Fresh start or stalemate? European insolvency lawreform and the politics of household debt

In the context of economic crisis and widespread household over-indebtedness, this paper examines the varying rate and extent of evolution of consumer insolvency laws in a selection of European countries, in order to identify the factors that influence the degree to which the law can respond to the conditions of the modern consumer credit society. I begin by examining the key features of the selected laws, including the newly enacted Irish Personal Insolvency Act 2012. I consider potential explanations for differences in national laws advanced by commentators and policymakers, in order to examine whether national legal traditions, relevant institutional structures, and cultural attitudes can determine the shape of a country’s personal insolvency law. I illustrate how empirical evidence provides little support for the idea that consumer insolvency laws are the product of such inherently national factors. Subsequently, I show how political science concepts such as political ideology, policy salience, and interest group influence appear to explain more effectively the development of these laws. Noting the politically controversial and complex nature of household debt issues, I conclude by suggesting that universal political forces, rather than inherently national factors, represent greater obstacles to reforming personal insolvency law to meet the needs of the modern consumer credit society