For indirect speech you always use Konjunktiv I (in written German; in spoken or colloquial German, people often just use the Indikativ). Konjunktiv II is used in three cases: (1) the Konjunktiv I form is identical to the Indikativ form, and you want to make clear that it's reported speech. (2) the Konjunktiv I form looks or sounds weird (to a modern native speaker) and the speaker doesn't want to use it. That's not a helpful criterion for a non-native speaker, but it doesn't happen that often. An alternative is to rephrase the sentence. (3) you want to express that whatever is spoken is somehow doubtful or hypothetical or has other attributes where you would use Konjunktiv II even in direct speech. In that case, Konjunktiv II trumps Konjunktiv I.