Germany
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Kanzlei Verbracken & Partner
Self-employed and in debt: procedures and options
Self-employment debts often affect the business, household and personal liability together. In Germany, the first distinction is whether you are still self-employed or have stopped trading. This affects which procedure needs to be assessed.
Consumer or regular insolvency?
Currently self-employed people generally use regular insolvency proceedings. Formerly self-employed people may qualify for consumer insolvency under section 304 InsO if they have fewer than 20 creditors and no employment-related claims. Deregistering a business alone is therefore insufficient: activity, creditors and claim types matter.
Can I keep working?
Insolvency does not automatically end self-employment. Continued trading and any release of the activity must be addressed with the insolvency administrator. Consider equipment, contracts and new liabilities. Section 295a InsO is relevant to payments during self-employment; a flat percentage of turnover does not describe that assessment.
Separate personal and business claims
A sole trader’s business debt may also be a personal debt. With a limited company, check whether a personal obligation exists alongside the company liability. Tax debts, social contributions, guarantees and liability notices need separate examination. Discharge rules are not identical for every type of claim.
When to compare European options
High personal debts can justify comparing German and other European routes. This requires a realistic view of your work and centre of interests. German customers, family, premises and actual management are relevant circumstances. A foreign address or a new company does not replace that assessment.
Documents for your next step
Prepare creditors, current business accounts, tax records, contracts and a household budget. Identify former employees and unpaid wages or contributions. This helps establish the correct assessment route before decisions about continuing, closing or relocating the business.
Sources and legal foundations
Sources checked: 14 September 2026
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