Just Consumer Financial Protection: Prevention or Cure

Abstract

This article examines the relationship between two complementary and related consumer financial protection approaches: regulatory oversight of financing terms (ex ante protection) and bankruptcy discharge of consumer debts (ex post protection). Although often conceptualized as distinct areas of law, consumer financial regulation and consumer bankruptcy are two sides of the same coin and function together to treat the harms of financial distress. This article seeks to explore the relationship and tensions between these various approaches by juxtaposing consumer debtor-creditor law attitudes and legal developments in continental Europe (primarily France and Germany) with those in the United States. After a brief overview of consumer indebtedness in the United States, Part I examines consumer financial regulation trends in the United States, France, and Germany. Part II compares and contrasts US, German, and French approaches to consumer bankruptcy and outlines some recent developments in insolvency law in these systems. Part III explains why optimal consumer protection laws should recognize the importance of both ex ante regulation and ex post bankruptcy discharge and should embrace the complexity inherent in debtor-creditor law. The article concludes with a brief consideration of how and why legal reforms should act holistically to improve the financial wellbeing of the most economically vulnerable consumers in society. 

Keywords: economic inequality, ex ante protection, ex post protection, financial protection, bankruptcy, insolvency