Anyone who is finally debt-free probably wants one thing above all: an unencumbered new beginning. Credit bureaus such as Schufa, however, keep private bankruptcies on file for three years - with considerable disadvantages for those affected.
How long are Schufa and other credit bureaus allowed to store that someone has gone through personal bankruptcy? The Federal Court of Justice (BGH) examines this Tuesday. A person concerned wants to use his lawsuit to force the Schufa to delete the entry. He can therefore not take out a loan, rent a new apartment and not even open a bank account. No judgment is expected for today.
Whom does this concern:
A consumer bankruptcy - or colloquially personal bankruptcy - is intended to give over-indebted people the chance to start over again after a certain period of time free of claims. As long as the proceedings are ongoing, the attachable assets and income will be distributed to the creditors. You can only keep what you need to survive. The advantage: remaining debts are waived at the end.
According to the latest figures from the Federal Statistical Office, more than 78,600 consumer insolvency proceedings were opened in 2021. The credit agency CRIF counted a little more than 109,000 private insolvencies for the same year and in October 2022 expected around 100,000 cases for the year as a whole. According to CRIF, this does not necessarily involve very large sums: the majority of those affected had debts of just under 10,000 euros. The number of over-indebted people is significantly higher - according to the "debtors' atlas" by the Creditreform credit agency, it was almost 5.9 million in 2022.
The duration of the insolvency proceedings was recently gradually reduced from six to three years. The plaintiff, who was in debt after failing to become self-employed, went through the long process between 2013 and 2019. He was then granted the so-called residual debt exemption.
What the court is about:
Residual debt exemptions that have been granted are officially announced on the internet portal bankruptcy announcements.de. The information is available there for six months. Credit agencies such as Schufa access it and store the data for three years.
The question is whether this is still permissible, because a new data protection law has been in force in the European Union since May 2018. In the case, which is now being clarified by the Supreme Court at the Federal Court of Justice, the Schleswig-Holstein Higher Regional Court (OLG) was last of the opinion that the entry should be deleted after six months, as on the authorities' portal. "Because it is obvious that the goal of enabling a debtor (...) to start over again is made more difficult by further publicizing the earlier insolvency."
The European Court of Justice (ECJ) is currently dealing with a very similar case, based on a submission by the Wiesbaden Administrative Court. It would therefore also be conceivable that the top German civil judges in Karlsruhe would first wait for the Luxembourg judgment before making their own decision.
What's at stake for the credit bureaus:
In the third quarter of 2022, Schufa registered around 302,000 people with a residual debt exemption. Only about 41,000 of them had this information less than six months old. For the remaining 261,000, it would have to be deleted in the event of a loss.
According to Schufa, this would also have negative effects for everyone who always pays their bills on time. "By reducing the storage period to six months, highly relevant information for a comprehensive assessment of the creditworthiness of people is no longer necessary," said a spokeswoman on request. "Companies have to accept a higher risk of non-payment, costs due to non-payment must be borne by all customers."
According to an evaluation by the Schufa, people who have already been insolvent have an increased risk of payment disruption in the first three years afterwards. According to the data from the years 2018 to 2021, 15.27 percent of people with residual debt exemption were negative. For all others it was only 4.35 percent.
