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Consumer Overindebtedness Around the World

posted by Bob Lawless

My plan for the evening is to go in search of a giant sculpted head of Karl Marx. Fortunately, I'm in Chemnitz, Germany, where such a monument is a feature of the town square, a holdover from the days when the city was known as Karl-Marx-Stadt. Dr. Wolfram Backart has organized a wonderful conference at the Technische Universtät Chemnitz. The conference is entitled "Overindebtedness: Everyday Risk in Modern Societies? Theoretical Aspects and Empirical Findings in International Perspective" and has brought together scholars from Germany, China, Portugal, Japan, Sweden, South Africa, Finland, Canada, the United States, the United Kingdom, and Austria. Two themes have been emerging

The Europeans are ahead of the United States and pretty much everyone else on an empirical understanding of overindebted consumers. As part of most every debt adjustment regime in Europe--and not every European country has such a regime--a consumer must first enter a program of debt advice and possible renegotiation of debt. These programs are not without controversy from a policy perspective as their efficacy is often questioned. From a research scholar's perspective, the programs accomplish two things. First, they allow for the identification of financially distressed debtors outside the formal bankruptcy system and thereby can give the research a more complete perspective on the overindebted. In the United States, for example, logistical problems largely limit study to those debtors who come into the formal bankruptcy system, meaning we often do not know much about other heavily indebted consumers who are coping without the use of formal bankruptcy. Second, they allow the collection of basic information that is lacking in other places. In the United States, again for example, the government does not collect even basic demographic information about bankruptcy filers, and we would not have any demographic profiles of bankruptcy filers were it not for research like our own Consumer Bankruptcy Project.

Last night, Dr. Backart and his colleague, Dr. Ditmar Brock, spoke to us about the need for harmonization of scholarly research instruments across international boundaries. This is another theme that is emerging in the conference. Dr. Götz Lochner and his colleagues at the Technische Universtät Chemnitz were able to surveyed German debtors in their debt advice system. At the Consumer Bankruptcy Project, we have surveyed U.S. debtors in bankruptcy. Professors Claudia Lopes and Fernanda Jesus of the University of Coimbra, Portugal have similarly examined Portuguese debtors. Because of differing institutions, research instruments cannot be duplicated. For example, different educational systems in different countries make it difficult to come up with a uniform measure of educational attainment. Duplication would not prevent harmonization. More consistent research instruments across borders would perhaps allow researchers to decompose the causes of overindebtedness into cultural and personal components. The reality of that goal may be a way off, but conferences like this help to foster international cooperation in study overindebtedness. Dr. Backart and his colleagues at Technische Universtät Chemnitz are to be congratulated for this conference.


I believe bankruptcy filers, prior to being allowed to file, must undergo at minimum a phone interview and fill out an extensive form detailing their positions.

This information exists already. However, it may be a privacy issue.

Ya, we already have a "form" of that. I think a third parties opinion on whether a debtor should file or not should not be made a "requirement". I think of Bankruptcy as a "pressure release valve". Without it the pressure builds up and the machine breaks down. Things were going good economically speaking they made the requirements harder, I think compounding the problem. Now that people need the help its tougher to get the help and people are bursting. They had an article on how people are not divorcing as much because of hard times. I am not seeing it. People always come in on the verge if not in the process. I have had to file lift stays for like 4 people in the last week in a half. The pressure often is way too much for a "modern" marriage to handle.

I think I have shared this story before but we had an elderly couple come in with a ton of debt mostly medical. They were actually going to get a divorce after 45 years together because he didn't want to saddle his wife with his medical debt in their twilight years. She is this tough as nails Hispanic woman, I mean she had these hands that were like farmers hands....strong! She was all, "Don't worry about me, if they come around I'll just get my shot gun". No no no no! Bankruptcy was the release valve, no more calls, no divorce, no homicides, no jail, no debt....well in one more year that is. Had to be a 13.

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