It can happen to anyone: outside circumstances force you to file for bankruptcy. First there are a few reminders, then collection notices follow, and at some point it's no longer manageable. The debts literally crush you. To have a basis for the future again, often only one thing remains: filing for bankruptcy. A hard road, but at the same time a chance at a future.

Bankruptcy comes with considerable restrictions. The amount you are allowed to keep is rather small.

In Germany, the length of insolvency proceedings changed in 2014. The legislature created new options to shorten the relatively long period of six years if the circumstances allow it for the debtor. The hurdles are high. Since the insolvency law reform there are now three different terms:

  • 3 years
  • 5 years
  • 6 years

This is linked to the so-called good conduct period (Wohlverhaltensphase). A discharge of remaining debts is possible. But as a rule, personal insolvency still lasts six years. Only in truly exceptional cases can the time be shortened to three or five years.

During the good conduct period, no new debts may be incurred. This period begins right at the time of the insolvency filing.


During the good conduct period, no new debts may be incurred. This period begins right at the time of the insolvency filing.

Bankruptcy duration

Shortening bankruptcy to three years

This shortened period can apply if the debtor repays 35 percent of their total debts within three years, plus the costs of the insolvency proceedings incurred up to that point. It's an opportunity, but 35 percent can be a sum that is hard to raise. Still, sometimes private options turn up or a new business opportunity appears, so that the debtor rises like a phoenix from the ashes and can sort out their life anew. The length of the proceedings is then cut from six years to three.

Many people have this shortened three-year period in their heads as a hurdle that is fairly easy to clear. But reality paints a different picture. Someone who ends up in bankruptcy usually doesn't have much in the way of reserves in their account.

If the duration of the bankruptcy is to be shortened, it is important that the debtor knows how much of their assets or garnishable wages can be counted. Non-garnishable income can be contributed voluntarily, but only if the rights of others are not affected. This usually concerns child support claims.

What about a five-year bankruptcy?

Shortening the bankruptcy to five years is possible if the debtor is able, within the good conduct period, to pay off the accrued costs of the insolvency proceedings. But this is a big hurdle, because the costs of insolvency proceedings are high. We are not talking about three-digit amounts here. It can quickly run into the thousands.