Two Decades, Three Key Questions, and Evolving Answers in European Consumer Insolvency Law: Responsibility, Discretion, and Sacrifice

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.

Keywords: consumer, bankruptcy, debt relief