
The creditor protection organization KSV1870 has recently discovered the reasons behind Austria’s growing number of personal bankruptcies. Their latest report highlights that individuals overestimating their financial abilities is the most common cause of these financial failures.
In 2023, debt settlement procedures increased by 8%, with 8,845 cases opened compared to the previous year. KSV expert Karlheinz Götze attributes this rise to a combination of high living costs and persistent inflation, which have placed significant financial pressure on Austrian households.
According to the report, 28.6% of personal bankruptcies in 2023 were due to people spending beyond their means, slightly up from 28.1% in 2022. This issue is particularly prevalent among young people. For instance, 34% of bankruptcies among those under 25 were due to overspending, and 31% among those aged 25 to 40. Götze expressed concern over this trend, especially as it reflects a lack of financial understanding among younger Austrians.
KSV advocates for better financial education in school curricula to help young people manage their money more effectively. The organization is already running several programs aimed at improving financial literacy.
Other common causes of personal bankruptcies include income reduction (17.8%), life crises (12.3%), personal problems (8.6%), and family-related burdens (6.4%). The report also notes that while many feared the COVID-19 pandemic would lead to more bankruptcies, this has not been the case. The financial aftereffects of the pandemic played a minimal role in 2023, accounting for just 0.9% of cases.
Due to concerns that current bankruptcy laws may be too lenient, KSV is calling for changes. Individuals can be discharged from their debts in as little as three years, down from the previous five years. KSV argues that this shorter period makes it too easy for people to escape their financial responsibilities, potentially leading to more reckless financial behavior.
Götze emphasized that if the three-year discharge period remains in place beyond its scheduled review in 2026, it could encourage more people to take on debt without fully considering the consequences. This, in turn, could further increase the number of bankruptcies due to personal mismanagement of finances.