• Selected
• Entire List

Abstract:
In this paper, I draw on the insights of behavioral economics to explain the rise of consumer debt and analyze the potential of several emerging European consumer debt relief systems in preventing excessive consumer borrowing. First, I submit that behavioral economics offers compelling explanations for some of the reasons why consumers get themselves into financial trouble despite the obvious dangers of over-borrowing and over-spending. Consequently, I propose that behavioral economics might also indicate which legislative models of consumer debt relief might be most effective, not only in treating, but also in combating the growing problem of excessive consumer debt. Drawing on my recent studies of the operation of the new consumer debt relief systems in Germany, France, Belgium, and Luxembourg (and my initial observations on the system in the Netherlands), I argue that some aspects of these systems are likely to be more effective - and others may even be counterproductive - in achieving the often-stated European goals of imparting positive lessons to consumers about personal responsibility and payment morality. At least from the perspective of behavioral economics, the German system seems to emerge as the most potentially successful system, although other systems seem to be moving in the right direction in many areas.

Consumer bankruptcy, comparative law, behavioral economics

Abstract:
To add another enlightening dimension to current U.S. consumer bankruptcy reform debate, this Article describes the consumer provisions of the new German Insolvency Act. It reports on Germany's rising consumer debt problem and the various ways in which German debtor-creditor law failed to address this increasing problem before 1999. It then examines the consumer provisions of the new German Insolvency Act, in force since January 1999 and significantly amended in December 2001. It reveals critical distinctions between the theory of consumer insolvency, as described in German law and legal literature, and the reality of consumer insolvency in practice as it has developed in the nearly five years since the law went into effect. From this examination, this Article extracts several lessons for U.S. law reformers battling with provisions quite similar to those implemented in the new German law. As it turns out, the German and U.S. consumer debt relief systems produce largely the same economic results. Important distinctions between the German and U.S. economic and social systems suggest, however, that the German approach - and the amendments currently under consideration in the U.S. Congress - would not lead to success in the U.S. At the same time, the German system focuses on achieving important societal goals that U.S. law neglects, which might be incorporated into U.S. law through more careful reform of U.S. debtor-creditor law.

Consumer bankruptcy, consumer insolvency, consumer debt, overindebtedness, German legislative process

Abstract:
This Article takes advantage of a rare double opportunity to break new ground in commercial, consumer, and comparative law. First, it offers one of the first detailed analyses of key elements of the new U.S. consumer bankruptcy reform law, which will go into effect on October 17, 2005. Second, this Article offers a unique perspective on the new law in light of a curious and surprising discovery: It turns out that the U.S. consumer bankruptcy system as reformed will resemble in many critical respects the consumer bankruptcy system in place for the past six years in the Netherlands. As a result of this serendipitous U.S.-Dutch convergence, years of experience under the Dutch consumer debt relief system can serve as a sort of crystal ball, providing a rare glimpse into the future of the new U.S. system. This Article describes both the law in books as well as the law in action as it has developed in the Netherlands in recent years. The Dutch law on the ground has diverged in significant ways from legislative expectations, and such divergences might well be repeated - for better or worse - in the United States in coming years. In particular, several key similarities and distinctions between the Dutch and U.S. systems reveal latent weaknesses and portend an impending breakdown in the credit counseling and means testing parts of our new system. A comparative view of recent Dutch developments offers not only cause for concern for coming problems, however, but also hope for some effective solutions.

Consumer bankruptcy, means testing, credit counseling, comparative consumer law, consumer debt relief

Abstract:
This book explores the rapidly evolving law of individual insolvency. As consumer borrowing and spending play a greater role in fueling worldwide economic growth, more and more countries are dealing with the casualties of the "democratization of credit" and the "open credit economy." Drawing on both primary sources of formal law and empirical studies of the law in action, this book offers an overview of how the law of consumer "overindebtedness" has played out in the last two decades in the United States and Europe and where it appears to be headed today. While the focus here is on law and practice, the questions for discussion at the end of each chapter might spawn deeper theoretical and policy explorations of the ambivalent relationship of societies to their financially overextended consumers and the ambiguous state of contract law in the consumer context in the 21st century.

Chapter 1 sets the stage by introducing the challenges and methodology of a comparative approach to this area of the law. Chapter 2 explores the varying form and role of "credit counseling" and pre-bankruptcy negotiation with creditors in the various systems presented. Chapters 3 and 4 compare and contrast the formal consumer insolvency systems in the United States, France, Germany, Austria, England & Wales, the Netherlands, Sweden, Belgium, and Luxembourg.

Designed to be short and inexpensive yet dense with information and ideas for discussion, this book is intended for use in a small unit of a larger course. For example, it might be used in a Comparative Law course, using consumer insolvency law to illustrate many of the challenges of comparative law analysis, or in a Bankruptcy course, using a variety of European approaches and their development over time to enlighten and challenge students' appreciation of the operation of the U.S. system.

Note: File contains only cover, contents, and prefatory material.

comparative law, bankruptcy, consumer debt, consumer finance

Abstract:
In 2009, Facts on File will release a major scholarly reference work on public policy in the United States, a three-volume collection entitled Governing America: Major Policies and Decisions of Federal, State, and Local Government. The work will deal with approximately 150 areas of public policy, ranging from abortion to monetary policy, and space exploration to bilingual education, covering not only landmark statutes and major programs at the federal level, but also key executive and judicial decisions and some important policies of state and local governments. This paper is the contribution on bankruptcy law and policy. Beginning with an overview of the goals and policies of bankruptcy in the United States, it traces the development of key issues such as federalism (with the rise of a unified federal bankruptcy law in the 1800s), separation of powers (especially in the allocation of judicial power to the new Bankruptcy Courts in the 1980s), the growing pains in the 1990s relating to both consumer and business bankruptcy, and the most salient themes of the reforms of 2005, especially in terms of their impact on bankruptcy judges, bankruptcy lawyers, and individual debtors. The contribution concludes on a positive note with observations about the renewed U.S. dedication to international cooperation in the new Chapter 15 of the Bankruptcy Code.

Abstract:
This paper explores the connection between social welfare reform and the adoption of consumer debt relief law in Europe. Health care expenses and unemployment are significant contributors to overindebtedness in Europe, and outside the primary sources, one finds suggestions to the effect that the unraveling social safety net was a major contributing factor in the adoption of consumer debt relief laws in Europe in the 1990s. This paper critically analyzes this notion by tracking the recent scaling back of social assistance programs in Sweden, Germany, and France, and comparing that movement with the adoption of consumer insolvency regimes in those three countries. The temporal correlation seems to be quite weak, and closer examination of the individual social welfare regimes reveals latent weaknesses that were amplified by changes in consumer economic factors in the 1980s. Rather than an eroding social safety net causing the adoption of consumer bankruptcy law, other powerful variables seem to have driven both of these reform processes. In countries with both strong and weak safety nets, consumer insolvency law has become the treatment of choice for new financial risks confronting consumers in the 21st century.

welfare, welfare reform, social safety net, consumer bankruptcy, insolvency

Abstract:
Comparative analyses of the treatment of excessive consumer debt are more relevant today than ever before, particularly given the recent overhaul of U.S. consumer bankruptcy and rapid developments in several new European consumer bankruptcy systems. This article is the next in a series designed to offer access by English speakers to such comparative analysis. Following on earlier studies of the systems in Germany and France, this article examines the recent enactment and implementation of consumer debt relief legislation in Belgium and Luxembourg. First, it explores the paradox of consumer bankruptcy in two of the least indebted states in Europe. It reveals how and why legislators overcame their reticence to adopt formal consumer debt relief procedures despite low levels of aggregate consumer indebtedness. Second, it reports on how lawmakers in Belgium and Luxembourg ultimately chose to structure formal consumer debt relief, focusing on the extent to which these new systems reflect continuity, change, and innovation in terms of the existing systems in neighboring states, especially France. In so doing, this article offers a foundation for predicting the challenges that will arise in the new, more demanding U.S. law, as well as the sort of debt relief system that will likely soon emerge as rising consumer debt becomes a problem for other countries with legal systems based on the French civil law model, such as Spain, Portugal, and a number of South American states. The first few years of experience with consumer debt relief systems in Belgium and Luxembourg show that such procedures need not be overly debtor-friendly to be effective, and they need not undermine dedication to the sanctity of contracts in a civil law system.

consumer bankruptcy

Abstract:
Before the dust had settled on the complete overhaul of the U.S. consumer bankruptcy system in October 2005, Sweden remodeled its consumer bankruptcy law on May 19, 2006. After over a decade of trial and error under its 1994 original law, Sweden has just adopted a streamlined new law to make its system more straightforward and efficient. Of particular interest to U.S. readers, Sweden's original law functioned very much like the revised consumer bankruptcy system just adopted in the United States. U.S. policymakers should be aware of reforms in parallel systems, like that in Sweden, to avoid falling into the same traps that snared our European neighbors. For example, the failure and abandonment of mandatory credit counseling and informal negotiation with creditors in Sweden seems a likely harbinger of things inevitably to come in the U.S. In addition, Sweden has just ushered in an administrative structure that corresponds almost exactly with proposals that were rejected in the United States in the 1970s. Perhaps it is time to reconsider our rejection of these proposals, at least in part. This article examines the Swedish law in books and in action as part of an on-going project to chart - in English - the experiences of our European neighbors with new and developing consumer debt relief systems. In undertaking this project, I hope to encourage U.S. policymakers to climb back to the top of the increasingly international learning curve.

consumer bankruptcy, bankruptcy reform, debt adjustment

Abstract:
This Article offers a new perspective on consumer bankruptcy reform, which continues to be the subject of fierce debate in the U.S. France introduced consumer debt relief into its consumer protection law 15 years ago, and the multi-stage development of this relief offers many lessons and insights for U.S. policymakers. Beginning with a description of the legal and market forces that created a consumer debt crisis in France, this Article analyzes the French law on Consumer Overindebtedness, both as it stands in the law books, and how it has played out in practice. The law in books has often differed quite dramatically from the law in action in this system in important and intriguing ways. From this examination, this Article extracts several lessons for U.S. law reformers. Most importantly, French law has achieved a more balanced and coherent approach to responsibility, which seems to be the driving concept in the most recent U.S. reform movement and will likely continue to motivate future reforms.

Consumer bankruptcy, comparative law, French law, consumer protection

Abstract:
This paper surveys the three most salient questions that have engaged policymakers in the last twenty years - and particularly the last ten - of insolvency law in Europe. This period has seen the discussion, emergence, and often multiple reforms of almost every consumer insolvency law in Europe. Consequently, we can now see not only points in time, but the lines that connect numerous points, and the convergence of these lines across Europe over time. Consumer insolvency policy has been in an almost constant state of flux in Europe since the 1990s, and it will likely to continue to be in the years to come. This paper situates the current status of policy in its historical context with an eye toward predicting what the future holds and offering suggestions for evolving policy. Part I untangles the numerous strands of argumentation that supported the adoption of distinct consumer insolvency law across Europe. Part II traces the development of consumer insolvency relief in terms of two intertwined sets of defining characteristics: discretion versus uniformity, and preservation versus destruction of contract rights. Over the last decade, a clear trend has emerged, driven largely by practical concerns, favoring uniformity of treatment and aggressive discharge of debt. Finally, Part III concludes with a brief look at the sacrifices demanded of debtors and the reasons for a gradual softening of these demands, along with the sticky question of state financing for relief in a system where most of the beneficiaries cannot afford to bear the administrative costs of that relief.

consumer, bankruptcy, debt relief

Abstract:
This paper (an excerpt from a forthcoming book on cooperation in international insolvency) analyzes the theoretical debate between the two main polar alternatives in the administration of international insolvency (bankruptcy): "territorialism" and "universalism." When financial distress strikes a business with assets and creditors in more than one national jurisdiction, the challenges of insolvency administration are heightened significantly. In the context of domestic insolvency, it is well accepted that individual claimants (and courts) yield to collective enforcement coordinated by one court with jurisdiction over all claims against the debtor's assets. When the challenges of insolvency administration arise in an international context, however, many nations abruptly abandon their support for collective compromise. Nations are less willing in general to subjugate the interests of "local" creditors to a broader compromise with "foreign" creditors, especially if that compromise is managed by foreign authorities. Resistance to cross-border cooperation is most often rooted in (or defended in terms of) appeals to sovereignty. In recent years, however, international practitioners and theorists have begun to make inroads into this "territorial" philosophy and the strictures of national sovereignty. A rapidly solidifying dedication to norms of "universal" cooperation and coordinated international compromise has swept over the cross-border insolvency landscape. This paper discusses the weaknesses of the historical territorial approach, especially in terms of its reliance on theories of sovereignty, thus revealing one perspective on why universalism has gained so much traction in recent legislative, jurisprudential, and practical developments in international bankruptcy (as further explored in the rest of the forthcoming book).

Abstract:
This paper explores the problems and processes that led to the birth of consumer bankruptcy in continental Europe, a process that began in Denmark in January 1972 and culminated with the adoption of the Danish consumer debt adjustment act, Gældssaneringslov, on May 9, 1984. While this law is often described in primarily humanitarian terms, in the sense of offering a respite to 'hopelessly indebted' individuals, both the motivation for the law and its intended scope were not simply accretions on an already multi-layered welfare system. Instead, the law was designed primarily as a pragmatic response to economically wasteful collections activities that imposed negative externalities on debtors, creditors, and especially Danish society and state coffers; the law was intended to force creditors to internalize (or eliminate) these externalities with respect to all debtors unable to pay their debts within a reasonable period of five years. The paper also examines the growing pains of this new system. The law originally left significant administrative discretion to judges, which produced vast disparities in treatment of cases in different regions of the country. Ultimately, a reform implemented in October 2005 made the system more accessible, more unitary throughout the country, and more humane. The effects of this reform are already visible in statistical observations of the system, though significant regional variations persist. Given the striking coincidence in timing, this paper also offers brief comparative comments on the parallel design - but very different effect - of the most significant reform of U.S. consumer bankruptcy law, also effective in October 2005.

insolvency, individual, comparative consumer bankruptcy