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I'm a non-European and I recently finished my master's degree in Germany and started a job. I needed to relocate to a different city for the job and I did.

I currently have a Fiktionsbescheinigung and it was getting close to its expiry date. So I went to my local foreigner's office and asked for an appointment to apply for a work residency since I have a job now. I was told that my file was still at my old city and that they can't do anything until then. That was last month and I was told I should go again when the residency is closer to its expiry date.

The expiry date is in two days so I went again today (that has to be close enough) and was told the same thing: No file, nothing we can do about it. I asked if there is anything I could do and was told no. I asked if I can get a piece of paper stating my current status of being stuck in limbo and was told no.

How bad is the situation I'm now? Is this common? Is there anything I can do? And finally will this affect my job?

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You need a new Fiktionsbescheinigung. Talk to the Ausländerbehörde where you get the previous one from and explain the circumstances.

These Fiktionsbescheinigung are exactly meant for that situation – files are in process and you need an interim paper which states "had a permission before, and we assume nothing important has changed so it still applies."