Debt disaster

Financing private purchases by taking out loans has been standard practice in Germany for decades. Banks may offer credit without checking a person's credit rating, and stores advertise with slogans like, "Buy now, pay later." And the Internet has made it easier than ever to rack up big costs buying everything from vacations to home furnishings.

It's the bumps in the road, like an unexpected job loss, that highlight the risks debt carries, leading many people each year to wind up with more debt than they can handle. Ralf Jeuschede is a debt adviser in Bonn, Germany, who believes unforeseen crises account for a big part of people's debt problems.

"I'd say around 90 percent are cases of crisis debt. The people involved actually planned very well in terms of their income, and then something happens that wasn't planned, which unleashes a financial disaster," Jeuschede said.

Debt overload

Jeuschede also points out that there is heavy social prejudice when it comes to severe debtors. People tend to assume they planned poorly or spent money frivolously, although such cases are the exceptions, said the debt adviser with 30 years of experience.

Going too far into debt is also not a phenomenon that only affects low-income people.

"It's also very well-situated people, who, for example, couldn't agree about how to handle a jointly purchased property following a divorce," Jeuschede said, adding that they can quickly end up with 100,000 euros of debt or more.

Creditreform's 2012 report

Around 6.6 million people in Germany are considered to have debt levels that are unsustainable. That means they are unable to pay off their debt, even over a long period of time, or with reductions in their living standard.

The figure comes from economic forecaster Creditreform's 2012 report on debt. Michael Bretz is a spokesman for the company and points to the direct relationship between debt and the business cycle and job market.

"Excessive debt is driven by the job market. When it gets worse, and when more people are out of work, then we see a lot more cases of unsustainable debt loads," he said in an inteview with Deutsche Welle.

Cities in focus

But in addition to marketplace factors, there are also structural explanations for people's accumulation of too much debt. Around nine million workers are employed in half-day or other part-time capacities, or in positions with short-term contracts. These individuals fall into financial difficulties much more often than full-time employees.

In cities and other population centers, the per capita incidence of excessive debt is much higher than elsewhere. Rent is higher in cities, of course, but there is also a different mentality and more of a consumer culture, said Michael Bretz.

"There you have the hedonistic type. The kind of person for whom the idea of saving or building a cushion is of no interest. For them, it's more about consumption, even if that means taking on debt to do so," he explained.

Young adults at risk

The tendency to pay for fewer things with cash and put more purchases on credit cards makes it harder for people to keep an overview of their finances. Particularly for young people with little financial experience, the seemingly endless supply of money can represent a big temptation, said Jeuschede.

That's why he calls for schools to include lessons on fiscal responsibility in their curricula. In the city of Essen, debt advisers employed by the state offer a so-called financial driver's license for young people. It imparts knowledge in a playful way.

Women over 50 also a risk group

Michael Bretz points to a second group that lands in debt trouble more often than others - women over the age of 50. Women still earn substantially less than men, meaning their pensions and retirement savings are correspondingly lower. It's often single mothers or divorced women with limited professional experience who wind up too far in debt, Bretz said.

"The bad thing is that in many cases, they simply are never able to get themselves out of debt," Bretz said.

Unfortunately for those at risk, Creditreform predicts that the number of heavily indebted people is set to rise rather than fall in the coming years.