a debt-free life.
Filing for insolvency in Germany means submitting a formal application to the competent insolvency court to open insolvency proceedings under German law (Insolvenzordnung – InsO). But how do you file for insolvency in Germany? Who is entitled to file, which procedure is the right one – and what happens afterwards?
To file for insolvency in Germany , it is important to understand the course of insolvency proceedings, the requirements for consumer insolvency or standard insolvency proceedings, and the documents required by the insolvency court. This article explains the entire process of filing an application to open insolvency proceedings in Germany – in a practical, comprehensible manner, drawing on the experience of hundreds of insolvency proceedings handled by our firm AHS Rechtsanwälte . It is specifically aimed at private individuals, i.e. consumers and (formerly) self-employed persons, who wish to file for insolvency in Germany and are seeking a fresh financial start.
General information on filing for insolvency in Germany
What is an insolvency application in Germany?
An insolvency application is a formal request to the competent insolvency court to open insolvency proceedings over your assets. The legal basis is the German Insolvency Code (Insolvenzordnung – InsO) , in particular §§ 13 ff. InsO .
The application initiates legally regulated proceedings, at the end of which a discharge of residual debt (debt relief) may be granted.
Consumer Insolvency or Standard Insolvency – which procedure applies to me?
Before you file for insolvency Germany, you must determine which procedure fits your status under the German Insolvency Code (InsO):
1. Consumer Insolvency ( § 304 InsO ) – this applies to private individuals who are not currently self-employed. Formerly self-employed persons also fall under this if their affairs are "simple" (fewer than 20 creditors) and no debts exist from former employment relationships (e.g., unpaid wages or social security).
2. Standard Insolvency ( § 11 InsO ) – this is the path for active freelancers and entrepreneurs. A significant difference: unlike consumer cases, a mandatory out-of-court settlement attempt is not a legal prerequisite to file your insolvency application Germany.
The distinction between consumer insolvency and standard insolvency is particularly complex for former self-employed individuals. As this classification determines whether an out-of-court settlement attempt is mandatory, you should seek legal advice at an early stage.
When should you file for insolvency in Germany?
An application is only admissible if a legally recognized reason for insolvency exists:
1. Payment Incapacity (Zahlungsunfähigkeit): According to Section 17 InsO , a debtor is unable to pay if they cannot meet matured payment obligations.
2. Imminent Illiquidity (Drohende Zahlungsunfähigkeit) : Under Section 18 InsO , this exists if the debtor will likely not be able to meet existing payment obligations as they fall due. When to file for insolvency on this ground is often a strategic choice: only the debtor can file based on imminent illiquidity, giving them more control over the wind-down.
Typical signs that filing for insolvency is advisable:
• Your bank account is permanently overdrawn or has already been attached.
• Your wages are being garnished.
• You receive enforcement orders or default notices.
• A bailiff has announced action.
• You are taking on new debts to pay old ones.
• You can no longer regulary pay rent, electricity, or health insurance.
• You have lost track of your liabilities.
Many people who come to us say: “I should have come much sooner.” Nobody needs to feel ashamed about debts – they can affect anyone, whether through illness, separation, job loss, or a failed self-employment. Insolvency proceedings are not a stigma but a path to a fresh start deliberately created by the legislator. Understanding how insolvency proceedings work takes away the fear and enables the development of a new perspective on life. The most difficult step is the first one: picking up the phone and making an appointment for a consultation.
Filing for Insolvency in Germany: Step-by-Step Guide
Step 1: Assessment – Get an overview of your financial situation
Before you file for insolvency in Germany, you should first fully assess your financial situation, including:
• Complete list of all creditors (including debts owed to relatives/friends)
• Current and future liabilities
• Income & assets zusammenstellen (salary, savings, social benefits, vehicles, real estate)
• Ongoing contracts (rental agreements, mobile phone, insurance policies, subscriptions)
Step 2: Seek professional advice
The Insolvency law in Germany is complex. Making wrong decisions at the outset can jeopardize the success of the entire proceedings. Seek advice early — either from a recognized debt counseling center or a lawyer specializing in insolvency law. In cases of acute existential threat or ongoing enforcement measures, it is advisable to consult a specialist lawyer for insolvency law , as this is usually the faster and often the only viable option.
• Which type of proceedings applies to you (consumer or standard insolvency)
• Whether alternatives to filing for insolvency exist (e.g., out-of-court settlements, installment plans, or deferrals)
• Which court has jurisdiction over your case
• Which documents and records you will require
• How your seizable assets are to be valued
• Whether a deferral of procedural costs is an option
Step 3: Out-of-court settlement attempt
For consumer cases, section 305 (1) No. 1 InsO mandatorily requires a genuine out-of-court settlement attempt with creditors before the application is filed. This involves a debt settlement plan with a concrete payment proposal, , which is sent to all creditors with a reasonable deadline for comment, as well as documentation of the creditors’ response.
Even if you fall under standard insolvency proceedings – for example as a formerly self-employed person with many creditors – a prior settlement attempt can be advisable, even though it is not legally required in that case.
Even though you are permitted to undertake the out-of-court settlement attempt yourself (there is no obligation to engage a lawyer for this purpose), I strongly advise against it. The requirements for a genuine settlement attempt are stringent and must be evidenced together with the insolvency application. A layperson is quickly overwhelmed by this.
Step 4: Filing the insolvency application
The insolvency application in consumer insolvency proceedings must be submitted using the official forms (pursuant to the Consumer Insolvency Form Regulation – VbrInsVV ) to the competent local court (Amtsgericht) acting as the insolvency court at your place of residence ( § 2 InsO ).
The application to open insolvency proceedings is filed together with the application for discharge of residual debt ( § 287 InsO ). It consists of the following key components:
• Evidence of the failed out-of-court settlement.
• Complete statement of your assets, income, and expenditure.
• List of all creditors including the amount and legal basis of each claim.
• Mandatory declaration of assignment for the probationary period (§ 287 (2) InsO).
Step 5: Court-supervised debt settlement procedure (consumer insolvency only)
After receipt of your insolvency application, the insolvency court may, pursuant to § 306 InsO , first undertake a court-supervised settlement attempt . Your debt settlement plan is served on the creditors. There are three possible outcomes:
1. All creditors agree – the debt settlement plan is accepted, and insolvency proceedings become unnecessary.
2. Individual creditors reject the plan – the court may, under certain conditions pursuant to § 309 InsO ersetzen, sodass der Plan dennoch wirksam wird.
3. The plan ultimately fails – the court opens simplified insolvency proceedings.
Our firm accompanies you closely from the initial consultation through the thicket of iinsolvency law. We guide you, carry out the out-of-court debt settlement, prepare your insolvency application, and clarify all open questions, including those relating to garnishment protection accounts (P-Konto) and attachments.
Step 6: Opening of the insolvency proceeding
If no out-of-court settlement can be reached, the court will assess whether the legal requirements for opening proceedings are met. When filing for insolvency, the central question remains: Is there a valid reason for the opening of the case (specifically insolvency/illiquidity), and are the procedural costs covered?
A major concern when filing for insolvency is the cost of the legal process itself. If you do not possess significant assets – as is the case for most individuals – you can apply for a deferral of procedural costs pursuant to Section 4a of the German Insolvency Code (InsO) . Under this provision, the court defers all legal costs until the discharge of residual debt is granted. These costs can subsequently be paid in installments. If you remain permanently unable to pay due to your economic situation, the costs may be waived entirely at the end of the period.
Once the court officially opens the case, the following legal consequences take effect:
• Appointment of a representative: An insolvency administrator (or a trustee in consumer insolvency proceedings) is appointed to oversee the process.
• Protection from Creditors: Individual enforcement actions (such as wage garnishment or bailiff visits) are strictly prohibited ( § 89 InsO ).
• Creditor filing period: The formal period begins for creditors to register their claims with the trustee.
• Asset Liquidation: Your seizable assets are identified, recorded, and liquidated by the trustee for the benefit of the creditors.
Completing the process after filing for insolvency in Germany
The actual insolvency proceedings are followed by the good conduct period . Since the 2020 legal reform, the timeframe for achieving a discharge of residual debt is generally only three years from the opening of the case for anyone filing for insolvency ( § 287 (2) InsO ).
Throughout this period, you must fulfill legal obligations, such as maintaining appropriate employment, surrendering seizable income, and reporting changes of address or job. If these duties are met, the court grants the discharge of residual debt . This waives your remaining debts – with few exceptions, such as claims arising from intentional torts.
Special considerations for (formerly) self-employed individuals
• Type of Insolvency proceeding: Formerly self-employed individuals may qualify for consumer insolvency if their financial affairs are straightforward (fewer than 20 creditors and no liabilities from employment relationships). Otherwise, standard insolvency proceedings apply.
• Tax Liabilities: Debts to tax authorities (VAT, income tax) are treated like other claims and can be covered by the residual debt discharge, unless they arise from intentional tax evasion.
• Right to self-employment: The insolvency proceedings Germany do not necessarily end your business. You have a legal right to remain self-employed, subject to coordination with the insolvency administrator.
Checklist: Your Path to filing for insolvency in Germany
If you are considering filing for insolvency, I recommend the following approach:
1. Gather all documents – default notices, bank statements, contracts, tax assessments, bailiff records
2. List all creditors and debts – as completely as possible
3. Arrange a consultation – with a debt counselling service or a specialist lawyer for insolvency law
4. Do not incur any new debts – in particular, no new loans and no instalment purchases
5. Set up a garnishment protection account (P-Konto) – if not already done, to protect your subsistence minimum
6. Stay calm – insolvency proceedings are not an emergency but an orderly process. However: do not wait too long
Conclusion: The insolvency application as a fresh start
The insolvency application is not an admission of failure – it is a legal instrument created to find a way out of an economically hopeless situation. After three years of the good-conduct period, the result is a discharge of residual debt: a genuine, complete fresh start without old burdens.
The key is: Take action! The longer you wait, the larger the mountain of debt becomes, the more burdensome the situation – and the more difficult the way back. The hardest step is the first one. But it is worth it.
AHS Rechtsanwälte will be happy to advise you confidentially and competently in your insolvency proceedings – from the initial assessment through to the discharge of residual debt.
