Personal Bankruptcy Law, Fresh Start and Judicial Practice
15 Pages Posted: 18 Mar 2011
Date Written: February 21, 2011
We explore in the French personal bankruptcy process the ways that judges perform with the possibility to discharge all the personal debts in exchange of liquidation of their assets. In particular, we give some empirical results on the determinants of judges’ selection between debtors whose debts are wiped out and debtors who have to reimburse their debts with their future incomes and current assets. Our main result is that French judges might prevent debtors from debt discharge when they are indebted to multiple creditors, especially financial ones. We give also empirical evidence that French judges would be sensitive when they make their decisions, to the regional labour market conditions as the higher the regional unemployment rate (in comparison to the mean rate), the higher is the likelihood of debt discharge. These empirical results are of prime interest to better understand how French personal bankruptcy laws perform in comparison to other national bankruptcy systems. Finally, our results can also serve to fill the gap between the bankruptcy rules and the practice of judges.
Keywords: Personal Bankruptcy, overindebtedness
JEL Classification: : G33, K29
Suggested Citation: Suggested Citation