The municipal debt and insolvency advice is a good barometer for how the people of Munich are doing – especially in the crisis. The lawyer Marc Wichlajew, 50, heads the department in the Office for Social Security. The 40-strong team is trying to help those people who are being suffocated by the crisis – and the right to a decent life.
SZ: Mr. Wichlajew, how has your work changed in recent years – due to the pandemic, inflation, energy crisis? Did you have to advise more customers than usual?
Marc Wichlajew: We had an enormous increase in the self-employed. We felt the lockdown immediately, from hairdressers to yoga studios and hotels, as well as many employees from the trade fair construction sector, from music, gallery owners. People have come to us who didn’t think they had to take this step, including pilots and self-employed people with luxury businesses.
Was it about avoiding bankruptcy or filing for personal bankruptcy?
As well as. We discussed the Corona aid and the entitlement to social benefits. Many did not want to take the step to social assistance.
The lockdown has hit almost everyone.
From the cleaning staff in hotels to the bakeries or small food stalls that have lost school children as customers.
The statistics say, however, that there was a decline in personal bankruptcies during this time. How do you explain that?
Maybe it was because the collection agencies and the bailiffs were also in the home office. And many creditors were tolerant during the crisis, and the tax authorities also generously granted deferrals. And of course there was less opportunity to spend money, for travel, for going out. Many people have probably used the money saved in this way to pay off existing debts.
Social life is now largely back to normal. People can spend money again. Do you notice that in your work?
If you don’t have much money, you certainly don’t throw it away. What we notice is the general inflation. In many households, existence is sewn to the brim. Not much has to happen for this system to collapse. It is enough if advance payments for electricity or heating are suddenly increased. Or if you have to raise money so that the children can go to the school camp, which was not possible for a long time. During the period when schools were closed, many families had to upgrade their technology to enable home schooling.
And now we have inflation and soaring energy prices.
We haven’t had these problems yet. Many people affected by this development are still trying to come to terms, drawing on their reserves if they have any. But we expect a rush, we will have to intensify our advice. The savings rate has fallen significantly in recent times. At a conference of the state working group for debt counseling in Bavaria, it was reported that it is generally expected that the need for counseling will increase massively. Although Munich is a rich city, it is also a very expensive city. In particular, parents with separate parents and families with several children or older people with low pensions will run into difficulties. The latest poverty report showed that there are 98,000 people in debt in Munich. So seven to eight percent of adults in Munich are in debt. This means that they can no longer pay their liabilities from their current income.
Do you expect the federal government’s aid packages that have just been approved to have a positive effect?
The decisive factor in this development will be how it is received by those affected. And whether the increase in social benefits, such as citizen income, can compensate for the increased cost of living due to inflation, which is rather unlikely.
What advice do you have for people who are running out of money so that they save on heating and limit their eating even more than before?
The most important thing is to get help in time. Contact persons are the social community centres. Many people do not even know what the law entitles them to. That they can also get help if they work full-time but the wages are not enough to live on. In addition, it is important to prioritize. First, rent and heating, electricity and water must be secured. You must not fall behind with the payments.
And when the debts are already so high that the welfare houses can no longer help, when it is almost too late, you come into play.
Debt regulation only makes sense if no more new debt arises. It is important for us that the budget is balanced, that you can get by with your income.
Do those affected get help immediately or do they have to expect waiting times?
We have a waiting period of three months for a long-term consultation, but we also have a hotline that can be reached every day and we have short consultations.
And the conditions for personal bankruptcy have improved.
Yes, this procedure has been reduced to three years, so it is now attractive to a larger target group. Germany lagged behind in a European comparison. Three years is a manageable period.
What do you have to do in this period of time to become debt free?
The good thing about insolvency proceedings is that they are not a sign of failure, but an instrument of restructuring. During this time you have an obligation to work, i.e. you have to earn an income, whether as a self-employed person or as an employee. If you don’t have a job, you have an obligation to look for a decent job.
And how exactly does it work then?
The insolvency administrator collects the income during these three years. It goes into a pot from which the procedure is paid for. What is left goes to the creditors. The quotas that creditors receive in personal bankruptcy proceedings range between two and four percent. Anyone who has no attachable income during this time can still obtain the residual debt exemption.