The 'Market Model' of Debt Counseling and Bankruptcy in the United States

Schulden, Schuldenberatung und Sozialstaat: Eine International Vergleichende Reflexion (Christoph Mattes, Simon Rosenkranz & Matthias D. Witte, eds., Munich/Weinheim: Beltz Juventa 2024)

20 Pages Posted: 5 Apr 2024

See all articles by Jason J. Kilborn

Jason J. Kilborn

University of Illinois Chicago School of Law

Date Written: March 1, 2024

Abstract

This paper is a chapter in a comparative volume examining social state, legal, and socio-political influences on debt counseling, in particular the challenges for the practice of counseling that arise from prevailing social and socio-political ideas about debt, help for those in debt, and over-indebtedness. It analyzes the US system of debt counseling as representative of the "market model" (in contrast with the "liability model" in Germany and Austria, the "grace model" in Sweden, and the "restrictions model" in England). This chapter reveals the unique trajectory of development of debt/credit counseling in the US, which arose not as a branch of social work or public support, but as a market-driven adjunct to small-loan lending, and it expanded as a market-driven response to a rise in personal bankruptcy. The “market model” thus quite aptly characterizes both credit counseling and personal bankruptcy in the US. Both represent efforts to keep the wheels of commerce turning in the face of market challenges, with a minimum of intervention, regulation, or funding by public government. The US challenges arising in both credit counseling and personal bankruptcy also demonstrate the limitations and risks of leaving such complex and sensitive matters to private market resolution.

Keywords: debt help, debt counseling, credit counseling, personal bankruptcy

Suggested Citation

Kilborn, Jason J., The 'Market Model' of Debt Counseling and Bankruptcy in the United States (March 1, 2024). Schulden, Schuldenberatung und Sozialstaat: Eine International Vergleichende Reflexion (Christoph Mattes, Simon Rosenkranz & Matthias D. Witte, eds., Munich/Weinheim: Beltz Juventa 2024), Available at SSRN: https://ssrn.com/abstract=4752879

Jason J. Kilborn (Contact Author)

University of Illinois Chicago School of Law ( email )

300 S. State Street
Chicago, IL 60604
United States

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