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Consumer Insolvency Filing Pattern Variations

posted by Jason Kilborn

The latest figures for insolvency filings in Sweden are now out.  Somewhat contrary to Bob's observations on U.S. filing patterns in the last quarter of the year, Sweden saw a 21.5% increase in filings in Q4 2008 over Q3 (and a 21.7% increase in filings in Q4 2008 over Q4 2007). Total filings for 2008 were slightly down from 2007 (6528 in 2008, 6831 in 2007, in a country with about 9 million total residents), but 2007 was Sweden's equivalent (actually, opposite) of 2005 in the U.S.--a huge rush of filings occurred in Q1 2007 after the implementation of a reform to make the system simpler and more widely accessible.  The biggest difference between 2007 and 2008 was thus the rate at which the administrative structure made its way through the huge backlog of new cases. The number of orders opening insolvency proceedings rose steadily through 2007 and 2008 and then spiked over 63% from Q3 to Q4 of last year in what appears to have been a major push to clear out old filings. Luckily for Swedish debtors, while the successful admission rate has returned to its historical level of about 55% of filings, the filing rate per 1000 residents has spiked to around 0.75 since the 2007 reform, so nearly 70% more debtors are being successfully admitted to the system now in comparison to two years ago. Unfortunately, very little empirical data exists on the content of the relief granted to these people, but the 2007 amendents have made some form of relief much more widely available and substantially more predictable. This is a trend that has swept over Europe in recent years, quite the opposite of what we've seen here in the U.S. It's tought to make accurate and meaningful comparisons between Europe and the U.S. in these complex systems, but the contrast in direction of reform policy is striking.


Wow, now I didn't read beyond a few details on Kronofogden but if that is what their Bks are about... Wow.... So it's like the government guarantees the regular ordinary, not so ordinary, corporate etc... debts that anyone may own or owe even one to another? Hand shake stuff even? In our system it could never be fair to have a creditor supervise a bankrupt debtors' case......well.....I take it back.... You know? That is exactly what the 05 fiasco did on the consumer side! I know we have involuntary stuff but seriously now, your talking birth to death! Are they in every part of every step of "debt". It's like total control right? I can see how it can be really efficient though. Does the government really gurantee every debt given to them?

Great learning experience there, wow man thanx.

The Kronofogden is separate from the government, and it acts as the public and private debt collector and overseer of bankruptcies and consumer debt adjustment cases. Imagine having to submit consumer bankruptcy petitions to the debtor collector (!), but that's exactly how it works in Sweden. The government doesn't really guarantee anything, then, but it does support an agency that provides effective collection and adjustment of debt (note that most of the debts involved here are public, from taxes to support repayment obligations, etc., from the state). If you're really interested in this fascinating system, you can read more about it by downloading my paper for free from http://ssrn.com/abstract=913096 (I'm writing about the similar but still quite different Danish system now--stay tuned).

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