What is a foreclosure?

A foreclosure is a legal procedure that allows a creditor to access the assets of a debtor. The aim is to collect outstanding debts that have not been paid voluntarily.

To do this, certain assets are “seized,” meaning they are legally frozen so they can be used to settle the claim. From the moment of foreclosure, the debtor is no longer allowed to use, sell, or give away the affected assets.

Foreclosures are part of what is known as enforcement proceedings. This means the state assists the creditor in collecting their money—but only under specific legal conditions. Foreclosure is one of the most common forms of enforcement in Germany.

Who is authorized to carry out a foreclosure?

A foreclosure may only be carried out by individuals or authorities who are legally authorized to do so. In most cases, this is a bailiff appointed directly by the relevant enforcement court. The bailiff visits the debtor on-site, reviews the assets that can be seized, and initiates the appropriate measures.

In the case of monetary claims—such as those involving bank accounts or wages—foreclosure is typically executed via written notification to third parties, such as the bank or employer. Even in these cases, action may only be taken following a court application.

In special cases, public authorities are permitted to carry out foreclosures themselves—such as tax offices for unpaid taxes or municipalities for outstanding fines. These authorities act within their sovereign powers and do not require a separate court order.

Who is affected by a foreclosure?

A foreclosure primarily affects the debtor. This is the person or business that owes the outstanding debt. Once foreclosure begins, the debtor loses the right to freely dispose of their assets—at least to the extent that they have been seized.

The creditor is also affected, as they are the applicant seeking to recover their money. Foreclosure is one of the tools available to them when voluntary payments have failed.

In addition, third parties may be involved—such as employers, banks, or landlords who manage or disburse the debtor’s assets. These parties are then legally obligated to comply with the foreclosure order and transfer the funds directly to the creditor or the designated authority.

What can be foreclosed?

In principle, almost anything that has economic value and belongs to or is owed to the debtor can be foreclosed. A distinction is made between movable and immovable property, as well as between current and future entitlements.

Common assets subject to foreclosure include:

Bank balances (e.g. checking or savings accounts)
Wages and salaries, sometimes pensions or social benefits
Tangible items such as vehicles, electronics, or valuable jewelry
Receivables, such as claims against tenants, customers, or business partners
Assets held by third parties, e.g. security deposits to be refunded

However, there are clear limits: certain items are exempt from foreclosure, including the subsistence minimum, basic household appliances, or tools essential for work. Wage garnishments also follow legally defined exemption thresholds.

Where does a foreclosure take place?

The location of a foreclosure depends on the type of asset being seized. There is no single place where all foreclosures occur—the location is determined by the nature of the asset.

Wage garnishment: Takes place at the employer’s office. The employer receives a foreclosure and transfer order and must forward the seizable portion of income directly to the creditor.
Account foreclosure: Occurs at the debtor’s bank or financial institution. The bank freezes the account up to the amount owed, within legal limits.
Foreclosure of physical assets: Usually takes place in the debtor’s home, property, or office. The bailiff visits in person and records the items that may be seized.
Foreclosure of receivables: The location is defined by the third-party debtor—for example, a customer who owes money to the debtor or a tenant who must pay rent.

The process is always tied to the location where the foreclosable asset is actually held or managed.

When can a foreclosure be carried out?

A foreclosure cannot be executed “on suspicion” alone. Specific legal prerequisites must be met before enforcement proceedings—and therefore foreclosure—can begin at all.

First, the creditor must possess an enforceable title. This is a document that officially confirms the existence of a debt. Examples include:

A court judgment
An enforcement notice issued in the judicial dunning process
A notarized document with an enforcement clause

Second, the creditor must prove that the debtor was properly served with the claim. The debtor must have been made aware of the debt.

Third, the creditor must submit an application for enforcement proceedings—either to the enforcement court (for accounts, wages, etc.) or to the bailiff’s office (for physical goods). Only after verifying the requirements can the foreclosure move forward.

How does a foreclosure proceed?

The foreclosure process begins with the creditor filing an application. Depending on the type of foreclosure, this application is submitted either to the enforcement court or to the bailiff. The relevant authority then checks whether all legal conditions have been met.

The exact procedure depends on which assets are being foreclosed:

In the case of account foreclosure, the bank is informed of the order. It freezes the account up to the claim amount, while observing any applicable exemptions.
In wage garnishment, the employer is instructed to withhold the garnishable portion of wages and transfer it directly to the creditor.
For physical asset foreclosures, the bailiff visits the debtor’s home or office, inspects the premises, and records seizable items in a written inventory. These items may either be collected immediately or released under a so-called “replacement foreclosure” arrangement.

The debtor is informed of every foreclosure. From that point onward, the affected assets are legally frozen. They may not be sold, transferred, or used as long as the foreclosure remains in effect.