Third, exclusion of over-indebted households harms debtors and societies, and it can be tackled by strengthening consumer bankruptcy’s function of regulating the credit market, not by bringing welfare policies into consumer debt relief. Second, both approaches exclude a considerable share of insolvent individuals from a ‘fresh start’, but they differ regarding their normative foundations, mechanisms of exclusion, and types of debtors excluded. Three main points are made: First, two approaches to consumer bankruptcy in Western Europe can be discerned, a ‘Germanic’ liability model emphasizing the debtor’s responsibility for debt payment, and a ‘Franco-Scandinavian’ mercy model focusing on the debtor’s deservingness for debt relief. Crpenaru, Drept comercial romn, IInd edition, revised, Bucharest, 1998. This paper discusses consumer bankruptcy as social policy in finance-driven capitalism, classifies the consumer bankruptcy systems of fifteen advanced economies, and examines the problem of social exclusion in European consumer bankruptcy systems.
In the past decades the growth of consumer credit has led to increased debt problems of private households, and many advanced economies have responded to this new social risk of consumer over-indebtedness by adopting consumer bankruptcy laws that enable insolvent individuals a financial ‘fresh start’ via discharge of debts.
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