More and more people in Germany are experiencing financial difficulties. Data from Schufa’s new risk and credit compass indicates that in late 2025, 8.1 percent of adults had at least one negative entry, up from 7.9 percent the previous year. This rise in defaults affects an increasingly large portion of the population, though Schufa chief Tanja Birkholz insists there is no “wave of bankruptcies” in Germany. Notably, roughly 88,000 people filed for private insolvency in 2025, a number not seen since 2021.
According to Schufa data covering all 400 districts and independent cities, the Rust Belt region (Ruhrgebiet) is the hardest hit. In Duisburg, nearly one in five adults (19.9 percent) had a negative entry, matching the highest rate nationwide, followed by Gelsenkirchen (19.4 percent). Conversely, the rate was lowest in the Eichstätt district in Upper Bavaria, at 3.6 percent.
The market for installment loans, particularly smaller loans under 1,000 Euros-which include “buy now, pay later” offers-is growing significantly. Schufa reports that 7.5 million such contracts were signed in 2025, an 11 percent increase from the prior year. Furthermore, 74,000 individuals were simultaneously repaying more than ten installment loans, a figure 28 times higher than five years ago. While Birkholz initially views these small loans as “practical financing options,” she cautions about the growing risk of consumers losing control or acquiring liabilities they cannot sustain long-term.
Consumer protection organizations have been critical of lenders. Claudio Zeitz-Brandmeyer of the Federal Association of Consumer Advice stated that providers, especially Klarna and PayPal, have not adequately ensured that their customers can afford the financing.
New stricter regulations will take effect on November 20th, requiring providers to assess the creditworthiness of customers even for small loans and to refer clients facing payment issues to debt counseling services. However, the capacity of these counseling agencies is already stretched to its limit, warns Ines Moers from the Federal Working Group for Debt Counseling. She notes that only about one in ten people facing insolvency receive counseling, and waiting periods of several months are common.
