A holistic approach to the legal treatment of consumer debt

The awareness that consumer over-indebtedness is a problem which needs to be tackled through specific measures most clearly emerged at the end of a period in which increased availability of retail financial services was presented as a means to promote consumers’ welfare. While, on the one hand, over-indebtedness is regarded as a problem to be counteracted, European law and policy, on the other hand, promote indebtedness, leading to a fragile equilibrium between opposing purposes which permeate the regulatory framework. How can the two objectives be reconciled, allowing for well-ordered development of a credit-based economy in which debtors in financial trouble are not left behind? This paper suggests the necessity of taking a holistic approach to over-indebtedness, starting from the assumption that, rather than being the manifestation of individual inability to properly deal with finance, the phenomenon is inherent to a credit economy and that modern law must therefore tackle it systematically through a combination of measures: private and public, contractual and non-contractual, preventive and curative, national and supranational. While articulating a critique of some of the rationales underlying ‘debt law’, the paper highlights the necessary interrelation between the possible legal strategies against household over-indebtedness and the need to coordinate them in order to reach an adequate level of protection