People who have gone through personal bankruptcy no longer have to fear that this information will be stored by the Schufa for years. Under the pressure of ongoing legal proceedings, the credit agency announced on Tuesday that it would reduce the storage period for the entries from 36 to 6 months with immediate effect. According to Schufa, around 250,000 people affected benefit from this.
The Federal Working Group for Debt Counseling spoke of a step in the right direction that was long overdue. “All other credit reporting agencies should now follow the example of Schufa,” demanded managing director Ines Moers. The shortening of the storage periods makes it easier for those affected to restart.
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.
Saved for three years
This process is called residual debt discharge in technical jargon. Residual debt exemptions that have been granted will be officially announced on the internet portal www.insolvenzsendungen.de. The information is available to everyone there for six months.
Credit bureaus such as the Schufa access it and store the data – so far uniformly for three years. The courts are debating whether this is still permissible. Because since May 2018 a new data protection law has been in force in the European Union.
At the European Court of Justice (ECJ), the responsible attorney general in two Schufa cases from Germany was very critical of the practice in mid-March: The discharge of residual debt should enable those affected to participate in economic life again – but this is thwarted by the long storage . The judgment of the ECJ judges could also turn out differently. However, they often agree with the Advocate General’s assessment.
Against this background, the Federal Court of Justice (BGH) temporarily suspended the proceedings in a model case from Schleswig-Holstein that had been heard in Karlsruhe in February.
lawsuit after bankruptcy
A man who had gone through insolvency proceedings for his private assets after a failed self-employment and wanted the Schufa to delete this information about him had complained. He can therefore not take out a loan, rent a new apartment and not even open a bank account.
A whole series of similar proceedings are pending at the BGH, as the presiding judge Stephan Seiters said at the announcement. The fundamental concerns of the ECJ Advocate General had encouraged his Senate that it made more sense to first wait for the Luxembourg decision before making a judgment of one’s own.
Immediately afterwards, the Schufa drew the consequences: “We will delete all entries for a residual debt exemption that have been stored for more than six months as of the key date March 28, 2023, as well as all associated debts after six months retrospectively to this date,” means it in a message. “This deletion takes place automatically, consumers do not have to worry about it.” The technical implementation will take about four weeks.
Does the risk increase?
At the hearing in February, the Schufa explained that the shortened storage period meant that “highly relevant information for a comprehensive assessment of the creditworthiness of people” was no longer available. The company has now announced that there are “no fundamental effects on the way the score is calculated and the quality of the procedure”. “Nevertheless, the individual payment default risk of the requesting company increases, since the creditworthiness of a customer cannot be fully assessed.” The “individual personal risk of renewed over-indebtedness” is also increasing.
According to the latest figures from the Federal Statistical Office, around 78,600 consumer insolvency proceedings were opened in 2021. The credit agency Crif counted more than 96,200 private insolvencies in 2022. According to Crif, it is not necessarily about very large sums: the majority of those affected have debts of just under 10,000 euros, the average amount is currently less than 18,000 euros.
