Setting the Comparative Record Straight

To my dismay, I have just read yet another recent publication that mischaracterizes European personal insolvency law.  Published in 2006 by an author and a press whom I respect a great deal, this book reports that individuals in Germany are not allowed to file for bankruptcy voluntarily, their debts are not discharged in bankruptcy at all, and they must repay their debts from future earnings.  To be fair, these comments in a footnote were not the thrust of the otherwise quite fine contribution.  Nonetheless, since 1999, the first two statements are false, and the last one is at least misleading.  For support, the note refers to two authorities, both published in the late-1990s.  Apparently both of these authorities missed the fact that Germany (along with many other European countries) revised its bankruptcy law in 1994 (effective 1999) to introduce a discharge for voluntary individual filers.  In fact, they made up a new word for this new discharge:  Restschuldbefreiung (literally, the “freeing [of the debtor] from the remainder of [his or her] debt”).  Technically, debtors must turn over to a trustee all non-exempt income for a six-year “good behavior period” (Wohlverhaltensperiode), theoretically to be paid to creditors, though the Justice Ministry recently observed that debtors in 80% of cases have barely enough non-exempt income during this period to cover the administrative fees, so creditors often receive nothing.

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I had hoped that by producing a series of articles describing the recent and rapid development of individual insolvency in Europe, I could help scholars avoid this kind of common mistake.  Note to researchers in this area:  If your source (or a source on which it relies) was published before 1995, chances are any description of European and Asian personal insolvency law will be seriously out of date.  We in the United States and Europe have so much to learn from each other, but useful comparison can proceed only if we set the record straight on the actual, current state of affairs.  I hope that by collecting and updating these studies in a little book (unoriginally entitled Comparative Consumer Bankruptcy, forthcoming summer 2007), I can get into the hands of academics and their students an accurate record of the adoption and revision of individual insolvency law in Europe.  Significant differences remain between U.S. and European practice in this area (and among the various European regimes), so focusing on current differences leaves plenty of room for interesting exploration and theorizing.