Relief for debtors in Germany as existence minimum increased

On 1 July 2013 new rules came into effect in Germany which mean debtors subject to court enforcement orders will not have to pay as much money to their creditors. Debtors will therefore have more money from which to live.

© ferkelraggae-Fotolia

© ferkelraggae-Fotolia

Minimum living standard

The aim of a court enforcement order is to ensure the payment of a judgment debt. There are different kinds of enforcement order; they include, for example, orders under which valuable objects belonging to the debtor are seized and sold, or deductions from wages.

When enforcing a judgment debt, there limits on the amount of money a debtor can be forced to pay. These limits are designed to secure a certain minimum living standard for the debtor, a so-called existence minimum.

The limits are also designed to ensure that a debtor’s property is not reduced to such a level that he would become reliant on social security benefits. Otherwise, a debtor’s debts would become a burden on the state.

The existence minimum amount (Pfändungsfreigrenze), below which a debt cannot be enforced, is dynamic and varies in accordance with changes in living costs.

Increased personal allowance

With a new act passed on 17 January 2013, the German government has recognised the effects of bracket creep and increased the personal allowance.

This means the amount which can be earned before tax is paid has increased from €8,004 to €8,130. The increase is being applied retrospectively to 1 January 2013.

Traditionally, the existence minimum amount tracks changes in the personal allowance threshold. As a result any rise in the personal allowance brings with it an increase in the existence minimum amount.

Therefore, from today, anything earned under the amount of €1,045.08 (an increase from €1,028.89) will remain protected from court enforcement orders.

Attachment of earnings

A further element of the existence minimum amount is that not all employment earnings which exceed the threshold become payable to creditors.

Where a debtor is not supporting another person, the amount payable is restricted to 70%. If, on the other hand, a debtor is supporting another person the amount payable is 50% of the excess.

Further restrictions are also foreseen and are calculated in accordance with the number of persons being supported by the debtor.

Christian Solmecke ist Partner der Kanzlei WILDE BEUGER SOLMECKE und inbesondere in den Bereichen des IT-, des Medien- und des Internetrechts tätig. Darüber hinaus ist er Autor zahlreicher juristischer Fachveröffentlichungen in diesen Bereichen.

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