Debt Advice: A Lifeline for People in Financial Distress?


This page shows results from four social science studies, the the Effectiveness of debt counseling have examined, compared. To assess whether debt counseling is a lifeline for people in financial distress, we assess the effectiveness of debt counseling in four dimensions opposite to. The effectiveness of debt counseling is measured in 4 dimensions: economic, financial Effectiveness, psychosocial Effectiveness, effectiveness through important key competence, and Monetization of the consequences. The evaluation of the studies shows a positive picture overall German debt counseling: They are often a success program. Because theirs success rate respectively. effectiveness is high, especially those that are very important for those affected psychosocial dimension.

results for effectiveness from debt counseling

In this post, the effectiveness from non-profit debt counseling service in Germany based on several empirical evaluation studies and surveys. In doing so, both economically financial improvements, changes of psychosocial situation, changes in structure important key competencies as well as the Monetization of the consequences considered.

The dimensions economic financial improvement, psychosocial improvement and Development of key competences refer to an improved situation of the clients self.

the dimension Monetization of the consequences refers to savings by the state due to effective debt counseling. A better condition of the clients can lead to debtors finding secure jobs after being unemployed. As a result, fewer state transfers are required. Data from a total of 1494 people was used to compare the data.

studyEconomically financial improvement through debt counselingPsychosocial improvement through debt counselingDevelopment of key competencesMonetization of the consequences
Kuhleman et al: “Effectiveness of debt counseling
in Germany" [2]

T1/ Before: Beginning of the consultation

T2/ After: After 8 months of consultation

1021 clients
57 counseling centers
secured work ⬆️
Increase of 39 %

no employment ⬆️
decrease by
a good 10 percent

wage change ⬆️ Increase of 8.34 %

job loss ⬆️
Reducing an impending situation by more than 60 %

Impediment to placement for non-employed persons ⬆️
Decrease by about 40 %

Subjective perception of financial situation ⬆️
41.6 % feel improvement

Subjective perception of professional situation ⬆️
22.6 % feel improvement
Mood / basic mood ⬆️
significant improvements

self-consciousness ⬆️
significant increase

wellbeing ⬆️
significant increase

social environment ⬆️
Better integration with family and friends

improvement of physical condition ⬆️

attitude to life ⬆️
positive change visible

life quality ⬆️
improvement visible.
Note: Despite the improvement, the quality of life does not reach that of the non-indebted comparison group.
Overview Debt⬆️
before: "medium"
afterwards: "good"
State transfer payments (ALG I, ALG II, housing benefit, basic security) Reduction of €372 per client. A total of €380,000
Hamburger et al "Effectiveness of debtor counseling" [5]

T1/ Before: Beginning of the consultation

T2/ After: After 12 months of consultation

239 clients of a Cologne counseling center included.
School education ⬆️
Before: 7.5 %;
After 10.2 %

no employment ⬆️
Before: 49.6%;
After 39.2 %

secured work ⬆️
Before: 27.7 %;
After 46 %

not explicitly collectednot explicitly collectednot explicitly collected
Faezeh Samari: "Effects of debt counseling by the Diakonisches Werk Hamburg from the point of view of those seeking advice" 2012 [6]

T1/ Before: Beginning of the consultation

T2/ After: After 15 months of consultation

234 clients

Fewer housing problems ⬆️
Before: 37.4 %;
After: 22 %

Threat of rent debts ⬆️
Before: 8.2 %
After: 2 %

On-time rent payment ⬆️
Before: 87 %
After: 96 %

Unemployed ⬇️
Before: 49.4 %;
After 51.6 %

work ⬆️
Before: 17.3 %;
After 18.3 %

Living on disposable income ⬆️
Before: 49%
After: 64 %
General loads ⬆️
before: 93.4 %
after: 87 %

health burdens ⬆️
50 % report fewer health problems
ignorance of income ⬆️
Before: 14 %
After: 6 %

ignorance of debt ⬆️
Before: 30 %
After: 2.5 %

Know what to do in the event of an account garnishment ⬆️
Before: 35.5 %
After: 61.1 %

Knowledge of garnishment exemption limits ⬆️
Before: 33 %
After: 82.2 %

not explicitly collected
Survey as part of the quality process in debt counseling in Schleswig-Holstein (2016-2017). [4]

T1/ Before: Beginning of the consultation

T2/ After: After 6 months of consultation

Clients of counseling centers in Schleswig Holstein.

No scientific study

Improvement of the overall financial situation ⬆️
85 % of participants

Threat of rent debts ⬆️
92 % of those surveyed manage fixed costs independently
improvement in general condition
86 % indicate improved condition ⬆️
not explicitly collectednot explicitly collected

evaluation of the results

The data shows that the debt counseling services, despite the short observation periods, are between 6 and 15 months effective and measurable results achieve.

Economic and financial dimension

In the economic and financial Dimension, an improvement was found in all studies. Through Improvements in acute problems such as unpunctual rent payments (decrease by 76 % from 8.2 % to 2 % at [6]) and housing problems (decrease by 41 % from 37.4 % to 22 % at [6]) was in many cases an alleviation of the financial situation possible for those affected. The employment rate, which increased by 10 % in the study by Kuhleman et al [2], also shows the success of debt counseling. The increase in income totaled around half a million euros. As a result, more than €380,000 in follow-up costs could be saved for government agencies. Nevertheless, the economic financial situation in all studies unsatisfactory. The unemployment rate is 45.5 % at Kuhleman et al [2], 51.6 % at Samari [6] and 39.6 % at Hamburger et al [5] about three to four times as high as the population average. The complex problems of integrating ALG II recipients into the labor market are clearly evident here.

The results of the survey as part of the quality process in debt counseling in Schleswig-Holstein [4] show a somewhat better picture of the effectiveness of debt counseling. In 83 % of the cases, the identification of weak points led to the clients getting along better with their money again. After the consultation, 89 % persons regained an overview of the finances. A total of 92 % respondents regularly pay their fixed costs such as rent again after consultation.

psychosocial dimension

The study situation also shows positive changes during the debt counseling with the psychosocial aspects. Kuhleman et al found significant improvements in well-being and self-esteem. In the study by Diakonie Hamburg, after 15 months of counselling, only half of the clients reported health problems. In the survey conducted as part of the quality process in debt counseling in Schleswig-Holstein, as many as 86 % clients stated that their condition was improved after debt counseling.

The results of the survey as part of the quality process in debt counseling in Schleswig-Holstein [4] also show a somewhat better picture of the success rate of debt counseling with regard to the psychosocial situation. The majority of respondents (86 %) stated that their financial situation had improved as a result of the debt counseling.

key competences of the clients

Of the Development of key competences could also be improved by the debt counseling service. Samari was able to identify major improvements in knowledge about appropriate behavior in the event of an account seizure at the debt counseling center of the Diakonisches Werk Hamburg [6]. After 15 months of advice, 61 % assumed that they would know what to do if an account was to be seized. Before the deliberations, only 35.5 % affirmed the statement. The same study also shows that clients know the seizure exemption limits much more frequently. At the beginning of the consultation, only 33 % clients were aware of the garnishment exemption limits. Afterwards there were 82.2 % of the clients.

The examples of more factual knowledge about account garnishment and garnishment exemption limits show that debt counseling prepares clients for personal bankruptcy.

Monetization of the consequences

the Monetization of the consequences have been insufficiently examined by studies. Only Kuhleman et al state that state transfer payments such as ALG I, ALG II, housing benefit and basic security have led to a reduction in state expenditure of €372 per client. During the study period of 8 months, government funds totaling €380,000 could be saved. The costs of the consultation were not offset here. However, no significant savings are to be expected from this offsetting.

The study situation shows that debt counseling is very strong both in building up key competencies among clients and in initiating improvements on the psychosocial level. Good improvements could also be found in the economic and financial situation in several studies. Overall, debt counseling was often able to alleviate the clients' acute problems that might even have led to homelessness. These include, for example, housing problems and unpunctual rent payments.

Nevertheless, the quality of life of the debtors lags behind the non-indebted comparison group at Kuhlemann. The unemployment rate at time T2 is 45.5 % at Kuhleman et al [2], 51.6 % at Samari [6] and 39.6 % at Hamburger et al [5] about three to four times as high as the population average .

Debt counseling: State help with financial decisions in emergencies

Over-indebtedness among low-income people is a social focal point. Despite increasing prosperity, many households are in need due to over-indebtedness. In this case, help is available from Country: For the debt advice the municipalities are responsible. The aim of the stately debt counseling service is to help the client make informed decisions about your finances. the counseling centers encourage it consumer desires to be critically examined with regard to disposable income.

Also Aim pursues the goal that more people make informed decisions about your finances. Find on the Home page find out which services are offered for this. However, for personal advice, especially debt advice, you should contact the government agencies turn.

causes of debt

The causes of debt are manifold:

  • Unforeseen events how illness, unemployment, divorce or currently due corona. What all events have in common is the reduction in income, which means that there is no longer sufficient disposable income.
  • Inability to renounce on consumer goods that are not urgently needed
  • Overestimation of future performancet repay loans taken out

The result is that the disposable income is no longer sufficient to pay the installments that are due. If further loans are taken out to increase disposable income, a debt spiral ensues.

"I got help and learned a lot about debt and the job center."

Participants in debt counseling in Hamburg

Current events often make the situation acute. Which includes Account garnishment, wage garnishment, job loss or separation. After such events, many of those affected only find their way to debt counseling after being referred by a third party [1,2].

consequences of debt

Debt leads to a lot of people getting into debt existential fear. This is often associated with a general fear of the future. A hopelessness from the situation is through the missing overview of the inputs and outputs aggravated. In addition, there is one for many bad health condition [1,2].

Inefficiency due to high inhibition thresholds

the inhibitionsThe likelihood of seeking advice early is still very high, however, and often prevents quick help. Numerous interviewees stated that they only went to a counseling center late, out of fear and shame. Other reasons were illnesses such as depression or drug addiction, the hope of being able to do it alone, or ignorance or incorrect information about the work of the debt counseling service.

Summary of the overindebtedness situation in Germany

In general, an aggravation of the over-indebtedness situation has been confirmed in recent years. The average debt rose from around €26,000 in 2001 to over €40,000 in 2007 [2]. An increase of over 50 %. This shows the astonishing situation: While almost half of the people who consult debt counseling live on ALG 2, the average debt is over €40,000.

According to the Federal Government's 6th Poverty and Wealth Report [7], the percentage and number of over-indebted people in Germany rose from 5.1 to 6.1 percent in 2006. This corresponded to 3.4 and 4.2 million people respectively. People who are permanently unable to meet their payment obligations are considered over-indebted.

How debt counseling can help

In the situation of over-indebtedness described, it is obvious that a large part of the work of the debt counseling service consists of offering psychosocial support for those seeking help. Therefore dominate in debt counseling behavioral measures. The complex and multifaceted causes of over-indebtedness such as unemployment, separation and divorce, illness and disability, consumer behavior or failed self-employment can hardly be influenced by debt counseling [3].

Risk Factors of Debt

Significant risk factors for over-indebtedness identified [2,5]:

  • single parent
  • Receipt of ALG II
  • low educational qualifications
  • lack of professional qualifications
  • middle age
  • migration background

A study [2] comments on single parents “The proportion of single parents is more than 21.8 % in the sample 3 times as high as in the general population (6.5 %).” While at the time the study was conducted in Germany 9.8 % were drawing ALG II, the proportion of ALG II recipients who went to debt counseling and took part in the study was 44.8 % four and a half times so tall.


[1] Expertise commissioned by the BMFSFJ, study by the University of Mainz on "Overindebtedness, Health and Social Networks" Prof. Dr. Eva Münster, Prof. Dr. med. Dipl.-Ing, Stephan Metzel Link

[2] Expertise on behalf of the BMFSFJ, created by KWuP organization developer, Gummersbach Dr. Astrid Kuhlemann, Dr. Ulrich Walbruehl link

[3] Black, Uwe: Sustainable social policy using the example of debt counseling. Part 2. In: Intelligence Service of the German Association for Public and Private Welfare,
June 2008 (b), pp. 259-265

[4] Survey as part of the quality process in debt counseling in Schleswig-Holstein from April 1, 2016 to March 31, 2017 link

[5] Hamburger, F. et al Effectiveness of debt counseling. Expertise on behalf of the Federal Ministry for Family Affairs, Senior Citizens, Women and Youth. 2004 link

[6] Faezeh Samari: "Effects of debt counseling by Diakonisches Werk Hamburg from the perspective of those seeking advice". (No longer available online)

[7] Over-indebtedness in the context of the Federal Government’s 6th Poverty and Wealth Report (2019) link

How useful was this post?

Click on a star to rate it!

Average rating 5 / 5. Vote count: 1

No votes so far! Be the first to rate this post.

We are sorry that this post was not useful for you!

Let us improve this post!

Tell us how we can improve this post?

Leave a Comment